31/   /I     T/ff/s/^       $7-, 


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AA  Gi?l0££. 


..•"••••••«^.. 


UNIVERSITY 

OF  CALIFORNIA 

LOS  ANGELES 

LAW  LIBRARY 


• 


A  SELECTION  OE  CASES 


ON 


THE  LAW  OF   SURETYSHIP 


BY 

JAMES   BARE   AMES 

BUSSEY   PROFESSOR   OF   LAW   IN   HARVARD   UNIVERSITY 


CAMBRIDGE 
HARVARD  UNIVERSITY  PRESS 


Copyright,  1900 
By  JAMES  BARR  AMES 


' 


CONTENTS. 

CHAPTER   I. 

PAGE 

Nature  of  the  Contract  of  Suretyship .  .    1 

Section  I. 
Suretyship  in  the  Form  of  a  Collateral  Undertaking,  or  Guaranty     ...         1 

Section  II. 
Suretyship  in  the  Form  of  an  Independent  or  Absolute  Undertaking      .     .       99 

CHAPTER   II. 
Surety's  Defences  against  the  Creditor 108 

Section  I. 

Defences  based  on  the  Absence  of  any  Liability  of  the  Principal  Debtor  to 
the  Creditor 108 

Section  II. 

Defences  based  upon  the  Extinguishment  or  Suspension  of  the  Liability  of 
the  Principal  Debtor  to  the  Creditor 131 

Section  III. 

Defences  based  upon  the  Principal  Debtor's  Right  of  Set-off  or  Counter- 
claim against  the  Creditor 184 

Section  IV. 
Surrender  or  Loss  of  Securities  by  the  Creditor 192 

Section  V. 

Creditor's  Failure  to  use  Money  within  his  Control  in  Lawful  Payment  of 
his  Claim 217 

Section  VI. 
Failure  of  the  Creditor  to  sue  the  Debtor  at  the  Surety's  Request      .     .     .     221 

Section  VII. 
No  Notice  to  Guarantor  of  Acceptance  of  the  Guaranty 225 

Section  VIII. 
No  Notice  to  Guarantor  of  Default  of  Principal  Debtor 238 

Section  IX. 
Alteration  of  Principal's  Contract,  or  Variation  of  Surety's  Risk  ....     243 


IV  CONTENTS. 

Section  X. 
Non-disclosure  by  Obligee  of  Facts  which  he  ought  to  reveal  to  the  Surety     275 

Section  XI. 
Retention  of  Principal  in  Service  after  Knowledge  of  his  Dishonesty      .     .     295 

Section  XII. 
Fraud  or  other  Misconduct  of  Principal  towards  Surety 305 

Section  XIII. 

Surety's  Defences  growing  out  of  Dealings  or  Relations  between  the  Cred- 
itor and  Co-surety 319 

Section  XIV. 

Effect  of  Accident,  Notice  of  Revocation,  Death  of  the  Surety,  or  Default 
of  the  Principal,  upon  the  Continuance  of  the  Obligation  of  Suretyship  .     330 

CHAPTER   III. 
The  Surety's  Rights 357 

Section  I. 
Subrogation  to  the  Rights  of  the  Creditor 357 

Section  II. 
Indemnity 498 

Section  III. 
Contribution 533 

Section  IV. 
Exoneration 583 

CHAPTER  IV. 

Creditor's  Rights  to  Surety's  Securities 620 


TABLE   OF   CASES 


Abbot,  Bank  of  Salina  v. 
Addyman,  Beckett  v. 
Aikin.  Mathews  v. 
Ames  v.  Foster 
Ames  v.  Maclay 
Andrews,  Butcher  v. 
Amiable,  Rnssell  v. 
Anstey  v.  Harden 
Appleton  v.  Bascom 
Armstrong-,  Hodges  v. 
Aston,  Sanderson  v. 
Atkinson,  Ex  parte 
Auchampaugh  v.  Schmidt 
Ayers  v.  Burns 

Bachelder,  Sumner  v. 
Baily's  Est. 
Baker  v-  Kennett 
Bank  of  Salina  v.  Abbot 
■  Bank  of  Scotland,  Smith  v. 
Barclay  v.  Gooch 
Bardwell  v.  Lydall  v. 
Barker  v.  Bucklin 
Barker,  Price  v. 
Barneby,  Somersall  v. 
Bascom,  Appleton  v. 
Batard  v.  Hawes 
Bateman.  Mallet  v. 
Baxter,  In  re 
Beal  v.  Brown 
Beardmore  v.  Cruttenden 
Beavan,  Bushell  v. 
Bechervaise  v.  Lewis 
Beckett  v.  Addyman 
Beers,  Swift  v. 
Belknap  v.  Bender 
Bell  v.  Jasper 
Bender,  Belknap  v. 
Benson,  Wood  v. 
Bird  v.  Gammon 
Bishop,  Pidcock  v. 
Bittick  v.  Wilkins 
Black,  Carter  v. 
Black,  Sherman  v. 
Black,  Waldrip  v. 
Blake  v.  Traders'  Bank 
Blanchard,  Dexter  v. 
Blanchard,  Gibbs  v. 
Bolenius,  Eshleman  v. 
Borland,  Phelps  v. 
Bostwick  v.  Van  Voorhis 
Bourne,  Dowbiggen  v 
Bowers  Est. 
Boyd,  Dock  v. 


Page 

Paga 

386 

Brabason,  Casey  v. 

102 

353 

Brackett  v.  Rich 

615 

445 

Bradbury  v.  Morgan 

340 

85 

Bradford  Co.,  Rouse  v. 

1(14 

139 

Bradley  v.  Burwell 

560 

11 

Briddock,  Parsons  v. 

476 

114 

Brigham,  In  re 

378 

55 

Brinson  v.  Thomas 

368 

49-: ) 

Broderick,  Chester  v. 

477 

522 

Brookbank  v.  Taylor 

238 

252 

Brown,  Beal  v. 

506 

37s 

Brown  v.  Curtiss 

62 

136 

Brown,  Risley  v. 

331 

521 

Brownlee,  Fulkerson  v. 

359 

Brunskill,  Holme  v. 

256 

645 

Bucklin,  Barker  v. 

37 

603 

Bnckmyr  v.  Darnall 

12 

111 

Burns,  Ayers  v. 

521 

386 

Burns  v.  Parish 

509 

275 

Burwell,  Bradley  v. 

560 

502 

Bushell  v.  Beavan 

21 

428 

Buss,  Pledge  v. 

194 

37 

Butcher  v.  Andrews 

11 

147 

Butler,  Capel  v. 

204 

225 

Butler,  Guild  v. 

132 

499 

Butler  v.  United  States 

312 

538 

56 

Calvert  v.  London  Co. 

266 

424 

Cambridge  Bank  v.  Hyde 

261 

506 

Capel  v.  Butler 

204 

607 

Cardell  v.  McNeil 

61 

21 

Carpenter  v.  Minter 

'397 

188 

Carr  v.  Ladd 

337 

353 

Carter  v.  Black 

528 

121 

Casey  v.  Brabason 

102 

42 

Chambers,  Midland  Co.  v. 

435 

547 

( lhambers,  Sawyer  v. 

128 

42 

Charnock,  Fleetwood  v. 

533 

94 

Chase,  Goodman  v. 

27 

29 

Chester  v.  Broderick 

477 

276 

Chicago  Co.  v.  Glenny 

464 

367 

Christie.  Paul  v. 

131 

528 

Church  p.  Swope 

494 

485 

Clark  v.  Sickler 

217 

398 

Clark  v.  Thayer 

333 

365 

Clayton,  Sheffield  Co.  v. 

633 

26 

Clementson,  Coulthart  v. 

343 

4 

Coates  v.  Coates 

206 

5S1 

Coles,  Hulme  v. 

177 

214 

Commercial  Bank,  Royal  Bank  v. 

625 

291 

Commonwealth  v.  Straton 

372 

376 

Cook,  Thomas  v. 

48 

408 

Cooke,  Petty  v. 

143 

40 

Coope  v.  Twynam 

551 

VI 


TABLE   OF   CASES. 


Cooper,  Davidson  v. 

243 

Cooper,  Ellesmere  Co.  v. 

247 

Cooper  v.  Jenkins 

465 

Cooper,  Jones  v. 

2 

Copis  i>.  Middleton 

381 

Cosgrove  v.  McKasy 

601 

CottrelTs  App. 

408 

Coulthart  v.  Clementson 

343 

Cowell  v.  Edwards 

536 

Cragoe  v.  Jones 

145 

Craythorne  v.  Swinburne 

482 

Cresswell,  Green  v. 

49 

Cromer  v.  Cromer 

388 

Cruttenden,  Beardmore  v. 

607 

Cunningham,  Osborn  v. 

527 

Curtiss,  Brown  v. 

62 

Daniels,  Thayer  v. 

517 

Darley,  English  v. 

152 

Darnall,  Buckmyr  v. 

12 

Davey  v.  Prendergrass 

155 

Davidson  v.  Cooper 

243 

Davies  v.  Humphreys 

541 

Davies,  Turner  v. 

481 

Davis  v.  Emerson 

553 

Davis  v.  Patrick 

89 

Davis  v.  Toulmin 

580 

Davis  v.  Wells 

228 

Day,  Holmes  v. 

480 

Deacon,  Pearl  v. 

192 

Decker  v.  Pope 

499 

Deering  v.  Winchelsea 

544 

Devey,  Prendergast  v. 

178 

Dexter  v.  Blanehard 

26 

Dickson,  Musgrave  v. 

466 

Dinkgrave's  Succ. 

469 

Dixon,  Steel  v. 

566 

Dobbins,  Jordan  v. 

347 

Dobie  v.  Fidelity  Co. 

598 

Dock  v.  Boyd 

40 

Dodd  v.  Winn 

327 

Dougbty,  Queen  v. 

378 

Douglass's  App. 

467 

Dowbiggen  v.  Bourne 

376 

Dows  v.  Swett 

64 

Drew  v.  Lockett 

404 

Dudlow,  Wildes  v. 

52 

Duncan  v.  North  Wales  Bank 

453 

Dunn  v.  Parsons 

199 

Eastwood  v.  Kenyon 

32 

Edwards,  Cowell  v. 

536 

Ellesmere  Co.  v.  Cooper 

247 

Ellis  v.  Emmanuel 

437 

Emerson,  Davis  v. 

553 

Emmanuel,  Ellis  v. 

437 

English  v.  Darley 

152 

Eshleman  v.  Bolenius 

581 

Everett,  Polak  v. 

207 

Ewin  v.  Lancaster 

162 

Fentum  r.  Pocock 

157 

Ferguson,  Leake  v. 

471 

Fewlass  v.  Keeshan 

339 

Fidelity  Co.,  Dobie  v. 

598 

Fleetwood  v.  Charnock 

533 

Fletcher,  New  York  State  Bank  v. 

475 

Forbes  v.  Jackson 

410 

Ford  v.  Stobridge 
Foster,  Ames  v. 
Fothergill,  In  re 
Fowler  v.  Strickland 
Foxall,  Phillips  v. 
Foye,  In  re 
Foyer,  Macdougall  v. 
Frazer  v.  Jordan 
Fulkerson  v.  Brownlee 
Fuller,  Gould  v. 
Fuller  v.  Tomlinson 
Furbish  v.  Goodnow 

Gammon,   Bird  v. 
Geagan,  Manley  v. 
Gibbs  v.  Blanehard 
Gifford,  Ex  parte 
Giglis  v.  Welby 
Gill,  Tomlinson  v. 
Gillespie  v.  Torrance 
Gillett,  Mallory  v. 
Glenny,  Chicago  Co.  v. 
Goddard  v.  Whyte 
Gooch,  Barclay  v. 
Goodman  v.  Chase 
Goodnow,  Furbish  v. 
Goodrich,  Tom  v. 
Gosserand  v.  Lacour 
Gould  v.  Fuller 
Grant,  Hare  v. 
Gray  v.  Seckham 
Green  v.  Cresswell 
Grey,  Sutton  v. 
Griffith  v.  SitgTeaves 
Griswold,  Hazard  v. 
Grover,  Towne  v. 
Grover  Co.,  Wright  v. 
Grubbs  v.  Wysor 
Guild  v.  Butler 
Gullick,  Wolmershausen  v, 

Hackett.  Ward  v. 
Hall,  Whiteher  v. 
Hammell,  Stone  v. 
Hampton  v.  Phipps 
Harding  v.  Tiff't 
Hare  v.  Grant 
Hargreaves  v.  Parsons 
Harlin,  Powers  Co.  v. 
Harper,  Lloyd's  v. 
Harradine,  Pooley  v. 
Harrah  v.  Jacobs 
Harrison,  Maure  v. 
Harrison  v.  Sawtel 
Hart,  Hubbard  v. 
Hart  v.  Longfield 
Hatch,  Miller  v. 
Hawes,  Batard  v. 
Hay<;s,  Ranelaugh  v. 
Hayes  v.  Ward 
Hazard  v.  Griswold 
Hill  v.  King 
Hitchman  v.  Stewart 
Hodges  v.  Armstrong 
Holme  v.  Brnnskill 
Holmes  v.  I  >ay 
Holzer,  Pierce  v. 
Hoppes  v.  Hoppes 


498 

85 
422 
470 
295 
638 
101 
172 
359 
578 
202 

33 

29 

104 

4 

319 

583 

31 
184 

76 
464 
357 
502 

27 

33 
507 
323 
578 
525 
431 

49 

70 
126 
125 

22 
401 
413 
132 
58? 

305 
251 
514 
647 
315 
525 

60 
293 
335 
159 
393 
620 

54 
180 
9 
175 
538 
596 
608 
125 
389 
554 
522 
256 
480 
362 
613 


TABLE   OF   CASES. 


vu 


Horton,  Richardson  v. 
Hotham  v.  Stone 
Howarth,  Samuel  v. 
Howes  v.  Martin 
Hubbard  v.  Hart 
Hulme  v.  Coles 
Humphreys,  Davies  v. 
Hungerford  v.  O'Brien 
Hunt,  National  Bank  v. 
Hunt  v.  Roberts 
Hyde,  Cambridge  Bank  v. 

Jackson's  A  pp. 

Jackson,  Forbes  v. 

Jacobs,  Harrah  v. 

Jarvis  v.  Wilson 

Jasper,  Bell  v. 

Jenkins,  Cooper  v. 

Johnson,  Offley  v. 

Jones  v.  Cooper 

Jones,  Cragoe  v. 

Jones,  Lee  v. 

Jones  v.  Orchard 

Jones  v.  Quinnipiack  Bank 

Jones  v.  Thayer 

Jones  v.  Ward 

Jordan  v.  Dobbins 

Jordan,  Frazer  v. 

Kaighn,  Paulin  v. 
Keeshan,  Fewlass  v. 
Kennett,  Baker  v. 
Kenyon,  Eastwood  v. 
Kidman,  Sison  v. 
Kimball  v.  Newell 
King,  Hill  v. 
Kingsbury  v.  Westfall 
Kii'by  v.  Landis 
Kirkham  v.  Marter 
Klingensmith  v.  Klingensmith 
Knepper,  Wright  v. 
Koehler,  Prime  v. 
Koelsch  v.  Mixer 
Koppel,  Wolff  v. 

Lack,  Thompson  v. 
Lacour,  Gosserand  v. 
Ladd,  Carr  v. 
Lakeman  v.  Mountstephen 
Lancaster,  Ewin  v. 
Landis,  Kirby  v. 
Layer  v.  Nelson 
Leake  v.  Ferguson 
Lee  v.  Jones 
Lee  v.  Yandell 
Leper,  Williams  v. 
Lewis,  Bechervaise  v. 
Lidderdale  v.  Robinson 
Lloyd,  North  British  Co.  u. 
Lloyd's  v.  Harper 
Loekett,  Drew  v. 
London  Co.,  Calvert  v. 
Longfield,  Hart  v. 
Loosemore  v.  Radford 
Lucas  v.  Owens 
Lydall,  Bardwell  v. 

Macdougall  v.  Foyer 


137 
380 
153 
4(i 
180 
177 
541 
239 
■350 
355 
261 

603 
410 
393 
106 
547 
465 
587 
2 
145 
283 
530 
641 
116 
151 
347 
172 

571 
339 
111 

32 

99 
108 
389 
264 
179 

23 
325 
197 

87 
563 

67 

322 
323 
337 

14 
162 
179 
498 
471 
283 
112 

72 
188 
384 
280 
335 
404 
26(5 
9 
606 
314 
428 

101 


Mace  v.  Wells 

515 

Mack,  Uzzell  v. 

360 

Maclay,  Ames  v. 

139 

Maclure,  Yorkshire  Co.  y. 

118 

Magruder,  M'Donald  v. 

488 

Mahurin  v.  Pearson 

190 

Maine,  Pray  v. 

400 

Mallet  v.  Bateman 

56 

Mallory  v.  Gillett 

76 

Manley  v.  Geagan 

104 

Marden,  Anstey  v. 

55 

Marsh  v.  Pike 

443 

Marshall,  Ex  parte 

416 

Marshall,  Murray  v. 

168 

Marter,  Kirkham  v. 

23 

Martin,  Howes  v. 

46 

Mathews  v.  Aikin 

445 

Mathews,  Railton  v. 

277 

Maure  v.  Harrison 

620 

Maynard  v.  Morse 

236 

McAllaster,  Sibley  v. 

511 

McAllister,  Titcomb  v. 

577 

Mc Bride  v.  Potter  J^ovell  Co. 

549 

M'Donald  v.  Magruder 

488 

MTver  v.  Richardson 

227 

McKasy,  Cosgrove  v. 

601 

M'Myn,  In  re 

383 

McNiel,  Cardell  v. 

61 

Mease  v.  Wagner 

20 

Merritt,  Richardson  u. 

599 

Metz  v.  Todd 

171 

Middleton,  Copis  v. 

381 

Midland  Co.  v.  Chambers 

435 

Miller  v.  Hatch 

175 

Millikin,  Stoner  v. 

310 

Minter,  Carpenter  v. 

397 

Mixer,  Koelsch  v. 

563 

Morgan,  Bradbury  v. 

340 

Morgan  v.  Seymour 

587 

Morris,  Ex  parte 

638 

Morrison,  Warner  v. 

504 

Morse,  Maynard  v. 

236 

Moulton  v.  Posten 

181 

Mountstephen,  Lakeman  v- 

14 

Murray  v.  Marshall 

168 

Musgrave  v.  Dickson 

466 

Nash,  Neal  v. 

394 

Nash,  Read  v. 

25 

National  Bank  v.  Hunt 

350 

National  Bank  v.  Smith 

219 

Neal  v.  Nash  • 

394 

Nelson,  Layer  v. 

498 

Newcomb  v.  Raynor 

213 

Newell,  Kimball  v. 

108 

New  York  Bank  v.  Fletcher 

475 

North  British  Co.  v.  Lloyd 

280 

North  Wales  Bank,  Duncan  v. 

453 

O'Brien,  Hungerford  v. 

239 

Offley  v.  Johnson 

587 

Orchard,  Jones  v. 

530 

Osborn  v.  Cunningham 

527 

Owen,  Williams  v. 

409 

Owens,  Lucas  v. 

314 

Pace  v.  Pace 

448 

Packard.  Pain  v. 

221 

Vlll 


TABLE  OF  CASES. 


Pain  v.  Packard 

221  ! 

Palmer,  Villars  v. 

135 

Parish,  Burns  v. 

509 

Parsons  v.  Briddock 

476 

Parsons,  Dunn  v. 

199 

Parsons,  Hargreaves  v. 

60 

Patrick,  Davis  v. 

89 

Paul  v.  Christie 

131 

Paulin  v.  Kaighn 

571 

Pearl  v.  Deacon 

192 

Pearson,  Mahurin  v. 

190 

Perkins,  Watkins  v. 

11 

Peter  v.  Rich 

533 

Petty  v.  Cooke 

143! 

Phelps  v.  Borland 

214 

Philhrick  v.  IShaw 

370 

Phillips  v.  Foxall 

295 

Phipps.  Hampton  v. 

647 

Pidcoek  v.  Bishop 

276 

Pierce  v.  Holzer 

362 

Pierce  v.  Williams 

524 

Pike,  Marsh  v. 

443 

Pledge  v.  Buss 

194 

Pocock,  Fentum  v. 

157 

Polak  v-  Everett 

207 

Pooley  v.  Harradine 

159, 

Pope,  Decker  v. 

499 

Poster,  Moulton  v. 

181 

Potter-Lovell  Co.,  McBride  v. 

549 

Powers  Co.  v.  Harlin 

293 

Pray  v.  Maine 

400 

Prendergast  v.  Devey 

178 

Prendergrass,  Davey  v. 

155 

Preston  v.  Preston 

473 

Price  v.  Barker 

147 

Prime  v.  Koehler 

87 

Putnam  v.  Schuyler 

122 

Queen  v.  Doughty 

378 

Quinnipiack  Bank,  Jones  v. 

641 

Raahe  v.  Squier 

93 

Radford,  Loosemore  v. 

606 

Railton  v.  Mathews 

277 

Randall  v.  Rigby 

96 

Ranelaugh  v.  Hayes 

596 

Raynor,  Newcomb  v. 

213 

Read  v.  Nash 

25 

Regina  v.  Robinson 

375 

Reynolds  v.  Wheeler 

492 

Rich,  Brackett  v. 

615 

Rich,  Peter  v. 

533 

Richardson  v.  Horton 

137 

Richardson  v.  Merritt 

599 

Richardson,  M'lver  v. 

227 

Rigby,  Randall  v. 

96 

Risley  v.  Brown 

331 

Roberts,  Hunt  v. 

355 

Robinson,  Lidderdale  v. 

384 

Robinson,  Regina  v. 

375 

Rogers,  Tobias  v. 

557 

Rouse  v.  Bradford  Co. 

164 

Royal  Bank  v.  Commercial  Bank 

625 

Rozer  v.  Rozer 

1 

Rushforth,  Ex  parte 

418 

Russell  v.  Annable 

114 
IKS 

Sanders  v.  Weelburg 
Sanderson  v.  Aston 
Sawtel,  Harrison  v. 
Sawyer  v.  Chambers 
Schmidt,  Auchampaugh  v. 
Schuyler,  Putnam  v. 
Scot  v.  Stephenson 
Seckham,  Gray  v. 
Seymour,  Morgan  v. 
Shandois  v.  iSimson 
Shaw,  Philhrick  v. 
Sheffield  Co.  i».  Clayton 
Sherman  v.  Black 
Shnttleworth,  Watts  v. 
ISibley  v.  McAllaster 
Sickler,  Clark  v. 
Simmons,  Watertown  Co.  v. 
Simson,  Shandois  v. 
Sison  v.  Kidman 
Sitgreaves,  Griffith  v. 
Sleigh  v.  Sleigh 
Smith  v.  Bank  of  Scotland 
Smith,  National  Bank  v. 
Smith  v.  Swain 
Somersall  v.  Barneby 
Sooy,  State  v. 
Souther,  In  re 
Squier.  Raabe  v. 
Staney,  Underwood  v. 
State  v.  Sooy 
State  v.  Swinney 
Steel  v.  Dixon 
Steele,  Wood  v. 
Stephenson.  Scot  v. 
Stewart,  Hitchman  v. 
Stobridge,  Ford  v. 
Stone  v.  Hammell 
Stone,  Hotham  v. 
Stoner  v.  Millikin 
Straton,  Commonwealth  v. 
Strickland,  Fowler  v. 
Sumner  v.  Bachelder 
Sutton  v.  Grey 
Swain,  Smith  v. 
Swain  v.  Wall 
Swett,  Dows  v. 
Swift  v.  Beers 
Swinburne,  Craythorne  v. 
Swinney,  State  v. 
Swope,  Church  v. 

Talcott,  Ex  parte 
Taylor,  Brookbank  v. 
Thayer,  Clark  v. 
Thayer  v.  Daniels 
Thayer,  Jones  v. 
Thomas,  Brinson  v. 
Thomas  v.  Cook 
Thompson  v.  Lack 
Thorne,  Trimble  v. 
Tifft,  Harding  v. 
Titcomb  v.  McAllister 
Tobias  v.  Rogers 
Todd,  Metz  v. 
Tom  v.  Goodrich 
Tomlinson,  Fuller  v. 
Tomlinson  v.  Gill 
Torrance,  Gillespie  v. 


574 

252 

54 
129 
136 
122 
498 
431 
587 

10 
370 
633 
485 
269 
511 
217 
302 

10 

99 
126 
519 
275 
219 
392 
225 
288 
426 

93 
330 
288 
273 
566 
244 
498 
554 
498 
514 
380 
310 
372 
470 
645 

70 
392 
535 

64 
121 
482 
273 
494 

426 
288 
333 
517 
116 
368 

48 
322 
223 
315 
577 
557 
171 
507 
202 

31 
184 


TABLE    OF    CASES. 


IX 


Toulmin,  Davis  v. 

580 

Towne  v.  Grover 

22 

Traders'  Bank,  Blake  v. 

365 

Trimble  v.  Thome 

223 

Turner,  Ex  parte 

418 

Turner  v.  Davies 

481 

Turquand,  Ex  parte 

422 

Twynam,  Coope  v. 

551 

Underwood  v.  Staney 

330 

United  States,  Butler  u. 

312 

Uzzell  v.  Mack 

360 

Van  Voorhis,  Bostwick  v. 

291 

Villars  v.  Palmer 

135 

Wackerbath,  Ex  parte 

496 

Wagner,  Mease  v. 

20 

Waldrip  v.  Black 

398 

Walker,  In  re 

633 

Wall,  Swain  v. 

535 

Ward  v.  Hackett 

305 

Ward,  Hayes  v. 

60S 

Ward,  Jones  v. 

151 

Waring1,  Ex  parte 

621 

Warner  v.  Morrison 

504 

Watertown  Co.  v.  Simmons 

302 

Watkins  v.  Perkins 

11 

Watts  v.  Shuttle  worth 

269 

Weelburg,  Sanders  v. 

674 

Welby,  Giglis  v. 

583 

Wells,  Davis  v. 

228 

Wells,  Mace  v. 

515 

Westfall,  Kingsbury  v. 

264 

Wheeler,  Reynolds  v. 

491' 

Whitcher  v.  Hall 

251 

Whyte,  Goddard  v. 

357 

Wilbur  v.  Williams 

211 

Wildes  v.  Dudlow 

52 

Wilkins,  Bittick  v. 

367 

Williams  v.  Leper 

72 

Williams  v.  Owen 

409 

Williams,  Pierce  v. 

524 

Williams,  Wilbur  u. 

211 

Wilson,  Jarvis  v. 

106 

Winchelsea,  Deering  v. 

544 

Winn,  Dodd  v. 

327 

Wolff  v.  Koppel 

67 

Wolmershausen  v.  Gullick 

588 

Wood,  Ex  parte 

417 

Wood  v.  Benson 

94 

Wood  v.  Steele 

244 

Wormleighton's  Case 

533 

Wright  v.  Grover  Co. 

401 

Wright  v.  Knepper 

197 

Wysor,  Grubbs  v. 

413 

Yandell,  lee  v. 

112 

Yorkshire  Co.  v.  Maclure 

118 

CASES    ON    SURETYSHIP. 


CHAPTER   I. 
NATURE   OF   THE   CONTRACT    OF   SURETYSHIP, 


SECTION    I. 

Suretyship  in  the  Form  of  a  Collateral  Undertaking,  or  Guaranty, 

ROZER  v.  ROZER. 
In  the  Common  Pleas,  Trinity  Term,  1681. 

[Reported  in  2  Ventris,  36.] 

An  Indebitatus  Assumpsit  pro  parcelV  Corii  ad  specialem  instan- 
tiam  &  requisitionem  of  the  defendant,  sold  and  delivered  to  J.  8. 
JEt  sic  inde  Indebitaf  existens  the  defendant  promised  to  pa}'. 

Upon  non  assumpsit  pleaded,  and  a  verdict  for  the  plaintiff,  it  was 
moved  in  arrest  of  judgment  that  there  is  no  promise  laid,  and  no 
reason  to  presume  a  promise,  when  'tis  the  very  ground  of  the  action, 
(though  after  a  verdict.  And  admitting  there  were  a  promise  ;  yet 
it  being  collateral  it  did  not  make  a  debt,  but  should  have  been  brought 
as  an  action  upon  the  case.1  Mo.  702,  and  Dyer,  230.  And  hereupon 
judgment  was  stayed.  Though  (as  I  hear)  in  the  King  Bench  about 
two  years  since,  between  Danbey  and  Kent,  they  held  such  a  case  well 
enough  after  a  verdict.     Qucere. 

1  Y.  B.  27  Hen.  VIII.  25-33,  per  Fitzjames,  C.  J.  Hinson  v.  Burridge,  Moo.  701 ; 
Cogan  v.  Green,  1  Roll.  Ab.  594;  Anon.,  1  Vent.  293  ;  Mires  v.  Sculthorpe,  2  Camp. 
215  ;  Rains  v.  Storry,  3  C.  &  P.  130,  Accord. 

Kent  v.  Derby,  1  Vent.  311  ;  3  Keb.  756  s.  c.  (overruled) ;  Kansas  Co.  v.  Smith,  36 
Mo.  Ap.  608,  622  (semble),  Contra. 

But  if  exclusive  credit  be  given  by  A  to  B  for  goods  delivered  to  C,  B  is  liable  in 
debt  or  indebitatus  assumpsit  for  goods  sold.     Watson  v.  Porael,  1 58  Pa.  513.  —  Ed. 

1 


JONES    V.   COOPER.  [CHAP.  1 


JONES  v.  COOPER. 
In  the  King's  Bench,  November  25,  1774. 

[Reported  in  Cowper,  227.] 

This  was  an  action  for  goods  sold  and  delivered  at  the  instance  of 
the  defendant.  Plea,  non  assumpsit,  and  verdict  for  the  defendant. 
Upon  a  rule  to  show  cause  why  a  new  trial  should  not  be  granted,  the 
case  appeared  from  the  report  of  Mr.  Justice  Nares,  who  tried  the 
cause,  to  be  shortly  this  :  The  defendant  had  frequently  given  written 
orders  to  the  plaintiff  to  deliver  goods  of  different  kinds  to  one  Smith, 
her  son-in-law  ;  in  all  of  which  she  undertook  to  be  answerable  for  the 
payment.  These  had  been  all  punctually  discharged.  But  the  goods 
upon  which  the  present  question  arose  were  delivered  to  Smith,  in  con- 
sequence of  a  parol  order  and  a  parol  promise  by  the  defendant  in  these 
words,  "  I  will  pay  you,  if  Smith  will  not."  — That  the  undertaking  was 
before  the  delivery  of  the  goods ;  but  that  Smith  was  entered  as  the 
debtor  in  the  plaintiff's  books. 

Mr.  Mansfield  and  Mr.  Duller,  in  support  of  the  rule.  The  single 
question  is.  Whether  the  promise  which  is  the  ground  of  the  plaintiff's 
action  is  to  be  considered  as  a  collateral  promise  within  the  Statute  of 
Frauds  ;  or  whether  it  is  not  an  original  undertaking  upon  the  credit  of 
which  the  goods  were  supplied  to  Smith? 

The  words  of  the  stat.  29  Car.  2,  c.  3,  are,  "  That  no  action  shall  be 
brought  whereby  to  charge  a  person  upon  an}'  special  promise  to  an- 
swer for  the  debt  or  default  of  another,  unless  the  agreement  upon 
which  such  action  is  brought,  shall  be  in  writing."  This  is  not  an 
undertaking  for  the  debt  of  another ;  but  an  original  contract  upon  the 
confidence  of  which  the  debt  first  accrued  :  therefore  not  within  the 
statute  ;  and  so  it  was  held  in  Mawbrey  v.  Cunningham,  Sittings  after 
Hil.  Term,  1773.  There  goods  were  delivered  to  A,  at  the  request  of 
B,  who  said  he  would  see  them  paid  for.  Lord  Mansfield  held,  that 
as  the  promise  was  before  delivery  of  the  goods,  it  was  not  within 
the  statute,  because  at  the  time  of  the  promise  there  was  no  debt 
at  all. 

Mr.  Dunning,  contra.  The  case  cited  was  for  goods  sold  at  the 
defendant's  request,  and  a  promise  by  the  defendant  to  pay  for  them. 
No  doubt  if  goods  be  delivered  to  A,  upon  the  request  of  B,  and  B 
promises  to  pay  for  them,  they  are  goods  sold  to  B.  But  in  the  present 
case,  the  defendant  was  to  pa}-  only  in  case  Smith  (to  whom  the  goods 
were  sent)  did  not  pay  for  them  ;  it  is  therefore  a  conditional  promise. 
Smith  was  made  debtor  for  them,  and  considered  as  such  by  the  plain- 
tiff, and  therefore  he  should  have  used  due  diligence  to  recover  against 
Smith  before  he  had  recourse  to  the  defendant. 

Lord  Mansfield.  The  general  distinction  is  a  clear  one,  and  upon 
that  distinction  the  case  which  has  been  cited  was  determined.     Where 


SECT.  I.]  JONES   V.   COOPER.  3 

the  undertaking  is  before  delivery,  and  there  is  a  direction  to  deliver 
the  goods,  and  "  I  will  see  them  paid  for,"  it  is  not  within  the  Statute 
of  Frauds.1  But  there  may  be  a  nicety  where  the  undertaking  is  before 
deliver}',  and  yet  conditional  as  this  is.  It  turns  singly  upon  the  un- 
dertaking being  in  case  the  other  did  not  pay.     We  will  look  into  it. 

The  next  day  Lord  Mansfield  delivered  the  unanimous  opinion  of 
the  Court  as  follows  :  — 

We  are  all  of  opinion  upon  the  authority  of  the  cases  in  the  books, 
that  the  promise  by  the  defendant  in  this  case  to  pay,  if  Smith  did 
not,  is  a  collateral  undertaking  within  the  Statute  of  Frauds  ;  and  it  is 
so  clear  that  it  would  only  be  misspending  time  to  go  through  the 
cases,  or  to  say  much  about  it. 

Mule  for  a  new  trial  discharged.'' 

1  The  opinion  of  the  Court  in  Perley  v.  Spring,  12  Mass.  297,  299,  to  the  same  effect, 
was  overruled  in  Cahill  v.  Bigelow,  18  Pick.  369,  371.  See  also  Rogers  v.  Kneeland, 
13  Wend.  114,  121  ;  Matthews  v.  Milton,  4  Yerg.  576,  578;  Mead  o.  Watson,  57  Vt. 
426.  — Ed. 

-  Parsons  v.  Walker,  3  Doug.  14  n.  (c);  Peckham  v.  Faria,  3  Doug.  13;  Matson  v. 
Wharam,  2  T.  R.  80;  Anderson  v.  Hayman,  1  H.  Bl.  120;  Keate  v.  Temple,  1  B.  &  P. 
158;  Boykins  v.  Dohlonde,  37  Ala.  577;  Webb  v.  Hawkins  Co.,  101  Ala.  630;  Harris 
v.  Frank,  81  Cal.  280;  Ruggles  v.  Gatton,  50  111.  412  ;  Pettit  v.  Braden,  55  Ind.  201 ; 
Wills  v.  Ross,  77  Ind.  1  ;  Langdon  v,  Richardson,  58  Iowa,  610;  Blake  v.  Parlin,  22 
Me.  395  ;  Moses  v.  Norton,  36  Me.  113;  Conolly  v.  Kettlewell,  1  Gill,  260;  Norris  v. 
Graham,  33  Md.  56;  Cahill  v.  Bigelow,  18  Pick.  369;  Hill  v.  Raymond,  3  All.  540: 
Swift  v.  Pierce,  13  All.  136;  Gill  v.  Herrick,  111  Mass.  501  ;  Barrett  v.  McHugh,  128 
Mass.  165;  Bugbee  v.  Kendricken,  130  Mass.  437;  Welch  v.  Marvin,  36  Mich.  59; 
Hagadorn  v.  Stronach  Co.,  81  Mich.  56;  Cole  v.  Hutchinson,  34  Minn.  410;  Maurin  v. 
Fogelberg,  37  Minn.  23  ;  Walker  v.  Richards,  39  N.  H.  259 ;  Rothmau  v.  Fix,  25  Mo.  • 
Ap.  571 ;  Price  v.  Chicago  Co.,  40  Mo.  Ap.  189;  Osboru  v.  Emery,  51  Mo.  Ap.  408; 
Gill  v.  Reed,  55  Mo.  Ap.  246;  Cowdiu  v.  Gottgetreu,  55  N.  Y.  650;  Allen  v.  Scarff, 
1  Hilt.  209;  Read  v.  Ladd,  1  Edm.  S.  C.  100;  Brown  v.  Bradshaw,  1  Duer,  199; 
Lelaud  v.  Creyon,  I  McC.  100;  Taylor  v.  Drake,  4  Strob.  431 ;  Matthews  v.  Milton. 
4  Yerg.  576  ;  Mead  v.  Watson,  57  Vt.  426;  Cutler  v.  Hinton,  6  Rand.  509  ;  Ware  v. 
Stephenson,  10  Leigh,  155,  Accord. 

In  Peckham  v.  Faria,  supra,  Lord  Mansfield  said,  p.  14  :  "  Before  the  case  of  Jones  v, 
Cooper  I  thought  there  was  a  solid  distinction  between  an  undertaking  after  credit 
given,  and  an  original  undertaking  to  pay,  and  that  in  the  latter  case  the  surety, 
being  the  object  of  the  confidence,  was  not  within  the  statute ;  but  in  Jones  v.  Cooper 
the  Court  was  of  opinion,  that  whenever  a  man  is  to  be  called  upon,  only  in  the  second 
instance,  he  is  within  the  statute;  otherwise,  where  he  to  be  called  upon  in  the  first 
instance." 

In  accordance  with  this  distinction,  the  Statute  of  Frauds  was  held  to  be  inappli- 
cable in  the  following  cases  where  credit  was  given  by  the  seller  to  the  defendant  alone, 
although  the  goods  were  delivered  to  another  person.  Croft  v.  Smallwood,  1  Esp.  121 ; 
Rhodes  v.  Leeds,  3  St.  &  P.  212;  Faires  v.  Lodana,  10  Ala.  50;  Sanford  v.  Howard, 
29  Ala.  684;  Clark  v.  Jones,  87  Ala.  474;  Loomis  v.  Smith,  17  Conn.  115;  Baldwin 
v.  Hiers,  73  Ga.  739;  Williams  v.  Corbet,  28  111.  262;  Hughes  v.  Atkins,  41  HI.  213; 
Owen  v.  Stevens,  78  111.  462;  Hartley  v.  Varner,  88  111.  561  (but  setnble  the  rule  was 
misapplied  in  this  case.  See  also  Browne,  St.  Fr.  [5  ed.]  252) ;  Johnson  v.  Hoover, 
72  Ind.  395  ;  Board  v.  Cincinnati  Co.,  128  Ind.  240;  Collins  v.  Stanfield,  139  Ind.  184; 
Benbow  v.  Soothsmith,  76  Iowa,  151  ;  Calahan  v.  Ward,  45  Kas.  545;  Elder  v.  War- 
field,  7  Har.  &  J.  397 ;  Walker  v.  Hill,  119  Mass.  249 ;  Larson  v.  Jensen,  53  Mich. 427; 
Morris  v.  Osterhout,  55  Mich.  262  ;  Hake  v.  Solomon,  62  Mich.  377  ;  Winslow  v.  Da- 
kota Co.,  32  Minn.  237  ;  Amort  v.  Christofferson,  57  Minn.  234;  Wallace  v  Wortham 


GIBBS    V.    BLANCHARD.  [CHAF.  L 


JOHN   GIBBS   and   Another   v.    IRA   BLANCHARD. 

In  the  Supreme  Court,  Michigan,  April  Term,  1867. 

[Reported  in  15  Michigan,  292.] 

Christiancy,  J.1  The  main  question  in  this  case  is  whether  the 
promise  of  Gibbs  (one  of  the  defendants  below)  comes  within  the 
second  clause  of  the  second  section  of  our  Statute  of  Frauds,  as  a 
"  special  promise  to  answer  for  the  debt,  default,  or  misdoings  "  of 
Daily,  the  other  defendant. 

The  declaration  contains  a  special  count  upon  the  contract,  and  the 
common  counts  for  goods  sold  and  delivered.  The  special  count  sets 
forth  that  "  in  consideration  that  said  plaintiff  agreed  to  sell  to  the  said 
Daily  a  certain  horse  which  the  plaintiff  then  and  there  had,  of  the  value 
of  sixty  dollars,  [the  defendants?]  undertook  and  promised  the  said 
plaintiff  to  make  sign,  and  deliver  their  promissory  note  to  said  plain- 
tiff or  bearer  in.the  sum  of  sixty  dollars  for  the  purchase  price  of  said 
horse,  which  said  promissoiy  note  was  to  be  payable  thereafter,  in  six 
months  from  date."  It  further  alleges  that  the  plaintiff,  relying  upon 
said  promise  of  said  defendants,  and  in  consideration  thereof,  did  sell 
and  deliver  the  horse  to  said  John  Daily  for  the  price  of  sixty  dollars. 
The  breach  alleges  the  failure,  and  refusal  to  make  and  deliver  the  note, 
as  well  as  the  refusal  to  pay  the  money. 

It  was  clear,  from  the  evidence,  that  the  horse  was  bought  for  the 
benefit  of,  and  delivered  to  Daiby,  and  that  the  plaintiff  would  not  have 
sold  the  horse  on  the  credit  of  Daily  alone.  But  upon  the  question 
whether  Daily  and  Gibbs  were  to  give  a  joint  note,  or  whether  the 
latter  was  only  to  indorse  the  note  of  the  former,  or  to  become  his 
guarantor,  the  evidence  was  conflicting. 

There  was  evidence  from  which  the  jury  might  have  found  a  joint 
promise,  or  in  other  words  a  promise  by  both  to  execute  and  deliver  to 
the  plaintiff  a  joint  note  for  the  price  :  and  from  the  circumstances  and 
subsequent  acts  of  the  parties  the  jury  might  have  been  authorized  to 
find  that  the  note  was  to  be  made  payable  in  six  months  ;  though  they 
might  also  have  found  that  no  particular  time  was  mentioned  or  ex- 
pressly agreed  upon  for  which  the  note  was  to  run. 

The  evidence  tending  to  show  that  the  promise  was  joint,  or  that  a 
joint  note  was  to  be  given,  was  substantially  this  :  Gibbs  and  Daily 

25  Miss.  119;  Waters  v.  Shafer,  25  Neb.  225  ;  Barras  v.  Pomeroy  Co.,  38  Neb.  311 ; 
Nesbit  v.  Pioche  Works  (Nevada,  1894),  38  Pac.  R.  670  ;  Walker  v.  Richards,  41  N.  H. 
388  ;  Chase  v.  Da}',  17  Johns.  114  ;  Bayles  v.  Wallace,  56  Hun,  428  ;  Maddock  v.  Root, 
72  Hun,  98;  Post  v.  Geoghegan,  5  Daly,  216;  Fitzgerald  v.  Tiffany,  9  N.  Y.  M.  R 
408  ;  Mackey  v.  Smith,  21  Oreg.  598  ;  Jefferson  Co.  v.  Slagle,  66  Pa.  202  ;  Merriman  v 
McManus,  102  Pa.  102;  Mease  v.  Wagner,  1  McC.  395;  Hazen  v.  Beard,  4  Sneed, 
48;  Sinclair  v.  Richardson,  12  Vt.  33;  Whitman  v.  Bryant,  49  Vt.  512;  Champion  v 
Doty,  31  Wis.  190 ;  West  v.  O'Hara,  55  Wis.  645  ;  Treat  Co.  v. Warner,  60  Wis.  183.—  E» 
1  Only  the  opinion  of  the  Court  in  regard  to  the  Statute  of  Frauds  is  given.  —  Ed- 


SECT.  I.]  GIBBS   V.    BLANCHARD.  5 

called  upon  the  plaintiff  together,  and  Gibbs  asked  plaintiff  if  he 
wanted  to  sell  his  mare.  Plaintiff  said  he  did.  Gibbs  inquired  the 
price,  and  being  told  sixty  dollars,  wanted  to  know  if  plaintiff  would 
take  Daily's  note  if  he,  Gibbs,  would  sign  it  and  see  it  paid  ;  to  this 
plaintiff  assented.  The  mare  not  being  present,  and  Gibbs,  being 
anxious  to  get  home,  said,  Daily  might  go  with  plaintiff  and  see  the 
mare,  and  if  the  mare  suited  him  he  might  fetch  her  back  with  him 
and  draw  up  a  note  and  Daily  might  sign  it,  and  the  first  time  he, 
Gibbs,  went  to  town  he  would  sign  it.  The  mare  was  delivered  to 
Daily,  who  signed  a  note  for  it  at  six  months,  which  was  afterwards 
indorsed  by  Gibbs  on  Sunday.  This  note  was  produced  on  the  trial 
and  tendered  back  to  defendants. 

The  Court  charged  the  jury  that  "  if  it  was  the  understanding  of  the 
parties  that  Daily  was  the  purchaser,  and  that  he  should  give  his  note 
to  the  plaintiff  for  the  price,  and  that  Gibbs  should  so  sign  as  only  to 
be  liable  as  indorser,  the  plaintiff  must  fail.  If,  however,  the  under- 
standing of  the  parties  was  at  the  time,  that  Gibbs  and  Daily  were  the 
buyers  of  the  mare,  and  that  both  were  to  be  liable  as  purchasers  for 
the  purchase  price,  and,  accordingly,  should  become  joint  makers  of  a 
promissory  note  for  its  payment,  though  Daily  was  less  relied  upon  by 
the  plaintiff  than  Gibbs,  and  though,  in  point  of  fact,  it  was  under- 
stood that  the  mare,  when  bought,  should  belong  to  Daily,  the  plaintiff 
is  entitled  to  recover.  That  the  principle  in  this  class  of  cases  is,  tha* 
if  the  agreement  be  such  that  two  persons,  in  the  purchase  of  goods, 
do  at  the  same  time  become  co-debtors  to  the  seller  for  the  price,  then 
both  are  purchasers,  and  the  case  is  not  within  the  Statute  of  Frauds, 
and  no  memorandum  in  writing  is  necessary.  But  if  it  be  such  that 
one,  at  the  time,  becomes  debtor  to  the  seller,  and  the  other  security 
onby  for  the  debt,  it  is  within  the  Statute  of  Frauds,  and  the  undertak- 
ing of  the  security  is  void  unless  a  memorandum  of  it  in  writing  is 
made." 

Though  the  question  is  one  requiring  some  accuracy  of  discrimina* 
tion,  I  have  come  to  the  conclusion,  after  a  careful  examination  of  the 
authorities,  that  the  charge  of  the  Court  was  not  only  correct,  but  that 
it  expresses  the  true  rule  of  law  applicable  to  the  question  with  re- 
markable clearness. 

No  question  can  arise  as  to  the  sufficiency  of  the  consideration  for 
the  undertaking  of  Gibbs,  whether  original  or  collateral,  within  or 
without  the  statute.  Without  his  promise,  the  plaintiff  would  not 
have  parted  with  his  property.  The  consideration,  therefore,  is  equally 
as  good  in  law  as  a  sale  of  the  horse  to  him  alone  would  have  been  for 
his  sole  promise  to  pay  the  price. 

The  plain,  ordinary  meaning  of  the  language  used  in  this  clause  of 
the  statute  would  seem  sufficiently  to  indicate  that  the  class  of  special 
promises  required  to  be  in  writing  includes  only  such  as  are  secondaiy 
or  collateral  to,  or  in  aid  of  the  undertaking  or  liability  of  some  other 
party  whose  obligation,  as  between  the  promisor  and  promisee,  is  origi- 


6  GIBBS    V.    BLANCHARD.  [CHAP.  L 

nal  or  primary.  If  there  be  no  such  original  or  primary  undertaking  or 
liability  of  another  part}*,  there  is 'nothing  to  which  the  promise  in 
question  can  be  secondary  or  collateral,  and  the  promise  is,  therefore, 
original  in  its  nature,  and  not  within  the  statute.  In  other  words,  the 
statute  applies  onby  to  promises  which  are  in  the  nature  of  guarantees 
for  some  original  or  primary  obligations  to  be  performed  by  another. 
This  has  been  settled  b}"  a  remarkably  uniform  course  of  decision  since 
the  passage  of  the  statute,  — 29  Car.  2,  c.  3,  §  4, —  which  does  not 
essentially  differ  from  our  own  and  those  of  most  of  the  States  of  the 
Union.  So  numerous  and  so  uniform  have  been  the  decisions  upon 
this  point,  that  it  would  savor  of  affectation  to  cite  them.  They  will 
be  found  cited  in  most  of  the  elementary  treatises.  See  Brown  on  Stat. 
Frauds,  c.  10;  Chitty  on  Cont.  p.  442  et  seq.  ;  2  Pars,  on  Cont.  4th 
ed.  301.  And  though  the  terms  original  and  collateral  have  been 
criticised,  }'et  when  used,  the  one  to  mark  the  obligation  of  the  princi- 
pal debtor,  the  other  that  of  the  person  who  undertakes  to  answer  for 
such  debt,  they  are  strictly  correct,  and  give  the  true  view  of  this 
clause  of  the  statute.  Mallory  v.  Gillett ;  Brown  on  Stat.  Frauds,  c.  10, 
§  192. 

As  a  result  of  this  principle,  that  one  must  be  held  originally  or 
primarily,  and  the  other  only  collaterally,  or  in  default  of  the  former, 
it  follows  that  the  statute  only  applies  to  such  promises  made  in  be- 
half or  for  the  benefit  of  another,  as  would,  if  valid,  create  a  distinct 
and  several  liability"  of  the  party  thus  promising,  and  not  a  joint  lia- 
bility with  the  party  in  whose  behalf  it  is  made.  For  if  one  be  bound 
in  the  first  instance  and  at  all  events,  and  the  other  only  contingently, 
or  on  default  of  the  first,  the  liability  could  not  be  joint.  On  the  other 
hand,  if  the  promise  or  the  obligation  of  the  two  be  joint,  as  between 
them,  on  the  one  side  and  the  promisee  on  the  other,  then  neither  is 
collateral  to  the  other ;  and  such  joint  promise  is  original  as  to  both. 
Hence  it  has  been  held  in  England  that  an  agreement  to  convert  a 
separate  into  a  joint  debt  is  not  within  the  statute  ;  the  effect  being  to 
create  a  new  debt,  in  consideration  of  the  former  being  extinguished. 
Ex  parte  Lane  ;a  Brown  on  Stat,  of  Frauds,  193. 

Where  the  question  arises  (as  it  has  in  almost  all  the  cases),  as  one 
of  the  several  liability  of  the  party  promising  in  behalf  of  another  (as 
for  the  price  of  goods  sold  to  another),  the  true  rule  undoubtedly  is, 
that  if  the  latter  (to  whom  the  goods  are  sold)  be  liable  at  all,  then  the 
promise  of  the  former  is  collateral,  and  must  be  in  writing  ;  because, 
from  the  very  nature  of  such  a  case,  the  party  to  whom  the  goods  are 
sold,  and  in  whose  behalf  the  promise  is  made,  is  the  principal  debtor ; 
and  because  it  would  be  manifestly  unreasonable  to  hold  that  both  were 
in  such  cases  severally  liable  as  principals,  as  upon  several  original 
undertakings  at  the  same  moment.  See  Hetfield  et  al.  v.  Dow  ;  2  Dixon 
v.  Frazee.8  And  this  rule  applies  equally  when  the  promise  is  made  in 
reference  to  a  pre-existing  liability  of  another,  if  the  plaintiff  in  accepting 

1  1  De  Gex,  300.  2  3  Butcher,  440.  3  I  E.  D.  Smith,  32. 


SECT.  I.]  GIBBS   V.   BLANCHARD.  7 

the  promise  does  not  release  the  principal.  In  reference  to  all  such 
cases  the  authorities  may  be  said  to  be  entirely  uniform.  But  the  rule 
thus  established  as  to  cases  where  the  question  is  one  of  the  several 
liability  of  the  party  making  the  special  promise,  can,  I  think,  have 
no  application  to  the  question  of  a  joint  liability  upon  a  joint  prom- 
ise of  the  two.  The  only  intimation  to  the  contrary  which  I  have 
seen  is  to  be  found  in  a  dictum  of  Judge  Catron  in  Matthews  v.  Milton.1 
a  case  in  which  no  such  question  was  involved,  there  being  no  evidence 
tending  to  show  a  joint  promise.  To  say  that  when  the  party  originally 
owing  the  debt,  or  for  whom  goods  are  purchased  and  to  whom  they 
are  delivered,  is  liable  at  all,  no  other  person  can  be  held  severally 
liable  unless  the  promise  be  in  writing,  is  merely  saying  that  such 
promise  is  collateral,  and  therefore  within  the  statute.  But  to  say 
that  the}-  cannot  both  become  jointly  liable  upon  their  joint  promise, 
not  in  writing,  to  pa}'  such  debt  or  the  price  of  such  goods,  if  the  party 
originally  owing  the  debt  or  receiving  the  goods  be  at  all  liable,  is  but 
another  form  of  declaring  that  it  is  not  competent  for  both  to  become 
original  promisors,  as  between  them  and  the  promisee,  unless  both  are 
under  an  equal  obligation,  as  between  themselves,  for  the  ultimate  pay- 
ment of  the  debt.  Such  a  proposition,  it  seems  to  me,  cannot  be  main 
tained  either  upon  principle  or  authority.  Such  an  objection  to  a  joint 
promise  seems  rather  to  have  reference  to  some  supposed  defect  of 
consideration  (a  question  entirely  distinct  from  the  statute)  than  to 
the  promise.  And,  if  the  party  promising  jointly  with  another  to  whom 
goods  are  furnished,  cannot  be  bound  jointly  with  the  latter,  because, 
as  between  the  two  promisors,  he,  not  having  received  the  goods,  is 
under  no  obligation  to  pay  ;  then  the  same  reason  ought  to  operate 
with  still  greater  force  against  his  several  promise  to  pa}*  the  whole 
price  of  goods  received  by  the  other.  But  the  law  in  the  latter  case  is 
well  settled  the  other  way. 

It  was  very  correctly  remarked  by  Whelply,  J.,  in  Hetfield  et  al.  v. 
Dow,  above  cited,  that,  "  to  settle  the  rights  of  promisors  inter  sese,  to 
ascertain  as  between  them  who  is  to  pay  the  debt  ultimately,  is  no  part 
of  the  object  of  the  act.  It  by  no  means  follows  that  he  who  by  the 
arrangement  between  the  promisors  ultimately  may  be  bound  to  pay 
the  debt  is,  as  to  the  promisee,  the  principal  debtor.  That  does  not  con- 
cern hitn."  This  view,  it  seems  to  me,  rests  upon  sound  reasons, — 
reasons  which  must  naturally  enter  into  the  consideration  of  business 
men,  in  the  ordinary  transactions  of  business.  Where  a  party  has 
been  willing  to  put  himself  in  the  position  of  an  original  promisor 
(either  jointly  or  severally)  to  a  vendor  for  goods  purchased  for  the 
benefit  of,  or  delivered  to  another,  the  vendor  has  a  right  conclusively  to 
presume  that  such  relations  or  arrangements  exist  between  the  two  as 
to  make  it  the  duty  of  the  party  or  parties  promising,  as  between  them- 
selves, to  pay  according  to  the  promise.  And  to  allow  the  contrary  to 
be  shown  to  defeat  the  promise,  would  operate  as  a  fraud  upon  the 
vendor. 

1  4  Yerg.  57ft 


3  GIBBS    V.    BLANCHARD.  [CHAP.  I. 

The  question  of  a  joint  promise  appears  to  have  been  seldom  raised 
for  adjudication  in  connection  with  the  Statute  of  Frauds  ;  but  the  fol- 
lowing cases  fully  sustain  the  proposition  that  a  joint  promise  of  two, 
whether  to  pa}r  the  pre-existing  debt  of  one  of  them,  or  a  debt  con- 
tracted at  the  time  for  his  benefit  (as  for  goods  bought  for  and  delivered 
to  the  one),  does  not  come  within  the  statute,  but  is  an  original  promise, 
as  between  them  and  the  promisee,  and  valid  without  writing.  Ex 
parte  Lane  ; x  Wainwright  v.  Straw  ; 2  Stone  v.  Walker  ; 3  and  Iletfield 
v.  Dow.4  See  also  b}'  analogy,  Batson  v.  King.5  The  same  doctrine  is 
laid  down  by  Mr.  Brown  in  his  able  treatise  on  the  Statute  of  Frauds. 
Ch.  10,  §  197. 

It  is  true  that  in  "Wainwright  v.  Straw,  which  most  resembles  the 
present  case,  the  decision  is  placed  in  part  upon  the  ground  that  the 
sale  was  made  to  both.  The  facts  were  that  Straw  and  Cunningham 
both  went  to  plaintiff's  store  and  said  they  wished  to  buy  a  stove  for 
Straw,  but  that  both  would  be  responsible.  Now  I  can  see  no  differ- 
ence in  legal  effect  between  the  case  where  A  and  B  sa\-  to  a  merchant, 
"  We  want  to  buy  a  stove  for  B,  and  both  of  us  will  be  responsible ;  " 
and  the  case  where  A  says,  "  B  wishes  to  purchase  a  stove,  but  we 
will  both  be  responsible."  Substantially,  the  transaction  is  the  same; 
in  both  cases  alike  it  is  a  sale  for  the  benefit  of  the  one  on  the  joint 
credit  of  the  two,  and  the  real  question  in  both  cases  is,  whether  the 
credit  was  given  to  both  jointly.  I  do  not  think  the  Court,  in 
Wainwright  v.  Straw,  based  their  decision  upon  the  narrow  and  merely 
verbal  ground  of  the  use  of  the  first  person  plural,  showing  merely  who 
wanted  the  stove,  but  upon  the  broad  ground  above  stated,  that  it  was 
sold  upon  their  joint  credit.  And  in  all  such  cases  where  the  sale  is 
upon  the  joint  credit  and  promise  of  the  defendants,  though  the  prop- 
erty is  purchased  for,  and  delivered  to  but  one  of  them,  I  think  the 
legal  effect  of  the  transaction  constitutes,  as  between  them  and  the 
vendor,  a  sale  to  the  two  jointly.  The  sale  as  between  the  vendor  and 
the  vendee,  is  to  the  party  or  parties  to  whom  the  credit  is  given  for 
the  price,  without  reference  to  the  question  for  whose  use  it  is  pur- 
chased, or  who,  as  between  the  promisors,  is  to  be  its  owner  when 
bought.6 

This  brings  us  to  another  point  in  the  case.  The  sale  (if  upon  the 
joint  credit  and  promise  of  the  defendants)  was  a  joint  sale  to  both,  as 
between  them  and  the  plaintiff.  But  in  the  special  count  of  the  decla- 
ration it  is  alleged  as  a  sale  to  Daily  alone.  The  plaintiff  cannot 
therefore  recover  upon  the  special  count. 

But  upon  the  count  for  goods  sold  and  delivered,  the  sale  having 

1  1  De  Gex,  300.  2  15  Vt.  215.  3  13  Gray.  613. 

4  3  Dutcher,  440.  5  4  H.  &  N.  739. 

6  Boyce  v.  Murphy,  91  Ind.  1  ;  Swift  v.  Pierce,  13  All.  136  (semble)  ;  Rothman 
v.  Fix,  25  Mo.  Ap.  571  (semble)  ;  Hetfield  v.  Dow,  27  N.  J.  440  (semb/e) ;  Wainwright 
v.  Straw,  15  Vt.  215  ;  Eddy  v.  Davidson,  42  Vt.  56  (semb/e),  Accord. 

See  Boykins  v.  Dohlonde,  Ala.  Sel.  Gas.  502,  507-8 ;  Matthews  v.  Milton,  4  Yerg. 
576.  —  Ed. 


SECT.  T.]  HART   V.   LONGFIELD.  9 

been  made  to  both,  the  plaintiff  would  be  entitled  to  recover,  if  the 
facts  be  such  as  would  warrant  a  recovery  upon  a  sale  made  for  the 
joint  benefit  of,  and  the  property  delivered  to  both. 

I  think  there  was  no  error  in  the  charge  or  proceedings  of  the  Court 
below,  and  that  the  judgment  should  be  affirmed,  with  costs. 

Cooley,  J.,  and  Campbell,  J.,1  concurred. 


HART  v.  LONGFIELD. 

In  the  Queen's  Bench,  Hilary  Term,  1703. 

{Reported  in  7  Modern  Reports,  148.] 

Indebitatus  Assumpsit.  One  of  the  counts,  to  which  there  was  a 
demurrer,  was  this  :  The  plaintiff  declared  that  whereas  such  a  da}-  and 
year  the  defendant  was  indebted  to  him  in  such  a  sum  for  nourishing 
Edward  Longfield,  at  the  request  and  instance  of  the  defendant,  and 
that  he,  the  defendant,  promised  to  pay  him. 

The  first  exception  was,  That  an  indebitatus  assumpsit  did  not  lie 
in  the  case  ;  and  to  prove  this  the  case  of  Sands  v.  Trevilian  2  was 
cited,  where  A  desired  B  to  be  attorney  for  J.  S.  and  undertook  to 
pay  him  his  fees,  and  such  fees  as  he  should  give  to  counsel ;  and  it 
was  adjudged,  that  an  indebitatus  would  not  lie  against  A.8  And  also 
the  cases  of  Hinson  v.  Burridge,4  and  Rozer  v.  Rozer. 

1  The  opinion  of  Campbell,  J.,  is  omitted. 

a  Cro.  Car.  107,  194.  —  But  see  Ambrose  v.  Rowe,  2  Show.  421. 

3  The  plaintiff  had  obtained  judgment  in  the  Common  Pleas,  but  on  a  writ  of  error 
to  the  King's  Bench,  "  All  the  Court  conceived  that  no  action  of  debt  lies  here,  but  an 
action  upon  the  case  only ;  for  the  retainer  being  for  another  man,  and  he  being  at- 
torney for  another  man  who  agreed  to  that  retainer,  there  is  no  cause  of  debt  betwixt 
him  who  retained  and  the  attorney,  and  no  contract  nor  consideration  to  ground  this 
action  :  and  he  who  is  so  retained  may  well  have  debt  for  his  fees  wherein  there  cannot 
be  any  wager  of  law ;  but  against  the  defendant,  who  is  a  stranger  to  the  suit,  and  at 
whose  request  he  took  upon  him  to  be  attorney,  debt  lies  not,  as  27  Hen.  VIII.,  pi.  24  : 
and  in  the  case  of  Rolls  v.  Germyn,  Cro.  El.  425,  Moo.  366,  it  was  so  resolved.  Where- 
upon it  was  adjudged  that  the  first  judgment  should  be  reversed." 

But  in  Harris  v.  Finch,  Al.  6,  Rolle,  C.  J.,  who  had  been  of  counsel  for  the  plain- 
tiff in  Sands  v.  Trevilian,  is  reported  as  saying  of  that  case  that  "the  judgment  was 
not  reversed  upon  the  roll,  and  his  opinion  was  that  the  judgment  was  good."  In  Am- 
brose v.  Rowe,  2  Show.  421,  Skin.  47,  s.  c,  Lord  Jeffries,  C.  J.,  said, "  that  he  thought 
Rolle's  argument  in  that  case  of  Sands  v.  Trevilian  not  to  be  answered."  Rolle  had 
argued  that  "  there  was  a  difference  where  one  is  retained  generally  for  another  with 
such  a  promise  to  pay  his  fees  and  as  much  as  he  should  expend  in  the  suit,  there  debt 
lies :  but  if  I  retain  one  to  be  attorney  for  another  and  promise  if  the  other  doth  not 
pay,  that  I  will  pay,  there  if  the  party  for  whom  the  retainer  is  doth  not  pay,  an  action 
of  the  case  lies  against  me  upon  my  promise,  and  not  an  action  of  debt."  In  confirm- 
ation of  this  sound  distinction  see  Woodhouse  v.  Bradford,  2  Roll.  R.  76,  Cro.  Jac. 
520 ;  Sanborn  v.  Merrill,  41  Me.  467 ;  Hodges  v.  Hall,  29  Vt.  209 :  Murphy  v.  Gates 
SI  Wis.  370.  — Ed. 

4  Moor,  701. 


10  SHANDOIS    V.    SIMSON.  [CHAP.  I. 

Holt,  C.  J.  Cannot  A  be  indebted  to  B  for  doing  good  to  C? 
For  if  A  should  say  to  B,  "Give  such  a  quantity  of  goods  to  C  upon 
my  account,  and  I  will  pay  you  ;"  or,  "  Make  J.  S.  a  cart,  and  I  will 
pay  you  for  it ;  "  surely  an  indebitatus  will  lie  against  A  in  that  case. 
The  sale  properly  is  to  him  upon  whose  request  it  is  given,  and  not  to 
him  to  whom  it  is  given  :  but  an  indebitatus  will  not  lie  for  being  an 
attorney  to  a  third  person,  because  in  that  case  his  being  an  attorney 
on  record  is  what  entitles  him  to  debt ;  and  therefore,  if  another  promise 
to  pa}-,  yet  he  for  whom  he  is  an  attorney  on  record  is  not  discharged, 
and  therefore  the  other  cannot  in  that  case  be  liable  to  an  indebitatus. 
And  in  the  case  of  the  cloth  put  before,  no  action  lies  against  him  to 
whom  it  is  delivered,  but  only  against  him  upon  whose  request  it  is 
sold.  Judgment  for  plaintiff1 


THE  LADY  SHANDOIS   v.  SIMSON. 
In  the  Queen's  Bench,  Trinity  Term,  1601. 

[Reported  in  1  Croke,  Elizabeth,  880.] 

Error  of  a  judgment  in  the  Common  Pleas,  where  the  plaintiff  de- 
clared in  debt  for  £256  upon  several  retainers  to  embroider  divers 
gowns. 

Secondly.2  It  was  alleged  that  debt  lies  not  in  this  case,  but  an 
assumpsit  only  ;  for  here  is  not  any  contract  betwixt  them,  nor  quid 
pro  quo :  and  therefore  Nelson's  Case,  28  Eliz.,  was  cited,  that  where 
one  retained  Nelson  to  be  attorne}'  for  another  in  such  a  suit,  and 
agreed  that  he  should  have  so  much  for  his  labor,  he  brought  debt 
against  him  who  retained  him,  and  not  against  him  for  whom  he  was 
retained :  and  it  was  adjudged  that  it  lay  not,  for  it  is  not  any  contract 
between  them  ;  but  an  assumpsit  lies  only  because  he  became  at  his 
request  the  other  man's  attorne}'.  Sed  non  allocatur:  for  here  the 
embroidering  of  the  gown  at  her  request  is  sufficient,  and  it  is  at  his 
election  to  have  debt  or  assumpsit ;  3  as  37  Hen.  6,  pi.  8  ;  3  Edw.  4, 
pi.  21 ;  7  Edw.  4,  pi.  26  ;  Dyer,  347  and  337 ;  Wooton's  Case. 

1  Bret  v.  J.  S.,  Cro.  El.  756 ;  Stonehouse  v.  Bodvil,  T.  Ray.  67,  1  Keb.  439,  s.  c.  ; 
Jordan  v.  Tompkins,  2  Ld.  Ray.  982 ;  6  Mod.  77,  s.  c. ;  Brown  v.  Harrell,  40  Ark.  429  ; 
McTighe  v.  Herman,  42  Ark.  285  ;  Chicago  Co.  v.  Liddell,  69  111.  639 ;  Geelan  v. 
Reid,  22  111.  Ap.  165;  Kernodle  v.  Caldwell,  46  Ind.  153;  Lessenich  v.  Pettit  (Iowa, 
1894),  60  N.  W.  R.  192;  Grant  v.  Wolf,  34  Minn.  32;  Sinclair  v.  Bradley,  52  Mo.  180; 
Bushee  v.  Allen,  31  Vt.  631,  Accord.  _ 

In  Rawson  v.  Springsteen,  2  Th.  &  C.  416,  A  was  not  liable  on  his  oral  promise 
to  pay  for  B's  board,  because  credit  was  given  to  B  also. —  Ed. 

2  Only  so  much  of  the  case  is  given  as  relates  to  the  second  error.  —  Ed. 

3  Y.  B.  37  H.  VI.  9-18 ;  Harris  v.  Finch,  Al.  6  ;  Gordon  v.  Martin,  Fitzg.,  302,  Accord. 
In  the  casf  last  cited,  Lee,  C.  J.,  said  :  "  There  is  a  difference  between  a  conditional 


SECT.  I.J  BUTCHER  V.   ANDREWS.  11 


WATKINS   v.  PERKINS. 

At  Nisi  Prius,  Coram  Lord  Holt,  C.  J.,  Easter  Term,  1697. 

[Reported  in  1  Lord  Raymond,  224.] 

Per  Holt,  C.  J.  If  A  promise  B,  being  a  surgeon,  that  if  B  cure 
D  of  a  wound,  he  will  see  him  paid  ;  this  is  only  a  promise  to  pay  if 
D  does  not,  and  therefore  it  ought  to  be  in  writing  by  the  Statute  of 
Frauds.1  But  if  A  promise,  in  such  case,  that  he  will  be  B's  paymas- 
ter, whatever  he  shall  deserve,  it  is  immediately  the  debt  of  A,  and 
he  is  liable  without  writing.2 


BUTCHER  v.   ANDREWS. 

In  the  King's  Bench,  Easter  Term,  1698. 

[Reported  in  Comberbach,  473. 3] 

Assumpsit.  The  plaintiff  declares  that  the  defendant,  in  consider- 
ation the  plaintiff  would  lend  his  son  £10,  promised  to  pay  it.  Upon 
non  assumpsit  pleaded,  and  Verdict  pro  quer' ,  it  was  moved  in  arrest 
of  judgment,  that  the  promise  of  the  father  wanted  a  sufficient  considera- 
tion ;  and  this  difference  was  taken  b}r  Holt,  C.  J.,  where  the  promise 
of  the  father  is  in  consideration,  that  the  plaintiff  would  lend  money, 
etc.,  and  where  it  is  in  consideration  that  he  would  pay  money  to  his 
son.  In  the  former  case  an  indebitatus  assumpsit  lies  not  against  the 
father,  for  it  is  a  collateral  promise,  and  ought  to  be  in  writing,  accord- 

and  an  absolute  undertaking  ;  as  if  A  promise  to  pay  B  such  a  sura  if  C  does  not,  there 
A  is  hut  a  security  for  C.  But  if  A  promise  that  C  will  pay  such  a  sum,  A  is  the 
principal  debtor  ;  for  the  act  done  was  on  his  credit,  and  no  way  upon  C's."  —  Ed. 

1  The  promise  being  collateral,  the  Statute  of  Frauds  applied  in  the  following 
cases  :  Puckett  v.  Bates,  4  Ala.  390  ;  Walker  v.  Irwin  (Iowa,  1895),  62  N.  W.  R.  785  ; 
Birchell  v.  Neaster,  36  Oh.  St.  331  ;  Bi.xby  v.  Church  (Oregon.  1895),  42  Pac.  R.  613; 
Lewis  v.  Albert  Co.,  156  Pa.  217  ;  Skinner  v.  Conant,  2  Vt.  453;  Steele  v.  Towne,  28 
Vt.  771.  — Ed. 

-  Credit  being  given  exclusively  to  the  defendant  for  services  rendered  to  another, 
the  Statute  of  Frauds  did  not  apply  in  Darnell  v.  Tratt,  2  C.  &  P.  82 ;  Milliken  v. 
Warner,  62  Conn.  51  ;  Crowder  v.  Keys,  91  Ga.  180 ;  Brandner  v.  Krebbs,  54  111.  Ap. 
652 ;  Peyson  v.  Conniff,  32  Xeb.  269* ;  Hazletone  v.  Wilson,  55  N.  J.  250  ;  Snell  v. 
Rogers,  70  Hun,  462  ;  Barrett  v.  Johnson,  77  Hun,  527;  Boston  v.  Farr,  148  Pa.  220. 
Walker  v.  Norton,  29  Vt.  226 ;  Eddy  v.  Davidson,  42  Vt.  56 ;  Weisel  v.  Spence,  59 
Wis.  301  ;  Murphy  v.  Gates,  81  Wis.  370.  --  Ed. 

3  Salk.  23;  Carth.  446,  s.  c  — Ed. 


12  BUCKMYK   V.   DARNALL.  [CHAP.  L 

ing  to  the  Statute  of  Frauds ;  l  but  in  the  other  case,  payment  to  the 
son  upon  the  request  of  the  father  is  in  law  a  payment  to  the  father, 
who  is  the  only  debtor,  and  therefore  shall  be  liable  to  the  action.2 


BUCKMYR  v.    DARNALL. 
In  the  Queen's  Bench,  Michaelmas  Term,   1704. 

[Reported  in  2  Lord  Raymond,  1085.3] 

An  action  upon  the  case  wherein  the  plaintiff  declared  that  the  defend- 
ant, in  consideration  the  plaintiff,  at  his  request  locaret  et  deliberaret  cui- 
</<tm  Josepho  English  a  gelding  of  the  plaintiff's  ad  equitandum  et  itin- 
erandum  usque  ad  Reading  in  comitatu  Berks,  assumpsit  et promisit 
the  plaintiff,  quod  the  said  Joseph  and  Charles  the  said  gelding  to  the 
plaintiff  redeliberarent,  etc.  Upon  non  assumpsit  pleaded,  this  cause 
came  to  trial  before  Holt,  Chief  Justice,  at  Westminster  Hall ;  and 
the  counsel  for  the  defendant  insisting  that  the  plaintiff  ought  to  pro- 
duce a  note  in  writing  of  this  promise,  within  the  Statute  of  Frauds, 
29  Car.  2,  c.  3,  s.  4;  and  the  Chief  Justice  doubting  of  it,  a  case  was 
made  of  it,  and  ordered  to  be  moved  in  court,  to  have  the  opinion  of 
the  other  judges.  And  now  it  was  argued  this  term  by  Sergeant  Dar- 
nall  for  the  defendant,  and  by  Mr.  Raymond  for  the  plaintiff.  And  it 
was  insisted  for  the  defendant  that  this  case  was  within  the  Statute  of 
Frauds,  29  Car.  2,  c.  3,  s.  4,  for  it  was  a  promise  to  answer  for  the 
default  and  miscarriage  of  the  person  the  horse  was  lent  to.  The  very 
letting  out  and  deliver}7  of  the  horse  to  English  implies  a  contract  by 
English  to  re-deliver  him,  and  he  is  bound  by  law  so  to  do,  and  conse- 
quently the  defendant  is  to  answer  for  the  default  of  another.  In  a 
case,  2  Will.  &  Mar.,  jour  Lordship  settled  this  rule,  that  where  an 
action  will  lie  against  the  part}'  himself,  there  an  undertaking  by  J.  S. 
is  within  the  statute  ;  and  where  no  action  will  lie  against  the  party 
himself,  there  it  is  otherwise.  And  therefore  I  agree  this  case,  that  if 
a  man  should  say  to  another,  "  Do  you  build  a  house  for  J.  S.  and  I 
will  pay  yon,"  that  case  is  not  within  the  statute,  because  there  J.  S.  is 
not  liable.  But  this  case  is  not  more  than  this,  if  a  man  should  saj*, 
"Do  you  let  J.  S.  have  goods,  and  if  he  does  not  pay  you  I  will,"  and 
this  is  within  the  statute,  because  an  action  will  lie  against  J.  S.  for 
the  money  for  the  goods.  Or,  if  a  man  should  say,  "Take  J.  S.  into 
your  service,  and  if  he  does  not  serve  }'ou  faithfully,  or  if  he  wrongs 
you,  I  will  be  responsible,"  that  is  also  within  the  statute. 

To  this  it  was  answered  for  the  plaintiff,  that  here  the  creciit  was 

1  Harriot  v.  Lister,  2  Wils.  141 ;  Radcliffe  v.  Poundstone,  23  W.  Va.  724,  Accord.. 
-Ed. 

2  Harris  v.  Huntbach,  1  Burr.  373 ;  Pearce  v.  Blagrave,  3  Com.  Law,  338 ;  Davis 
r.  Tift,  70  Ga.  52,  Accord.  —  Ed. 

3  6  Mod.  248  ;   Salk.  27  ;  3  Salk.  15;   Holt,  606,  s.  c  —  Ed. 


SECT.  I.]  BUCKMYK   V.   DARN  ALL.  13 

wholly  given  to  the  defendant ;  that  that  rule  of  the  sergeant's  must  be 
understood,  where  an  action  does  or  does  not  lie  against  the  party  him- 
self on  the  contract,  and  not  where  an  action  does  or  does  not  lie 
against  him  upon  collateral  respects.  And  therefore  in  this  case,  for 
an  actual  conversion,  or  for  refusing  to  re-deliver  the  horse,  English 
may  be  charged  in  trover  or  detinue  ;  yet,  he  being  not  chargeable  upon 
the  contract,  the  case  is  not  within  the  statute.  This  contract  cannot 
be  said  properly  to  be  a  promise  to  answer  for  the  default  or  miscar- 
riage of  another,  unless  English  were  liable  by  the  first  contract. 

Upon  the  first  motion  and  arguing  this  case,  the  three  judges  against 
Powys  seemed  to  be  of  opinion  that  this  case  was  not  within  the  stat- 
ute, because  English  was  not  liable  upon  the  contract ;  but  if  any 
action  could  be  maintained  against  him,  it  must  be  for  a  subsequent 
wrong  in  detaining  the  horse,  or  actually  converting  it  to  his  own  use. 
And  Powell,  Justice,  said  that  that  rule,  of  what  things  shall  be  within 
the  statute,  is  not  confined  to  those  cases  only,  where  there  is  no 
remedy  at  all  against  the  other,  but  where  there  is  not  any  remedy  against 
him  on  the  same  contract.  This  case  is  just  like  the  case  where  a  man 
says,  "  Send  goods  to  such  a  one,  and  I  will  pa}'  you  ;  "  that  is  not  within 
the  statute,  for  the  seller  does  not  trust  the  person  he  sends  the  goods 
to.  So  here  the  stable-keeper  only  trusted  the  defendant,  and  an 
action  on  the  contract  will  not  lie  against  English,  but  for  a  tort  subse- 
quent he  may  be  charged  in  detinue,  or  trover  and  conversion,  which  is 
a  collateral  action. 

Powys,  Justice,  said  that  there  was  a  trust  to  English,  for  the  ver\' 
lending  of  the  horse  necessarily  implies  a  trust  to  the  person  he  is  lent 
to,  and  consequently  the  defendant  in  this  case  is  to  answer  for  the 
default  of  another,  and  is  within  the  statute. 

Powell,  Justice,  agreed,  that  if  a  man  should  say,  "  Lend  J.  S.  a 
horse,  and  I  will  undertake  he  shall  pay  the  hire  of  it,"  or,  "  Send 
J.  S.  goods,  and  I  will  undertake  he  shall  pay  you,"  that  those  cases 
would  be  witiiin  the  statute  ;  and  agreed  with  Powys,  that  if  any  trust 
were  given  to  English,  then  the  case  would  be  within  the  statute.  But 
he  and  the  Chief  Justice  and  Gould  held,  that  here  was  no  credit  given 
to  English  ;  and  the  Chief  Justice  agreed  with  him,  that  if  there  had, 
this  promise  would  have  been  but  an  additional  security,  and  within  the 
statute.  And  the  Chief  Justice  said,  that  if  a  man  should  say,  "Let 
J.  S.  ride  your  horse  to  Reading,  and  I  will  pay  you  the  hire,"  that  is 
not  within  the  statute,  no  more  than  if  a  man  should  say,  "Deliver 
cloth  to  J.  S.,  and  I  will  pay  you."  He  said  also,  that  a  bailee  of  an 
horse  for  hire  is  not  bound  to  re-deliver  him  at  all  events,  but  if  he  be 
robbed  of  him  without  fraud  in  him,  he  is  excused.  And  so  it  was 
ruled  in  the  case  of  Coggs  v.  Bernard.1 

The  last  day  of  the  term  the  Chief  Justice  delivered  the  opinion  of  the 
Court.  He  said  that  the  question  had  been  proposed  at  a  meeting  of 
judges,  and  that  there  had  been  great  variety  of  opinions  between  them, 

1  2  Stra.  916. 


14  LAKEMAN    X.    MOUNTSTEPHEN.  [CHAP.  L 

because  the  horse  was  lent  wholly  upon  the  credit  of  the  defendant; 
but  that  the  judges  of  this  court  were  all  of  opinion  that  the  case  was 
within  the  statute.  The  objection  that  was  made  was,  that  if  English 
did  not  re-deliver  the  horse,  he  was  not  chargeable  in  an  action  upon 
the  promise,  but  in  trover  or  detinue,  which  are  founded  upon  the  tort, 
and  are  for  a  matter  subsequent  to  the  agreement.  But  I  answered 
that  English  may  be  charged  on  the  bailment  in  detinue  on  the  original 
delivery,  and  a  detinue  is  the  adequate  remedy,  and  upon  the  delivery 
English  is  liable  in  detinue,  and  consequently  this  promise  by  the 
defendant  is  collateral,  and  is  within  the  reason  and  the  very  words  of 
the  statute  ;  and  is  as  much  so  as  if,  where  a  man  was  indebted,  J.  S., 
in  consideration  that  the  debtee  would  forbear  the  man,  should  promise 
to  pay  him  the  debt,  suclr  a  promise  is  void  unless  it  be  in  writing. 
Suppose  a  man  comes  with  another  to  a  shop  to  buy,  and  the  shop- 
keeper should  say,  "  I  will  not  sell  him  the  goods  unless  3*011  will 
undertake  he  shall  pa}T  me  for  them,"  such  a  promise  is  within  the 
statute  ;  otherwise,  if  a  man  had  been  the  person  to  pa}'  for  the  goods 
originally.  So  here  detinue  lies  against  English  the  principal ;  and  the 
plaintiff  having  this  remedy  against  English  the  principal,  cannot  have 
an  action  against  the  defendant  the  undertaker,  unless  there  had  been 
a  note  in  writing.1 


T.  LAKEMAN,  Appellant,  v.  J.  P.  MOUNTSTEPHEN, 

Respondent. 

In  the  House  of  LoFtDS,  Mat  5,   1874. 

[Reported  in  Law  Reports,  7  English  and  Irish  Appeals,  17.] 

This  was  an  appeal  against  a  judgment  by  the  Court  of  Exchequer 
Chamber,  which  had  reversed  a  previous  judgment  of  the  Court  of 
Queen's  Bench.  The  case  has  already  been  fully  reported  in  the 
courts  below.2  The  following  is  a  summary  of  the  facts  :  Lakeman  was 
the  chairman  of  the  board  of  health  of  the  town  of  Brixham.  Mount- 
stephen  was  a  builder  and  contractor  at  Torqua}',  and  had  often 
executed  works  for  the  board.  He  had  in  the  early  part  of  1866  com- 
pleted for  the  board  a  main  sewer  for  the  town,  and  the  board  had 
directed  him  to  make  a  purchase  of  pipes,  and  had  given  notice  under 
the  11  &  12  Vict.  c.  63,  s.  69  (the  Public  Health  Act  of  1848),  to  the 
owners  of  certain  houses  near  this  main  sewer  to  connect  the  drains  of 
their  houses  with  it,  or  that  the  board  would  make  the  connections  at 
their  expense.     These  persons  had  not  obej'ed  the  notice,  and  the  board 

1  Billingsley  v.  Dempewolf,  11  Ind.  414,  Accord. 

Compare  Tindal  v.  Touchberry,  3  Strob.  177,  where  the  delivery  of  a  chattel  to  A, 
at  the  defendant's  request,  was  regarded  by  the  Court  as,  in  truth,  a  bailment  to  the 
defendant.  —  Ed. 

2  Law  Rep.  5  Q.  B.  613;  Ibid.  7  Q.  B.  196. 


SECT.  I.]  LAKEMAN    V.    MOUNTSTEPHEN.  15 

iherefore  possessed  the  power  to  make  the  connections  and  to  charge 
the  inhabitants,  to  whom  notice  had  thus  been  given,  with  the  cost 
thereof.  The  board,  however,  had  not  passed  any  resolution  so  to  do. 
Adams,  the  surveyor  of  the  board,  had  proposed  to  Mountstephen  to 
construct  these  connections.  The  latter  did  not  do  so,  as  he  had  no 
orders  from  the  board.  On  the  5th  of  April,  1866  (which  was  before 
the  expiration  of  the  notice  given  to  the  householders),  according  to 
Mountstephen's  evidence,  he,  after  finishing  the  main  sewer,  was  about 
to  take  away  his  carts  and  building  materials,  when,  after  some  talk 
with  Adams,  a  conversation  ensued  between  him  and  Lakeman.  The 
latter  said,  "What  objection  have  you  to  making  the  connections?'" 
Mountstephen  answered,  "  None,  if  you  or  the  board  will  order  the 
work,  or  become  responsible  for  the  payment,"  to  which  Lakeman 
replied,  "  Go  on,  Mountstephen,  and  do  the  work,  and  I  will  see  you 
paid."  Mountstephen  did  the  work  ;  but  the  board,  alleging  that  no 
orders  had  been  given  for  the  work,  declined  to  pay  for  it.  Mount- 
stephen then  brought  an  action  against  Lakeman  for  the  amount  due 
for  the  work. 

The  declaration  contained  three  counts.  The  first  stated  that  the 
defendant  was  the  chairman  of  the  board,  and  that  in  consideration 
that  the  plaintiff  would  do  and  provide  certain  work  and  materials  for 
the  board  at  the  request  of  the  defendant,  as  and  assuming  to  be  agent 
for  the  board,  the  defendant  promised  the  plaintiff  that  he  was  autho- 
rized by  the  board  to  make  the  request ;  that  the  plaintiff,  relying  on 
the  defendant's  promise,  did  the  work  ;  breach,  that  the  defendant  was 
not  so  authorized. 

The  second  count  stated  that  the  defendant,  being  such  chairman, 
in  consideration  that  the  plaintiff  would  do  and  provide  work  and 
materials  for  the  board,  at  the  request  of  the  defendant,  the  defendant 
promised  to  obtain  for  the  plaintiff  from  the  board  a  contract  whereby 
the  board  should  be  legally  bound:  breach,  that  the  defendant  did  not 
obtain  such  contract.  The  third  count  was  for  work  and  materials 
done  and  supplied  by  the  plaintiff  to  the  defendant  at  his  request. 

The  defendant  pleaded,  1,  to  the  first  and  second  counts,  that  the 
defendant  did  not  promise  as  alleged  ;  2,  that  the  plaintiff  did  not 
do  the  work  for  the  board  at  the  defendant's  request ;  and  3,  never 
indebted. 

The  cause  was  tried  before  Lord  Chief  Baron  Kelly  at  the  Devon 
Summer  assizes,  1870,  when,  by  the  permission  of  the  learned  judge, 
a  count  was  added  alleging  that  the  defendant  promised  that  in  con- 
sideration that  the  plaintiff  would  do  the  work  for  the  board,  the 
defendant  promised  to  pay  for  the  work  if  the  board  should  at  any 
time  refuse  to  pay. 

At  the  close  of  the  plaintiff's  case  the  defendant's  counsel  submitted 
that,  on  the  declaration  and  the  evidence  (as  it  then  stood),  there  must 
be  a  nonsuit.  The  learned  judge  declined  to  nonsuit,  being  of  opinion 
that  there  was  evidence  to  go  to  the  jury,  and  he  gave  leave  to  the 


16  LAKEMAN  V.    MOUNTSTEPHEX.  [CHAP.  I 

plaintiff  to  add  the  count  as  above  stated.  The  defendant's  case  was 
then  entered  on,  when  the  statement  of  the  conversation,  as  detailed  in 
plaintiff's  evidence,  was  denied.  At  the  close  of  the  case  the  Lord 
Chief  Baron  left  it  to  the  jury  to  say  whether  the  conversation,  as 
leposed  to  by  the  plaintiff,  but  denied  b}'  the  defendant,  had  taken  place. 
The  jury  returned  a  verdict  for  the  plaintiff  for  £287,  and  leave  was 
then  reserved  to  the  defendant  to  move  to  set  aside  this  verdict  and 
inter  a  nonsuit,  if  the  Court  should  be  of  opinion  that  there  was  no 
ovidence,  either  upon  the  original  or  amended  declaration,  which  ought 
to  have  been  left  to  the  jury.  A  rule  for  that  purpose  was  obtained 
and  was  made  absolute,1  the  Court  being  of  opinion  that,  coupling  the 
expressions  used  with  the  conduct  and  position  of  the  parties,  the 
defendant's  words  did  not  amount  to  an  engagement  to  be  primarily 
liable  for  the  work,  but  only  to  a  promise  that  if  the  plaintiff  would  do 
the  work  on  the  credit  of  the  board  the  defendant  would  pa)r  if  the 
board  did  not ;  and  that  this  was  a  promise  to  be  answerable  for  the 
debt  of  another  within  sect.  4  of  the  Statute  of  Frauds,  though  in  fact 
the  board  had  never  been  indebted,  and  as  this  promise  was  not  in 
writing  it  could  not  be  enforced. 

On  appeal  to  the  Exchequer  Chamber  this  decision  was  reversed, 
that  Court  being  of  opinion  that  there  was  evidence  to  go  to  the  jury  on 
the  question  whether  the  defendant  had  not  by  his  words  made  himself 
primarily  liable.2 

This  appeal  was  then  brought. 

Mr.   Cole,  Q.  C,  and  Mr.  Francis  Pinder,  for  the  appellant.3 

Mr.  Lopes,  Q.  C,  and  Mr.  Arthur  Charles,  for  the  respondent,  were 
not  called  on. 

The  Lord  Chancellor  (Lord  Cairns)  :  — 

My  Lords,  the  question,  and  the  only  question  which  your  Lordships 
are  called  upon  in  this  appeal  to  decide  is,  whether  there  was  or  was 
not  evidence  of  an  original  liability  on  the  part  of  the  defendant  to  pay 
the  plaintiff  in  the  action  for  the  work  to  be  done.  I  begin  by  pointing 
out  to  your  Lordships  that  that  is  the  question,  and  the  only  question 
in  the  action,  for  the  purpose  of  reminding  you  that  we  are  not  embar- 
rassed here  by  any  consideration  as  to  whether  the  precise  sum  for  which 
the  verdict  of  the  jury  was  returned,  is  the  sum  which  ought  to  have  been 
assessed  as  the  amount  to  be  paid  in  the  action.  Whatever  questions 
might  have  been  raised,  whatever  distinctions  might  have  been  made 
as  to  different  items  of  the  demand,  this  is  not  the  time  or  the  place  for 
making  them.  If  it  was  desired  to  make  them,  and  if  there  was  room 
for  making  them  (which  I  am  far  from  saying  there  was  not),  it  ought 
to  have  been  done  at  an  earlier  stage  in  these  proceedings. 

My  Lords,  taking  the  question  raised  by  the  rule  which  was  obtained 

1  Law  Rep.  5  Q.  B.  613. 

2  Law  Rep.  7  Q.  B.  196. 

*  The  argument  for  appellant  and  the  concurring  opinions  of  Lords  Hathekley 
l)'Hagan,  and  Selborne  are  omitted.  —  Ed. 


SECT.  I.]  LAKEMAN   V.   MOUNTSTEPHEN.  17 

in  the  first  instance,  whether  there  was  or  was  not  evidence  of  an  original 
liability  on  the  part  of  the  defendant  to  pay  the  plaintiff  for  the  work  to 
be  done,  I  may  remind  your  Lordships  that  that  question  falls  to  be  deter 
mined  really  upon  the  consideration  of  the  evidence  of  the  plaintiff 
in  the  action  himself.  It  is  true  that  another  witness  was  called  on 
behalf  of  the  plaintiff,  but  his  evidence  on  this  subject  is  quite  immate- 
rial, and  we  have  the  evidence  of  the  plaintiff  only  to  deal  with.  My 
Lords,  that  evidence  might  have  been  accepted  by  the  jurymen  or  it 
might  have  been  rejected ;  they  might  have  been  so  satisfied  with  the 
evidence  adduced  on  the  other  side  as  to  lead  them  to  disbelieAre  the 
evidence  of  the  plaintiff,  but  the  question,  I  repeat,  is,  whether  or  not  in 
this  case  the  learned  judge  would  have  been  right  in  directing  a  nonsuit 
on  the  ground  that  there  was  no  substantial  evidence  to  go  to  the  jurj*. 

Now  I  will  call  3'our  Lordships'  attention,  for  a  few  moments,  to  what 
the  plaintiff  really  did  sa}-,  because,  I  think,  if  the  two  portions  of  his 
evidence,  which  at  first  sight  appear  rather  disconnected,  are  brought 
into  their  proper  order,  a  Arery  clear  and  intelligible  account  of  the  origin 
of  this  contract  will  be  given.  The  plaintiff  says  in  his  cross-examina- 
tion, referring  to  the  19th  of  March  and  to  the  resolution  of  the  board  of 
that  date,  "  that  notices  should  be  served  by  the  board  ;"  that  is,  notices 
upon  the  owners  of  houses  who  were  to  be  required  to  connect  their 
drainage  with  the  main  drainage  of  the  town  :  "  I  knew  nothing  of  this." 
And  then,  at  another  part,  "  Adams  asked  me  if  I  would  procure  1300 
feet  of  pipes,  and  if  I  would  do  the  work."  He  was  asked  two  things  ; 
if  he  would  procure  the  materials,  and  if  he  would  do  the  work.  "  I  said 
'  not  unless  the  board  would  be  responsible  for  the  payment,  fori  would 
not  take  orders  from  the  owners  of  the  property.'  I  know  they  must 
have  notices  before  they  are  liable.  I  think  it  is  twenty-one  days'  notice." 
Then  a  resolution  of  the  board  was  put  in  "for  notice  to  owners  and 
occupiers,  and  that  Mountstephen  procure  1300  feet  of  pipes."  That 
appears  to  have  been  communicated  to  him,  as  I  gather  from  the  next 
portion  of  his  evidence,  for  he  continues,  "  I  proceeded  then  according 
to  that  order,  but  I  refused  to  do  the  work  unless  the  board  would  make 
themselves  responsible." 

I  understand  that  as  being  a  very  clear  statement ;  it  may  be  accurate 
or  inaccurate,  that  is  another  question ;  but  it  is  a  very  clear  state- 
ment by  the  plaintiff  that  he  had  his  attention  called  to  the  danger  of 
proceeding  in  these  cases  without  a  distinct  formal  authority  from  a 
board,  like  the  local  board  in  this  case,  and  that  in  the  first  instance  he 
would  neither  procure  materials  nor  do  the  work  without  the  order  of 
the  board  ;  that  he  got  from  the  board  a  proper  order  with  which  he 
was  satisfied  with  regard  to  the  materials.  He  may  have  been  right  or 
wrong  in  thinking  it  a  proper  order,  but  he  was  satisfied  with  it ;  but  he 
had  no  order  of  the  board  with  regard  to  the  work  to  be  done,  and  he 
refused,  therefore,  to  do  that  work. 

Then,  turning  to  another  part  of  the  evidence,  we  have  from  him  an 
account  of  a  conversation  which  took  place  between  him  and  Mr.  Lake- 

2 


18  LAKEMAN  Z.   MOUNTSTEPHEN.  [CHAP.  L 

man,  the  appellant,  which  must  have  been  some  daj-s  afterwards.  He 
had  finished  some  works  connected  with  the  main  drainage,  and  he  says  : 
"We  had  just  finished  everything."  Lakeman  (the  defendant)  said: 
tl  What  objection  have  you  to  make  these  connections?  "  From  which  I 
should  infer  that  Adams  had  told  Lakeman  that  although  the  materials 
had  been  supplied,  there  was  an  objection  to  doing  the  work,  "  meaning 
the  laying  down  of  the  junction  pipes.  I  said  :  '  I  have  no  objection  to 
do  the  work  if  you  or  the  local  board  will  give  me  the  order.'  He  " 
(that  is  Mr.  Lakeman)  "  was  chairman  of  the  local  board  of  health 
for  Brixham.  He  said  :  '  Mountstephen,  you  go  on  and  do  the  work, 
and  I  will  see  you  paid.' " 

Your  Lordships  have  had  very  ingenious  arguments  addressed  to  you, 
putting  various  constructions  upon  these  few  words.  It  has  been  sug- 
gested that  the  effect  of  these  words  was  that  Mountstephen  must  be 
taken  to  have  asked  Mr.  Lakeman  first  for  an  order  from  the  board,  and 
to  have  been  satisfied  that  he,  as  chairman  of  the  board,  could  then  and 
there  give  the  order,  and  to  have  had  through  him  then  and  there  an 
order  from  the  board,  and  yet  that,  not  being  satisfied  with  that  order 
then  and  there  thus  obtained,  he  desired  to  superadd,  and  he  had 
superadded  to  it,  a  virtual  guaranty  by  Lakeman  that  he,  personally, 
would  guarantee  that  the  board  would  pay  the  money.  My  Lords,  I 
must  say  that  that  does  appear  to  me  to  be  a  most  strange  and  violent 
construction  placed  upon  a  few  simple  words.  As  it  appears  to  me,  a 
very  natural  meaning  (and  it  is  quite  sufficient  for  the  present  purpose) 
of  these  words  is  this,  that  Mountstephen,  following  up  that  course  of 
action  which  he  had  previous!}'  pursued  with  Adams,  stated  to  Lakeman 
that  the  reason  why  he  refused  to  do  the  work  was,  that  he  had  got  no 
order  from  the  board  to  do  it,  that  he  would  do  the  work  if  he  had  a 
formal  order  from  the  board,  or  if  he  had  a  personal  order  from  Lakeman 
himself,  and  that  thereupon  Mr.  Lakeman  —  who  for  some  reason,  the 
stringency  of  which  it  is  not  for  your  Lordships  now  to  inquire  into, 
wished  the  work  to  be  imraediatelv  done  —  that  thereupon  Mr.  Lakeman 
said  :  "  You  go  on  and  do  the  work  ;  do  not  concern  }Tourself  upon  the 
subject  of  whether  you  have  an  order  from  the  board,  or  have  not  such 
an  order.  You  go  on  and  do  the  work,  and  I  will  be  your  pajmaster. 
I  will  see  you  paid."  Now,  nry  Lords,  if  that  is  the  meaning  of  these 
words,  and  it  appears  to  me  certainly  to  be  the  prima  facie  and  natural 
meaning  of  the  words,  I  think  there  was  ample  and  strong  evidence  to 
go  to  the  jury  that  the  go-by  was  entirety  given  to  the  question  of  an 
order  of  the  local  board,  and  that  Mr.  Lakeman  stepped  in  and  under- 
took himself,  as  a  matter  of  primary  liability,  to  pa}T  for  the  work  that 
would  be  done.  Against  that  primary  liability  he  might  afterwards,  as 
chairman  of  the  board,  have  sheltered  himself  b}'  obtaining  from  the 
board  the  consent  to  make  a  formal  order,  and  acting  upon  and  paying 
under  that  formal  order.  But  that  was  for  him  to  consider  ;  he  did  that 
"vhich  the  contractor  required  to  be  done  —  he  put  the  contractor  in  the 
,  osition  of  having  then  and  there  an  absolute  contract  made  —  and  the 


SECT.  I.]  LAKEMAN    V.    MOUNTSTEPHEN.  19 

only  contract  which  then  and  there  absolutely  could  be  made,  would  be 
a  personal  and  primary  contract  by  him  to  pay  the  contractor  for  the 
work  to  be  done.  My  Lords,  it  appears  to  me  that  there  was  clearly 
substantial  evidence  in  the  case  to  go  to  the  jury,  and  that  any  judge  who 
had  to  try  this  case  would  have  miscarried,  if  upon  this  evidence  he  had 
held  that  there  was  no  case  to  go  to  the  jury. 

I  shall,  therefore,  submit  to  your  Lordships  that  the  decision  of  the 
Court  of  Exchequer  Chamber  is  correct,  and  that  this  appeal  should  be 
dismissed. 

Jwhjim  nt  of  Court  of  Exchequer  Chamber  affirmed,  and  appeal 
dismissed  with  cost*.1 

1  Lord  Selborne,  in  the  course  of  his  opinion,  said  (p.  24) :  "  There  are  some  observa- 
tions in  the  opinions  of  the  learned  judges  in  the  Court  of  Queen's  Bench  which  cer- 
tainly do  look  at  first  sight  as  if  some  of  those  learned  judges  thought  that  there  might 
be  a  valid  contract  of  suretyship,  or  a  secondary  liability  upon  the  principle  of  a  guaranty 
for  the  debt  of  some  one  else,  to  which  the  law  relative  to  that  description  of  contracts 
would  apply,  although  there  might  be  in  truth  no  principal  debtor.  If  that  was  the 
view  of  the  learned  judges,  with  all  respect  to  them,  I  must  confess  myself  unable  to 
follow  it.  There  can  he  no  suretyship  unless  there  be  a  principal  debtor,  who  of  course 
may  be  constituted  in  the  course  of  the  transaction  by  matters  ex  post  facto,  and  need 
not  be  so  at  the  time,  but  until  there  is  a  principal  debtor  there  cau  be  no  suretyship. 
Nor  can  a  man  guarantee  anybody  else's  debt  unless  there  is  a  debt  of  some  other 
person  to  be  guaranteed." 

In  the  Exchequer  Chamber,  Wilkes,  J.,  said,  L.  R.  7  Q.  B.  202 :  "  The  leading 
case  upon  the  application  of  the  Statute  of  Frauds  has  generally  been  considered  to  be 
Birkmyr  v.  Darnell,  and  in  the  note  to  Mr.  Evans's  edition  of  Salkeld's  Reports  it  is 
stated  that  'from  all  the  authorities  it  appears,  conformably  to  the  doctrine  in  this 
case,  that  if  the  person  for  whose  use  the  goods  are  furnished  is  liable  at  all,  any  other 
person's  promise  is  void,  except  in  writing.'  I  think  that  may  very  well  be  modified  : 
'Or  if  his  liability  is  made  the  foundation  of  a  contract  between  the  plaintiff  and  the 
defendant,  and  that  liability  fails,  the  promise  is  void  : '  so  as  to  include  the  cas£  which 
I  put  to  Mr.  Charles  of  persons  wrongly  supposing  that  a  third  person  was  liable,  and 
entering  into  a  contract  on  that  supposition.  If,  in  such  a  case,  it  turned  out  that  the 
third  person  was  not  liable  at  all,  the  contract  would  fail,  because  there  would  be  a 
failure  of  that  which  the  parties  intentionally  made  the  foundation  of  the  contract. 
The  lex  contractus  itself  would  make  an  end  of  the  claim,  and  not  the  application  of 
the  Statute  of  Frauds,  whether  the  contract  was  in  writing  or  not,  and  whether  signed 
or  not.  The  law  of  contract  gives  you,  as  foundation,  that  a  person  was  taken  to  be 
liable,  and  that  the  suretyship  was  a  suretyship  in  respect  of  that  liability.  Take 
away  the  foundation  of  principal  contract,  the  contract  of  suretyship  would  fail." 
See  further,  Hooker  v.  Russell,  67  Wis.  257.  —  Ed. 


20  MEASE    V.    WAGNER.  [CHAP.  L 


CHARLES   C.  MEASE  v.  ANN   WAGNER. 
[n  the  Constitutional  Court,  South  Carolina,   May  Term,  1821. 

[Reported  in  1  McCord,  395. J 

This  was  an  action  for  the  articles  furnished  the  funeral  of  Mrs. 
Bradley,  at  the  request  and  by  order  of  the  defendant.  Mrs.  Bradley 
was  the  widow  of  Dr.  Bradley,  who  left  her  his  estate  during  life, 
remainder  to  his  nephew,  John  Bradley.  Mrs.  Bradley,  prior  to  her 
death,  expressed  a  wish  to  be  buried  in  a  particular  manner.  As  soon 
as  she  expired,  the  defendant  was  sent  for  as  a  friend  of  the  family,, 
and  she  undertook  to  procure  the  articles  necessary  to  such  a  funeral 
as  the  deceased  had  desired.  She  proceeded  to  the  shop  of  the  plain- 
tiff, where  she  selected  the  articles  required,  saying  the}'  were  for  Mrs. 
Bradley's  funeral.  She  was  asked  "by  whom  they  were  to  be  paid 
for."  She  replied,  "  Charge  them  to  the  estate  of  Dr.  Bradley,  and  as 
soon  as  his  nephew  comes  to  town  he  will  pay  for  them,  or  I  will." 
The  articles  furnished  were  such  as  were  suitable  to  the  condition  in 
which  Mrs.  Bradley  had  lived. 

On  the  arrival  of  the  nephew  in  the  city,  the  account  was  presented 
to  him,  and  he  refused  to  pay  it,  saying  that  the  defendant  had  no 
authority  to  procure  the  articles  at  his  expense.  The  defendant  was- 
then  applied  to,  and  she  refused  payment.  Some  time  after  this  refusal, 
one  of  the  witnesses  remonstrated  with  the  nephew  on  the  impropriety 
of  his  conduct,  when  he  said  he  would  pa}"  it,  but  did  not.  It  appeared 
that  a  Miss  Teabont  administered  upon  the  estate  of  Mrs.  Bradley. 

The  counsel  for  the  defendant  contended  that  she  was  responsible,  as 
it  was  a  collateral  and  not  an  original  undertaking. 

The  Court  charged  the  jury  that  it  was  an  original  and  not  a  col- 
lateral undertaking,  and  that  the  defendant  was  liable. 

A  verdict  was  accordingly  rendered  for  the  plaintiff. 

A  motion  was  now  made  for  a  new  trial,  on  the  ground  that  the  Court 
misdirected  the  jury. 

Mr.  Justice  Huger  delivered  the  opinion  of  the  Court. 

It  has  been  regarded  as  settled  doctrine  ever  since  the  case  of  Buckmyr 
v.  Darnall,  that  when  no  action  will  lie  against  the  party  undertaken  for, 
it  is  an  original  promise.  If  A  promise  B  that  in  consideration  of  his 
doing  a  particular  act,  C  shall  pay  him  such  a  sum,  and  if  C  do  not  pay 
him,  he,  A,  will  pay  the  same,  this  is  said  to  be  no  collateral  undertaking 
on  the  part  of  A  unless  C  was  privy  to  the  contract,  and  recognized  him- 
self as  debtor  also  (Fitzgibbon,  302,  Robt.  on  Frauds,  223).  In  the  case 
before  me,  the  defendant  undertook  for  the  representative  of  Dr.  Brad- 
ley, against  whom  no  action  could  lie  for  the  articles  furnished  for  the 
funeral  of  Mrs.  Bradley.  And  there  was  no  privity  of  contract  between 
the  plaintiff  and  the  nephew  of  Dr.  Bradley.     But  it  has  been  urged 


SECT.  I.]  BUSHELL    V.    BEAVAN.  21 

that  the  subsequent  promise  of  the  nephew  had  a  retroactive  operation, 
and  rendered  him  liable  ;  but  if  he  were  not  liable  before  the  promise 
was  made,  he  could  not  be  so  afterward.  It  was  not  in  writing,  and 
was  nudum  pactum.  Had  the  defendant  undertaken  for  the  estate  or 
legal  representative  of  Mrs.  Bradley,  who  was  legally  bound  to  pa}'  the 
expenses  of  her  funeral,  it  would  have  been  a  different  question  ;  but 
she  unfortunately  undertook  for  one  who  was  not  responsible,  and  who 
was  so  far  from  being  privy  to  the  contract,  or  acknowledging  himself 
a  debtor,  refused  payment,  and  denied  the  authority  of  the  defendant  to 
render  him  responsible. 

I  am  of  opinion,  therefore,  that  the  motion  must  be  refused. 

Justices  Nott,  Johnson,  Richardson,  and  Colcock  concurred. 

Mr.  Justice  Gantt  dissented. 

King,  for  the  motion. 

Hunt,  contra. 


BUSHELL   and  Others    v.   BEAVAN. 
In  the  Common  Pleas,  June  5,  1834. 

t  [Reported  in  1  Bingham,  New  Cases,  103.] 

Tindal,  C.  J.1  This  is  an  action  of  assumpsit,  brought  by  the  pla:n- 
tiffs  to  recover  damages  for  the  breach,  b^y  the  defendant,  of  a  promise 
to  procure  one  Thomas  Potter  Macqueen  to  sign  a  written  guarant}\ 
and  to  cause  the  same  to  be  delivered  to  the  plaintiffs  within  a  certain 
time. 

It  is  objected,  that  the  promise  on  which  the  action  is  brought  is  a 
promise  to  answer  for  the  debt,  default,  or  miscarriage  of  another  per- 
son ;  and  that  no  action  is  maintainable  upon  it  according  to  the  well- 
known  rule  of  law,  because  the  consideration  of  the  promise  does  not 
appear  in  writing  as  well  as  the  promise  itself.  The  promise  on  which 
the  first  count  is  framed  is  an  undertaking  by  the  defendant  to  get  a 
copy  of  a  guarant}*  which  is  written  above  it,  duly  signed  by  Mr.  Potter 
Macqueen,  and,  within  a  week  afterwards,  delivered  to  the  plaintiffs' 
agent.  The  immediate  consideration  for  that  promise  was  the  removal 
by  the  plaintiffs  of  a  stop  which  they  had  put  upon  the  vessel,  then 
lying  in  St.  Katharine's  Docks,  and  the  permitting  her  to  sail  on  the 
voyage  before  the  security  was  signed.  Under  these  circumstances  the 
contract  appears  to  us  not  to  be  a  contract  to  answer  for  the  debt,  de- 
fault, or  miscarriage  of  any  other  person,  but  a  new  and  immediate 
contract  between  the  defendant  and  the  plaintiffs.     If  Mr.  Macqueen 

1  Everything  is  omitted  except  the  opinion  of  the  Court  relating  to  the  Statute 
of  Frauds.  —  Ed. 


22  TOWNE    V.    GROVER.  [CHAP.  I. 

had  signed  the  guaranty,  that  guaranty  would,  indeed,  have  been 
within  the  Statute  of  Frauds  ;  for  his  is  an  express  guaranty  to  be 
answerable  for  the  freight  due  under  the  eharter-party,  if  Sempill  did 
not  pay  it.  But  no  person  could  be  answerable  on  the  promise  to  pro 
cure  his  signature  but  the  defendant.  Sempill  had  never  engaged  to 
get  the  guaranty  of  Macqueen,  nor  had  Macqueen  engaged  to  give  it. 
There  was,  therefore,  no  default  of  any  one  for  which  the  defendant 
made  himself  liable  ;  but  he  did  so  simply  upon  his  own  immediate  con- 
tract. For,  as  to  any  default  of  Sempill  in  paying  the  freight,  the 
action,  on  the  undertaking  of  the  defendant,  could  not  be  dependent 
on  that  event ;  for  it  would  have  been  maintainable  if  the  guaranty  were 
not  signed  at  any  time  after  the  da}-  on  which  the  defendant  engaged  it 
should  be  given  ;  that  is,  long  before  the  time  when  the  freight  became 
payable.  Judgment  for  plaintiffs  accordingly.1 


SOLOMON   TOWNE  v.  NATHANIEL   GROVER. 
In  the  Supreme  Judicial  Court,  Massachusetts,  March,  1830. 

[Reported  in  9  Pickering,  306.] 

Assumpsit.  The  declaration  alleged  that  the  defendant  employed 
one  Newell,  a  housewright,  to  build  for  him  a  house  :  that  Newell  was 
to  do  all  the  work  and  find  all  the  materials,  and  the  defendant  was  to 
pa}'  him  therefor  the  sum  of  1400  dollars  when  the  house  should  be 
completed  ;  that  Newell  being  indebted  to  the  plaintiff  in  the  sum  of 
790  dollars,  partly  for  materials  supplied  and  used  for  building  the 
house,  and  being  desirous  of  purchasing  more  lumber  to  finish  the 
house,  the  plaintiff  refused  to  sell  him  any  more,  unless  the  defendant 
would  cause  the  plaintiff  to  be  secured  out  of  the  amount  which  the 
defendant  should  owe  to  Newell  when  the  house  should  be  completed, 
as  well  for  the  sum  then  due  to  the  plaintiff,  as  for  what  might  become 
due  for  materials  afterwards  sold  to  Newell  to  finish  the  house  ;  that  in 
consideration  of  the  premises  the  defendant  promised  the  plaintiff  that 
if  he  would  sell  and  deliver  to  Newell  the  lumber  necessary  to  finish 
the  house,  he,  the  defendant,  would  not  settle  with  Newell  for  the 
house,  until  he  had  given  the  plaintiff  sufficient  notice,  after  the  com- 
pletion of   the  house,   so  that  the  plaintiff  might  secure  himself  by 

1  For  analogous  cases,  where  defendant's  promise  was  not  accessory  to  any  similar 
primary  liability,  see  Elkins  v.  Hart,  Fitzg.  202  ;  Jarmain  v.  Algar,  2  C.  &  P.  249  ; 
Marion  v.  Faxon,  20  Conn.  486  ;  Ingraham  v.  Strong,  41  111.  Ap.  46  ;  Jepherson  v.  Hunt, 
2  All.  417  ;  Douglass  v.  Jones,  3  E.  D.  Sm.  551  ;  Sampson  v.  Swift,  11  Vt.  315  ;  Bel 
lows  v.  Sowles,  57  Vt.  165. 

The  principal  case  was  criticised  adversely  in  Carville  v.  Crane,  5  Hill,  483,  485 
—  Ed. 


SECT.  I.]  KIRKHAM    V.    MARTER.  23 

process  of  attachment  upon  the  defendant  as  trustee  of  Newell  for  the 
whole  of  the  debt  which  should  be  then  due  from  Newell  to  the  plain- 
tiff; that  relying  on  this  promise,  the  plaintiff  forbore  to  take  meas- 
ures to  secure  his  debt  against  Newell,  and  gave  him  further  credit  to 
the  amount  of  98  dollars,  but  that  the  defendant  afterwards,  the  house 
not  being  then  completed,  settled  with  Newell  without  giving  the 
plaintiff  notice,  and  paid  Newell,  by  negotiable  notes,  760  dollars,  the 
balance  due,  and  that  Newell  immediately  absconded  and  was  wholly 
unable  to  pay,  by  reason  of  which  the  plaintiff  had  lost  his  debt. 

The  cause  was  tried  before  Wilde,  J.,  on  the  general  issue.  The 
plaintiff  offered  the  testimom"  of  a  witness  to  prove  the  promise  ;  to 
the  admission  of  which  the  defendant  objected,  on  the  ground  that  the 
promise  was  within  the  Statute  of  Frauds  and  could  be  proved  only  by 
writing.  But  the  objection  was  overruled,  and  the  evidence  admitted; 
to  which  the  defendant  excepted.     The  verdict  was  for  the  plaintiff. 

Fletcher,  for  the  defendant. 

Nichols,  for  the  plaintiff.1 

Per  Curiam.  The  plaintiff  shows  a  fair  ground  of  action,  having 
parted  with  his  property  on  the  faith  of  the  defendant's  promise.  We 
think  the  promise  is  not  within  the  Statute  of  Frauds.  It  is  a  separate, 
independent  agreement,  having  no  reference  to  the  debt  of  Newell 
except  as  to  the  measure  of  damages.  The  defendant  was  not  to  pay 
the  debt  of  Newell,  but  was  to  give  notice  previously  to  making  a 
settlement  with  him,  which  would  enable  the  plaintiff  to  obtain  pay- 
ment of  his  demand.  Whether  Newell  paid  the  debt  or  not,  the  prom- 
ise of  the  defendant  would  remain  to  be  performed. 

Judgment  on  the  verdict. 


KIRKHAM   v.   MARTER. 
In  the  King's  Bench,  May  21,  1819. 

[Reported  in  2  Bamewall  8f  Alderson,  613.] 

The  declaration  stated  that  one  T.  E.  Marter,  before  the  making 
of  the  promise  of  defendant,  had,  without  the  leave  or  license  of  the 
plaintiff,  wrongfully  ridden  a  horse  of  the  plaintiff's,  in  consequence 
whereof  the  horse  died  ;  that  the  plaintiff  had  threatened  to  commence 
an  action  against  the  said  T.  E.  M.  for  the  recoverv  of  such  damages 
as  plaintiff  had  sustained  by  reason  of  the  premises  ;  and  thereupon,  in 
consideration  of  the  premises,  and  that  the  plaintiff  at  the  request  of 
defendant,  would  not  bring  any  action  against  the  said  T.  E.  M.  for  the 
cause  aforesaid,  and  that  plaintiff  would  be  content  to  take,  for  and  on 
account  of  the  said  horse,  what  should  be  agreed  upon  between  the 

1  The  arguments  of  counsel  are  omitted.  —  F 


24  KIRKHAM    V.   MARTEK.  [CHAP.  I. 

defendant  and  one  A.  B.,  defendant  promised  to  pay  plaintiff  what 
should  be  agreed  upon  between  defendant  and  said  A.  B.,  for  and  on 
account  of  said  horse.  Averment,  that  plaintiff  had  brought  no  action 
for  the  cause  aforesaid,  and  that  he  was  willing  to  take,  for  and  on 
account  of  the  horse,  what  had  been  agreed  upon  between  the  defend- 
ant and  A.  B.,  and  that  defendant  and  A.  B.  did  agree  that  defendant 
should  pay  plaintiff  fifty  guineas  for  the  said  horse,  and  the  bill  due  for 
the  maintenance  and  keep  of  the  said  horse,  and  that  the  same  should  be 
paid  before  the  then  next  Epsom  races.  Declaration  then  averred,  that 
that  bill  before  the  then  next  Epsom  races  was  ascertained  to  amount 
to  a  certain  sum  therein  mentioned.  Breach,  non-payment  of  the  said 
several  sums.     Flea,  general  issue. 

The  cause  was  tried  on  Thursday,  13th  Ma}T,  at  the  second  Middle- 
sex sittings  in  this  term,  before  Abbott,  C.  J.,  when  the  plaintiff  proved 
a  verbal  contract,  as  laid  in  the  declaration.  Abbott,  C.  J.,  thought 
this  an  undertaking  for  the  default  or  miscarriage  of  another,  within 
the  Statute  of  Frauds  ;  and,  consequently,  that  the  promise  ought  to 
have  been  in  writing,  and  the  plaintiff  was  nonsuited. 

Abraham  now  moved  for  a  new  trial.1 

Abbott,  C.  J.  This  case  is  clearly  within  the  mischief  intended  to 
be  remedied  by  the  Statute  of  Frauds  ;  that  mischief  being  the  frequent 
fraudulent  practices  which  were  too  commonly  endeavored  to  be  upheld 
by  perjury  ;  and  if  it  be  within  the  mischief,  I  think  the  words  of  the 
statute  are  sufficiently  large  to  comprehend  the  case.  The  words  are 
these:  "  No  action  shall  be  brought  to  charge  a  defendant  upon  any 
special  promise  to  answer  for  the  debt,  default,  or  miscarriage  of 
another  person."  Now  the  word  "miscarriage"  has  not  the  same 
meaning  as  the  word  "debt"  or  "default;"  it  seems  to  me  to  com- 
prehend that  species  of  wrongful  act  for  the  consequences  of  which  the 
law  would  make  the  party  civilly  responsible.  The  wrongful  riding  the 
horse  of  another,  without  his  leave  and  license,  and  thereby  causing  its 
death,  is  clearly  an  act  for  which  the  party  is  responsible  in  damages  ; 
and,  therefore,  in  my  judgment,  falls  within  the  meaning  of  the  word 
"miscarriage."  The  case  of  Read  and  Nash  is  very  distinguishable 
from  this  :  the  promise  there  was  to  pa}7  a  sum  of  money  as  an  induce- 
ment to  withdraw  a  record  in  an  action  of  assault,  brought  against  a 
third  person.  It  did  not  appear  that  the  defendant  in  that  action  had 
ever  committed  the  assault,  or  that  he  had  ever  been  liable  in  dam- 
ages ;  and  the  case  was  expressly  decided  on  the  ground  that  it  was 
an  original,  and  not  a  collateral  promise.  Here  the  son  had  rendered 
himself  liable  by  his  wrongful  act,  and  the  promise  was  expressly  made 
in  consideration  of  the  plaintiff's  forbearing  to  sue  the  son.  I  therefore 
think  that  the  nonsuit  was  right.  Rule  refused.2 

1  The  argument  of  counsel  and  the  concurring  opinions  of  Holroyd  and  Best, 
JJ.,  are  omitted.  — Ed. 

2  Turner  v.  Hubbell,  2  Day,  457  (semble) ;  Baker  v.  Morris,  33  Kas.  580  (semble)', 
Jacobs  v.  Burgwyn,  63  N.  C.  196  (semble). 


SECT.  L]  READ    V.   NASH.  25 


READ,  Executor  of  TUACK,  v.  NASH. 

In  the  King's  Bench,  Trinity  Term,  1751. 

[Reported  in  1  Wilson,  305.] 

Tuack,  the  plaintiff's  testator,  brought  an  action  of  assault  and  bat- 
tery against  one  Johnson ;  the  cause  being  at  issue,  the  record  entered 
and  just  coming  on  to  be  tried,  the  defendant  Nash  being  then  present 
in  court,  in  consideration  that  Tuack  would  not  proceed  to  trial,  but 
would  withdraw  his  record,  undertook  and  promised  to  pay  Tuack  £50 
and  the  costs  in  that  suit  to  be  taxed  till  the  time  of  withdrawing  the 
record,  in  which  taxation  all  such  sums  of  money  were  to  be  allowed  as 
Tuack  had  paid  and  was  liable  to  pay  to  his  attorney  and  witnesses 
who  attended  the  trial ;  Tuack,  relying  upon  his  promise,  did  with- 
draw his  record,  and  no  further  proceeding  was  had  in  that  cause. 
Tuack  being  dead,  Read,  his  executor,  has  brought  his  action  upon 
this  special  promise  and  undertaking  by  Nash. 

The  defendant  has  pleaded  non  assumpsit^  and  thereupon  issue  is 
joined  to  the  country.  Secondly,  He  has  pleaded  the  Statute  of 
Frauds  and  Perjuries. 

To  this  plea  the  plaintiff  has  demurred,  and  the  defendant  has  joined 
in  demurrer. 

This  case  was  twice  argued  at  the  bar,  and  after  time  taken  by  the 
Court  to  consider,  the  Chief  Justice  delivered  the  opinion  of  the  Court. 

Lee,  C.  J.  The  single  question  is,  Whether  this  promise,  which  is 
confessed  by  the  demurrer  not  to  have  been  in  writing,  is  within  the 
Statute  of  Frauds  and  Perjuries  ;  that  is  to  sa)r,  whether  it  be  a  promise 
for  the  debt,  default,  or  miscarriage  of  another  person  ;  and  we  are  ail 
of  opinion  that  it  is  not,  but  that  it  is  an  original  promise  sufficient  to 
found  an  assumpsit  upon  against  Nash,  and  is  a  lien  upon  Nash,  and 
upon  him  only.  Johnson  was  not  a  debtor,  the  cause  was  not  tried,  he 
did  not  appear  to  be  guilt)'  of  any  default  or  miscarriage,  there  might 
have  been  a  verdict  for  him  if  the  cause  had  been  tried  for  anything  we 
can  tell ;  he  never  was  liable  to  the  particular  debt,  damages,  or  costs. 
The  true  difference  is  between  an  original  promise  and  a  collateral 
promise  ;  the  first  is  out  of  the  statute,  the  latter  is  not  when  it  is  tG 
pay  the  debt  of  another  which  was  already  contracted . 

Judgment  for  the  plaintiff.1 

1  See  for  analogous  cases,  Jepherson  v.  Hunt,  2  All.  417;  Bellows  v.  Sowles,  51 
Vt.  165.  — E». 


26  DEXTER  V,   BLANCHARD.  [CHAP.  L 


ALVIN   DEXTER  v.    WILLIAM   E.   BLANCHARD. 

In  the  Supreme  Judicial  Court,  Massachusetts,  November,  1865. 

[Reported  in  11  Allen,  365.] 

Contract  brought  upon  an  oral  promise  by  the  defendant  to  pay  to 
the  plaintiff  a  bill  for  the  hire  of  horses  and  carriages,  and  for  injury 
to  a  wagon. 

At  the  trial  in  the  Superior  Court,  before  Morton,  J.,  the  plaintiff 
offered  to  prove  that  the  horses  and  carriages  were  hired  and  the  injury 
done  by  the  defendant's  minor  son,  to  whom  the  credit  therefor  was 
given ;  and  that  not  long  after  the  date  of  the  last  charge  the  defend- 
ant's son  became  sick,  and  while  so  sick  the  plaintiff  several  times 
demanded  payment  of  him,  and  thereupon  the  defendant  verbally  prom- 
ised to  pay  the  plaintiff's  bill,  if  the  plaintiff  would  not  trouble  his  son 
an}-  further ;  to  which  the  plaintiff  agreed.  The  son  afterwards  died. 
It  was  admitted  that  the  bill  was  not  for  necessaries. 

The  judge  ruled  that  upon  these  facts  the  action  could  not  be  main- 
tained, and  a  verdict  was  returned  accordingly  for  the  defendant.  The 
plaintiff  alleged  exceptions. 

E.  L.  Sherman,  for  the  plaintiff. 

W.  Brigham,  for  the  defendant. 

Bigelow,  C.  J.  The  ruling  of  the  Court  was  in  accordance  with 
well-established  principles.  The  defendant's  promise,  although  it  may 
have  been  made  on  a  good  consideration  as  to  the  plaintiff,  was  never- 
theless a  promise  to  pay  the  debt  of  another,  and  no  action  can  be 
maintained  upon  it.  Gen.  Sts.  c.  105,  §  1.  The  fallac}'  of  the  argu- 
ment urged  in  behalf  of  the  plaintiff  lies  in  the  assumption  that  there 
was  in  fact  no  debt  due  from  the  son  of  the  defendant,  because  he  was 
a  minor  at  the  time  he  undertook  to  enter  into  a  contract  with  the 
plaintiff.  A  debt  due  from  a  minor  is  not  void  ;  it  is  voidable  only ; 
that  is,  it  cannot  be  enforced  b}r  a  suit  at  law  against  the  contracting 
party,  on  plea  and  proof  by  him  of  infancy.  But  it  is  voidable  only  at 
the  election  of  the  infant,  and  until  so  avoided  it  is  a  valid  debt.  Nor 
can  a  third  person  avail  himself  of  the  minoi*ity  of  a  debtor  to  obtain 
any  right,  or  security,  or  title.  Infanc}'  is  a  personal  privilege,  of  which 
no  one  can  take  advantage  but  the  infant.  Kendall  v.  Lawrence,1 
Nightingale  v.  Withington,2  McCarty  v.  Murray.3 

The  effect  of  the  doctrine  contended  for  by  the  counsel  for  the  plaintiff 
would  be  that  a  verbal  agreement  to  answer  for  the  debt  of  another 
would  be  valid,  if  it  could  be  shown  that  the  original  contracting  party 
could  have  established  a  good  defence  to  the  debt  in  an  action  brought 
against  him.  We  know  of  no  principle  or  authority  on  which  such  a 
proposition  can  be  maintained.     It  certainly  would  open  a  wide  door 

1  22  Pick.  540  2  15  Mass.  274.  3  3  Gray,  578. 


SECT.  I.]  GOODMAN   V.   CHASE.  27 


for  some  of  the  mischiefs  which  the  Statute  of  Frauds  was  designed  to 
prevent. 

The  case  for  the  plaintiff  derives  no  support  from  the  argument  based 
on  proof  of  an  agreement  by  the  plaintiff  to  forbear  to  sue  the  defend- 
ant's son,  in  consideration  of  the  promise  of  the  latter  to  pa}'  the  debt. 
It  is  perfectby  well  settled  that  it  is  not  a  sufficient  ground  to  prevent 
the  operation  of  the  Statute  of  Frauds,  that  the  plaintiff  has  relin- 
quished an  advantage  or  given  up  some  lien  or  claim  in  consequence  of 
the  defendant's  promise,  if  that  advantage  or  relinquishment  did  not 
also  directly  enure  to  the  benefit  of  the  defendant.  It  is  only  when 
such  relinquishment  or  surrender  operates  to  transfer  to  the  defendant 
the  right,  interest,  or  advantage  which  the  plaintiff  gives  up,  or  to  cre- 
ate in  the  defendant  some  title  or  benefit  derived  from  that  which  the 
other  party  surrenders,  that  the  promise  can  be  regarded  as  an  original 
undertaking,  and  not  within  the  statute.  Curtis  v.  Brown,1  and  cases 
cited.  Exceptions  overruled? 


GOODMAN  and  Others  v.  CHASE. 
In  the  King's  Bench,  Hilary  Term,   1818. 

[Reported  in  1  Barnewall  §•  Alderson,  297.] 

Assumpsit.3  Plea,  general  issue.  The  cause  came  on  to  be  tried 
before  Abbott,  J.,  at  the  last  assizes  for  Hampshire,  when  a  verdict 
was  taken  for  the  plaintiffs  for  .£686,  subject  to  the  opinion  of  the 
Court  on  the  following  case  :  — 

The  plaintiffs  having  recovered  the  judgment  (mentioned  in  the 
declaration)  against  William  Chase  the  younger,  sued  out  a  ca.  sa., 
under  which  he  was  arrested  on  the  12th  August,  1816.  On  his  arrest 
he  applied  to  the  plaintiff's  attorney  for  time  to  get  the  mone}',  and  in 
the  mean  time  to  be  released  from  custody  ;  to  which  the  plaintiff's 
attorney  consented,  provided  defendant  (the  father  of  the  said  Wm. 
Chase  the  younger)  would  sign  a  written  paper,  which  was  delivered 
to  John  Handley,  the  sheriff's  officer,  to  be  taken  to  the  defendant  for 
that  purpose.  Immediately  on  receiving  that  paper,  Handley,  having 
the  said  Wm.  Chase  the  younger  still  in  his  custody,  waited  on  the 
defendant,  who  knew  him  to  be  a  sheriff's  officer,  and  delivered  the 
paper  to  the  defendant,  having  first  read  it  over  to  him  in  the  presence 
of  Wm.  Chase  the  younger,  and  having  at  the  same  time  informed  the 
defendant  that  Wm.  Chase  the  younger  was  in  his  custody,  and  that 

1  5  Cush.  488. 

2  Scott  v.  Bryan,  73  N.  C.  582;  Brown  v.  Farmers'  Bank  (Tex.  1895),  31  S.  W.R 
285,  Accord. 

King  v.  Summit,  73  Ind.  312,  Contra.  —  Ed. 

3  The  report  of  the  declaration  and  the  arguments  of  counsel  are  omitted.  —  Ed. 


28  GOODMAN    V.    CHASE.  [CHAP.  I 

the  plaintiffs  attorney  was  ready  to  let  the  said  Wm.  Chase  the  younger 
out  of  his  custody  if  the  defendant  would  sign  that  paper ;  upon  which 
the  said  defendant  read  the  paper  over,  and  signed  it :  the  contents  of 
the  paper  were  as  follow,  viz.  "I  do  hereby  undertake  and  agree  to 
put  the  above  defendant  into  the  custody  of  the  sheriff  of  Hampshire 
on  or  before  Saturday  next,  and  in  default  of  my  doing  so  I  undertake 
to  pa}T  the  damages  and  costs  for  which  the  said  defendant  has  been 
this  day  taken  in  execution  by  the  said  sheriff  at  the  suit  of  the  above- 
named  plaintiffs."  Dated,  &c.  The  paper  so  signed  was  returned  by 
Handley  to  the  plaintiff's  attorney,  by  whose  consent  the  said  Win. 
Chase  the  younger  was  thereupon  discharged  out  of  custody ;  he  did 
not,  however,  return  into  the  custody  of  the  sheriff  on  or  before  the 
Saturday  next  after  the  date  of  the  said  written  paper,  nor  hath 
the  £686,  nor  any  part  thereof,  been  paid.  The  said  Wm.  Chase 
the  younger  did,  however,  on  the  6th  November,  on  which  da}'  the 
ca.  set.  was  returnable,  offer  the  plaintiff's  attorney  to  return  into  cus- 
tod}'  in  discharge  of  the  defendant's  agreement,  but  the  plaintiff's: 
attorney  refused  to  discharge  the  defendant  from  his  agreement  on 
those  terms,  and  he  on  the  same  day  offered  to  surrender  himself  to 
the  under-sheriff,  who  refused  to  receive  him. 

This  case  was  twice  argued  :  first,  in  Michaelmas  Term,  by  Moore 
for  the  plaintiff,  and  Minchin  for  the  defendant ;  and  now  in  this  term 
by  Gaselee  for  the  plaintiff,  and  Bayly  for  the  defendant. 

When  the  case  was  called  on  the  second  time,  the  Court  said  that  it 
was  unnecessary  to  hear  Gaselee  on  the  case  of  Wain  v.  Warlters,1  inas- 
much as  it  appeared  to  them  that  the  plaintiff,  by  agreeing  to  let 
Chase  junior  out  of  custody,  had  entirely  discharged  the  debt  as  to 
him  ;  and  then  the  case  would  be,  that  the  defendant  promised  to  pay 
a  certain  sum  of  money,  in  consideration  of  the  debt  between  the 
plaintiff  and  Chase  junior  being  put  an  end  to :  which  being  a  detri- 
ment to  the  plaintiff,  would  be  a  good  consideration  for  an  original 
promise,  and  take  the  question  entirely  out  of  the  Statute  of  Frauds. 

Lord  Ellenborough,  C.  J.  By  the  discharge  of  Chase  junior  with 
the  plaintiff's  consent,  the  debt  as  between  those  two  persons  was  satis- 
fied. No  case  can  be  cited  in  which  such  a  discharge  has  not  been 
held  quite  sufficient.  Then,  if  so,  the  promise  by  the  defendant  here 
is  not  a  collateral  but  an  original  promise,  for  which  the  consideration 
is  the  discharge  of  the  debt  as  between  the  plaintiff  and  Chase  junior. 
That  being  so,  it  becomes  wholly  unnecessary  to  consider  the  question 
arising  out  of  the  construction  of  the  fourth  section  of  the  Statute  of 
Frauds.  Judgment  for  the  plaintiff *.2 

1  5  East,  10. 

2  Butcher  v.  Stewart,  11  M.  &  W.  857  ;  Cowenhoven  v.  Howell,  36  N.  J.  323  (semble) ; 
Afercein  v.  Andrews,  10  Wend.  461  (as  explained  in  Mallory  v.  Gillet,  21  N.  Y.  412, 
424) ;  Cooper  v.  Chambers,  4  Dev.  261,  Accord. 

See  also,  Griffin  v.  Derby,  5  Me.  476.  —  Ed. 


SECT.  I.]  BIRD    V.    GAMMON.  2k 


BIRD   v.   GAMMON. 
In  the  Common  Pleas,  June  9,  1837. 

[Reported  in  3  Bingham,  New  Cases,  883.] 

Tindal,  C.  J.1  The  facts  are,  that  the  plaintiff  was  a  creditor  of 
Lloyd's  for  £340  6s.  10c/.,  for  which  amount  he  held  a  warrant  of 
attorne}'.  Lloyd  becoming  embarrassed,  the  plaintiff  signed  judgment 
and  sued  out  execution  ;  and  other  creditors  had  similar  claims  upon 
Lloyd  ;  the  defendant  then  on  behalf  of  Lloj'd  endeavored  to  make 
terms,  and  offered  the  plaintiff  10s.  in  the  pound  ;  but  the  plaintiff 
refusing  to  accede,  the  defendant  looked  accurately  into  Lloyd's  ac- 
counts in  March,  1829,  and,  among  other  debts,  became  apprised  of 
the  amount  of  this  which  was  due  to  the  plaintiff.  Then,  in  May,  1829, 
Lloyd  conve3-s  all  his  propertj-  to  the  defendant  to  his  own  use,  the 
defendant  undertaking  to  pay  Lloyd's  creditors.  Matters  go  on  in  this 
wa}*  for  some  years,  Lloyd  acting  as  bailiff  to  the  defendant,  when  in 
Ma}-,  1832,  an  account  is  stated  between  the  plaintiff  and  the  defend- 
ant, the  first  item  of  which  is  this  sum  of  £340  6s.  lOd. ;  the  aggregate 
total  is  cast  up  in  the  handwriting  of  the  defendant,  who  makes  no 
objection,  but  says,  "all  these  sums  we  owe  to  Bird."  It  appears  then 
that  the  plaintiff,  with  the  consent  of  Lloyd  and  the  defendant,  had 
relinquished  his  execution  against  Lloyd,  to  look  to  the  defendant ;  that 
the  defendant  admitted  his  liability  when  the  account  was  presented  ; 
and  that  the  jury  found  such  to  have  been  the  agreement  between  the 
parties.  No  objection,  therefore,  can  be  raised  on  the  Statute  of 
Frauds,  for  this  is  not  an  agreement  to  pay  the  debt  of  a  third  person  ; 
but  an  agreement  that  if  the  plaintiff  would  forego  his  claim  on  Lloyd, 
the  defendant  would  pay  the  amount  of  the  debt  on  his  own  account. 
The  case,  therefore,  falls  within  the  principle  of  Read,  Executor  of 
Tuack,  v.  Nash,  where  a  cause  being  at  issue,  the  record  entered,  and 
just  coming  on  to  be  tried,  the  defendant  Nash  being  then  present  in 
court,  in  consideration  that  Tuack  would  not  proceed  to  trial,  but  would 
withdraw  his  record,  promised  to  pay  Tuack  £50  and  the  costs  in  that 
suit  to  be  taxed  till  the  time  of  withdrawing  the  record.  Tuack  reiving 
upon  this  promise  did  withdraw  his  record,  and  no  further  proceeding 
was  had  in  that  cause ;  Tuack  being  dead,  Read,  his  executor,  brought 
his  action  upon  that  special  promise  and  undertaking  by  Nash  ;  and  it 
was  held  that  this  was  no  promise  to  answer  for  the  debt,  default,  or 
miscarriage  of  another ;  but  an  original  promise  sufficient  to  found  an 
assumpsit  upon  against  Nash. 

It  is  objected  that  the  plaintiff,  if  he  fails  in  this  action,  ma}'  still  sue 
Lloyd,  or  issue  execution  ;  but  if  he  were  to  do  so,  Lloyd  might  show, 

1  Everything  is  omitted  except  the  opinions  of  Tindal,  C.  J.,  and  Coltman,  J 
Park  and  Vafghan,  JJ..  delivered  short  concurring  opinions.  —  Ed. 


30  BIRD    V.    GAMMON.  [CHAP.  L 

on  plea  or  audita  querela,  that  on  good  consideration  the  plaintiff  gave 
up  his  remedy  against  Lloyd,  and  took  the  defendant's  liabilit}-  instead  ; 
which,  though  not  properly  accord  and  satisfaction,  would  be  a  com- 
plete defence  on  the  general  issue  ;  Good  v.  Cheeseman,  and  the  cases 
there  cited.     I  think,  therefore,  this  rule  must  be  discharged. 

Coltman,  J.  As  to  the  £340  G*'.  10/.,  there  is  no  difficulty:  if 
debtor,  creditor,  and  a  third  party  agree  that  the  third  party  shall  be 
substituted  for  the  debtor,  the  debtor  is  exonerated.  Fairlie  v.  Denton,1 
has  decided  that,  establishing  to  that  extent  an  exception  to  the  rule, 
that  debts  cannot  be  assigned.  If  the  plaintiff  had  sued  Lloyd,  or 
issued  execution,  he  would  have  had  a  good  answer  by  plea  or  audita 
querela  ;  Good  v.  Cheeseman.  Rule  discharged.'1 

1  8  B.  &  C.  395. 

2  Browning  c.  Stallard,  5  Taunt.  450;  Tomlinson  v.  Gell,  6  A.  &  E.  564  {semble); 
Ex  parte  Lane,  De  Gex,  300 ;  Gull  v.  Lindsay,  4  Ex.  45,  52 ;  Thornton  v.  Guice,  73  Ala. 
321  ;  Carlisle  v.  Campbell,  76  Ala.  247  ;  McLaren  v.  Hutchinson,  22  Cal.  187  ;  Welch  v. 
Kenny,  49  Cal  49  ;  Lacker  v.  Benton,  35  Conu.  343  ;  Buchanan  v.  Moran,  62  Conn.  83  ; 
Karr  v.  Porter,  4  Honst.  297  ;  Harris  v.  Young,  40  Ga.  65  ;  Anderson  v.  Whitehead,  55 
Ga.  277 ;  Howell  v.  Field,  70  Ga.  592;  Sapp  v.  Faircloth,  70  Ga.  690;  Casey  v.  Miller 
(Idaho,  1893),  32  Pac.  R.  195  ;  Corbin  v.  McChesney,  26  111.  231  ;  Runde  v.  Runde,  59  111. 
98;  Struble  v.  Hake,  14  111.  Ap.  546;  Lindley  v.  Simpson,  45  111.  Ap.  648;  Nelson  v. 
Hardy,  7  lnd.  364  ;  Hopkins  v.  Carr,  31  Ind.  260  ;  Bovven  v.  Kurtz,  37  Iowa,  239  ;  Lester 
v.  Bowman,  39  Iowa,  61 1  ;  Brant  v.  Johnson,  46  Kas.  389  (semble) ;  Armstrong  v.  Flora, 
3  Mon.  (Ky.)  43 ;  Jones  v.  Walker,  13  B.  Mon.  356  (semble) ;  Day  v.  Chloe,  4  Bush,  563 ; 
Whitman  v.  Wentworth,  76  Maine,  20;  Andre  v.  Bodman,  13  Md.  241  (semble) ;  White 
v.  Solomonsky,  30  Md.  585;  Webster  v.  LeCompte,  74  Md.  249 ;  Walker  v.  Penniman, 
8  Gray,  233  ;  Wood  v.  Corcoran,  1  All.  405  ;  Lord  v.  Davison,  3  All.  131 ;  Langdon  v. 
Hughes,  107  Mass.  272  ;  Eden  v.  Chaffee,  160  Mass.  225  ;  Mulcrone  v.  American  Co.,  55 
Mich.  622  ;  Yale  v.  Edgerton,  14  Minn.  194 ;  Wilson  v.  Vass,  54  Mo.  Ap.  221  ;  Watson  v. 
Randall,  20  Wend.  201  (semble) ;  Meriden  Co.  v.  Zingsen,  48  N.  Y.  247  ;  Booth  v.  Eigh- 
mie,  60  N.  Y.  238 ;  Quintard  v.  De  Wolf,  34  Barb.  97  ;  Stanly  v.  Hendricks,  13  Ired.  86 
(semble;)  Estabrook  v.  Gebhart, 32  Oh.  St. 415  ;  Miller  v.  Lynch,  17  Oreg.  61 ;  Allshouse 
v.  Ramsay,  6  Whart.  331  (semble) ;  Corbett  v.  Cochran,  3  Hill  (S.  C),  41 ;  Bason  v. 
Hughart,  2  Tex.  476 ;  Warren  v.  Smith,  24  Tex.  484 ;  McCrary  v.  Van  Hook,  35  Tex. 
631 ;  Anderson  v.  Davis,  9  Vt.  136  ;  Watson  v.  Jacobs,  29  Vt.  169;  Buchanan  v.  Paddle- 
ford,  43  Vt.  64  (semble) ;  Bates  v.  Sabin,  64  Vt  511;  Waggoner  v.  Gray,  2  Hen.  &  Munf. 
603  (semble);  Noyes  v.  Humphreys,  11  Grat.  636  (semble);  Willard  v.  Bosshard,  68 
Wis.  454  (semble) ;  Rietzloff  v.  Glover  (Wisconsin,  1895),  64  N.  W.  R.  298,  Accord. 

In  the  cases  cited  in  the  preceding  paragraph  the  novation  was  effected  by  the  sub- 
stitution of  a  new  debtor  in  the  place  of  the  original  debtor  (novatio  debiti).  If  the 
novation  is  accomplished  by  a  change  of  creditors,  the  debtor  remaining  the  same, 
(novatio  nominis)  the  promise  of  the  debtor  to  pay  his  old  debt  to  the  new  creditor  is 
obviously  not  within  the  Statute  of  Frauds.  Lacy  v.  McNeile,  4  D.  &  Ry.  7  ;  Aultman 
v.  Fletcher  (Ala.  1895),  18  So.  R.  215;  Gallagher  v.  Nichols,  60  N.  Y.  438;  Van 
Wagner  v.  Terrett,  27  Barb.  181.  —Ed. 


SECT.  1.]  TOMLINSON   V.   GILL.  31 

TOMLTNSON   v.   GILL. 
In  Chancery,  before  Loud  Hardwicke,  C,  November  15,  1756. 

[Reported  in  Ambler,  330.] 

The  defendant  Gill  promised,  that  if  the  widow  of  the  intestate 

would  permit  him  to  be  joined  with  her  in  the  letters  of  administration 
of  his  assets,  he  would  make  good  any  deficiency  of  assets  to  discharge 
the  intestate's  debts. 

Bill  by  creditors  of  the  intestate  against  Gill,  for  a  satisfaction  of 
their  debts,  and  performance  of  the  promise.  It  was  insisted,  on  the 
part  of  the  defendant,  to  be  within  the  Statute  of  Frauds  and  Per- 
juries ;  and  that  the  promise,  not  being  in  writing,  was  void  by  that 
statute. 

Lord  Hardwicke,  Chancellor.  There  are  two  questions :  1st,  On 
the  right ;  2d,  On  the  remedy.  The  bill  is  founded  on  an  argument, 
which  is  not  unusual  where  there  is  a  contest  about  obtaining  adminis- 
tration. It  is  not  uncommon,  upon  such  occasions,  for  the  simple  con- 
tract creditors  to  agree  that  administration  shall  be  granted  to  a 
specialty  creditor,  upon  terms  of  his  agreeing  to  pa}'  the  debts  equally 
and  pari  passu.     Such  agreements  are  seldom  put  into  writing. 

I  am  of  opinion  this  case  is  not  within  the  Statute  of  Frauds.  It  is 
not  within  the  first  branch  of  the  section,  for  Gill  was  not  adminis- 
trator at  the  time  of  making  the  promise  ;  and  it  is  no  answer  to  say 
that  he  was  administrator  afterwards.  It  is  not  within  the  second 
branch  of  that  clause,  —  the  modern  determinations  have  made  a  dis- 
tinction between  a  promise  to  pa}'  the  original  debt,  on  the  foot  of  the 
original  contract,  and  whei'e  it  is  on  a  new  consideration.  The  dis- 
tinction taken  in  Buckmire  v.  Darnell  is  a  very  slight  and  cobweb 
distinction.  The  judges  were  much  divided  upon  the  question.  I 
agree  with  the  many. 

Here  is  quite  a  new,  distinct  consideration.  Read  v.  Nash  is  strong 
to  the  purpose. 

2d  Question.  The  plaintiff  is  proper  for  relief  here  for  two  reasons : 
1st,  He  could  not  maintain  an  action  at  law,  for  the  promise  was  made 
to  the  widow ;  but  he  is  proper  here,  for  the  promise  was  for  the 
benefit  of  the  creditors,  and  the  widow  is  a  trustee  for  them.  2dly,  The 
bill  is  brought  for  an  account,  and  that  draws  to  it  relief,  like  the  com- 
mon case  of  a  bill  to  be  paid  a  debt  out  of  assets.  It  was  at  first 
doubted  whether  the  Court  should  go  further  than  to  take  the  account ; 
but  it  was  afterwards  settled  that  the  Court  ought  not  to  make  two 
suits  out  of  one,  but  give  complete  satisfaction  on  such  a  bill,  by 
decreeing  the  debt  to  be  paid. 


32  EASTWOOD   V.    KENYON.  [CHAP.  I 

EASTWOOD  v.  KENYON. 
In  the  Queen's  Bench,  Hilary  Term,   1840. 

[Reported  in  11  Adolphus  and  Ellis,  438.] 

In  this  term  (January  16th)  the  judgment  of  the  Court  was  deliv- 
ered by 

Lord  Denman,  C.  J.  The  first  point  in  this  case  arose  on  the  fourth 
section  of  the  Statute  of  Frauds,  viz.,  whether  the  promise  of  the  de- 
fendant was  to  "  answer  for  the  debt,  default,  or  miscarriage  of  another 
person."1  Upon  the  hearing  we  decided,  in  conformity  with  the  case 
of  Buttemere  v.  Hayes,2  that  this  defence  might  be  set  up  under  the 
plea  of  no?i-assuntpait.3 

The  facts  were  that  the  plaintiff  was  liable  to  a  Mr.  Blackburn  on  a 
promissoiy  note  ;  and  the  defendant,  for  a  consideration,  which  may 
for  the  purpose  of  the  argument  be  taken  to  have  been  sufficient,  prom- 
ised the  plaintiff  to  pay  and  discharge  the  note  to  Blackburn.  If  the 
promise  had  been  made  to  Blackburn,  doubtless  the  statute  would  have 
applied  ;  it  would  then  have  been  strictly  a  promise  to  answer  for  the 
debt  of  another  ;  and  the  argument  on  the  part  of  the  defendant  is, 
that  it  is  not  less  the  debt  of  another  because  the  promise  is  made  to 
that  other,  viz.,  the  debtor,  and  not  to  the  creditor,  the  statute  not 
having  in  terms  stated  to  whom  the  promise  contemplated  by  it  is  to 
be  made.  But  upon  consideration  we  are  of  opinion  that  the  statute 
applies  only  to  promises  made  to  the  person  to  whom  another  is  answer- 
able. We  are  not  aware  of  an}'  case  in  which  the  point  has  arisen,  or 
in  which  any  attempt  has  been  made  to  put  that  construction  upon  the 
statute  which  is  now  sought  to  be  established,  and  which  we  think  not 
t  *  be  the  true  one.4 

Hide  to  enter  verdict  for  defendant  discharged. 

1  Everything  is  omitted  except  the  opinion  of  the  Court  upon  this  point.  —  Ed. 

2  5  Mee.  &  W.  456. 

8  The  Statute  of  Frauds  is  now  an  affirmative  defence  in  England  and  most  of  the 
States  in  this  country.  —  Ed. 

*  Pratt  v.  Bucklin,  22  Conn.  .317;  Tuttle  v.  Arm  stead,  53  Conn.  175;  Meyer  v. 
Hartman,  72  111.  442  ;  Neagle  v.  Kelly,  146  111.  460  ;  44  111.  Ap.  234  ;  Crim  v.  Fitch,  53 
Ind.  214;  Bateman  v.  Butler,  124  Ind.  223;  Patton  v.  Mills,  21  Kas.  163;  Colt  o. 
Root,  17  Mass.  229;  Hubon  v.  Park,  116  Mass.  541  ;  Pratt  v.  Bates,  40  Mich.  37  ;  Goetz 
v.  Foss,  14  Minn.  265 ;  Ware  v.  Allen,  64  Miss.  545  ;  Howard  v.  Coshow,  33  Mo.  118, 
Fisk  v.  McGregory,  34  N.  H.  414;  Mersereau  v.  Lewis,  25  Wend.  243;  Smart  v. 
Smart,  97  N.  Y.  559;  Rice  v.  Cooke,  11  Ired.  298  ;  Soule  v.  Albee,  31  Vt.  142;  Randall 
v.  Kelsey,  46  Vt.  158,  Accord. 

In  the  preceding  cases  the  promise  was  made  to  the  debtor.  The  promise  is  equally 
clear  of  the  Statute  of  Frauds  if  made  to  one  who  is  neither  debtor  nor  creditor,  as,  in 
Reader  v.  Kingham,  13  C.  B.  n.  s.  344,  where  the  defendant,  in  consideration  that  the 
plaintiff,  a  bailiff,  would  forbear  to  arrest  a  judgment  debtor,  promised  the  bailiff  to 
pay  the  debt  to  the  judgment  creditor.     See  also  Thomas  v.  Welles,  1  Root,  57.  —  Ed. 


SECT.  I.]  FURBISH   V.    GOODNOW.  33 


FURBISH  and  Another  v.  P.  GOODNOW. 
In  the  Supreme  Judicial  Court,  Massachusetts,  November,  18G7. 

[Reported  in  98  Massachusetts  Reports,  296.] 

Contract  on  a  promise  by  the  defendant  to  pa)-  the  amount  of  a 
promissory  note  due  to  the  plaintiffs  from  Charles  Redding. 

At  the  trial  in  the  Superior  Court,  before  Russell,  J.,  the  plaintiffs 
relied  upon  the  case  stated  in  their  declaration  ;  namely,  that  Redding 
was  indebted  to  them  on  a  promissory  note  which  the)-  continued  to 
hold  ;  and  that,  by  an  agreed  arrangement  between  the  defendant,  Red- 
ding, and  the  plaintiffs,  Redding  conveyed  certain  real  estate  to  the 
defendant,  and,  as  a  part  of  the  consideration  therefor,  the  defendant 
promised  to  pay  the  plaintiffs  the  amount  of  the  note.  The  plaintiffs 
admitted  that  they  had  no  written  evidence  of  any  promise  by  the  de- 
fendant, whereupon  the  judge,  on  motion  of  the  defendant,  ruled  that 
without  such  written  evidence,  and  without  evidence  that  Redding  was 
to  be  discharged  from  his  obligation  to  pay  the  plaintiffs,  this  action 
could  not  be  maintained  ;  and  a  verdict  was  accordingly  taken  for  the 
defendant,     The  plaintiffs  alleged  exceptions. 

G.  W.  Pari;  for  the  plaintiffs.1 

JR.  D.  Smith  {H.  L.  Hazelton  with  him),  for  the  defendant. 

Gray,  J.  This  case  arises  under  that  clause  of  the  Statute  of  Frauds 
which  provides  that  no  action  shall  be  brought  "  to  charge  a  person 
upon  a  special  promise  to  answer  for  the  debt,  default,  or  misdoings  of 
another,  unless  the  promise  or  some  memorandum  or  note  thereof  is  in 
writing,  and  signed  by  the  party  to  be  charged,  or  his  agent."  Gen. 
Stats,  c.  105,  §  1,  cl.  2.  By  the  established  construction  of  this  clause, 
"  a  special  promise,"  in  order  to  fall  within  the  statute,  must  be  express 
and  not  merely  implied  by  law,  "  to  answer  for  a  debt,"  for  which  the 
promisor's  person  or  estate  is  not  already  liable,  "of  another"  than 
either  of  the  parties  to  the  promise,  and  who,  if  already  liable  for  the 
debt,  continues  so  liable.  Goodwin  y.  Gilbert,2  Fish  v.  Thomas,3  Alsrer 
v.  Scoville,4  Walker  v.  Penniman.5 

Even  when  all  these  elements  concur,  still,  if  the  principal  and  im- 
mediate object  of  the  transaction  is  to  benefit  the  promisor,  not  to 
secure  the  debt  of  another  person,  the  promise  is  considered  not  as  col- 
lateral to  the  debt  of  another,  but  as  creating  an  original  debt  from  the 
promisor,  which  is  not  within  the  statute,  although  one  effect  of  its  pay- 
ment may  be  to  discharge  the  debt  of  another.  It  must,  however,  be 
constantly  borne  in  mind  that  the  question  under  the  statute  is  not 
whether  there  is  a  sufficient  consideration  for  the  defendant's  promise, 
but  whether  that  promise  is  to  answer  for  the  debt  of  another.     The 

1  The  argument  for  plaintiffs  is  omitted.  —  Ed. 

2  9  Mass.  514.  3  5  Gray)  45 

♦  1  Gray,  395.  6  8  Graj)  933. 

3 


Si  FURBISH    V.    GOODNOW.  [CHAP.  I 

common  law  requires  a  consideration  for  every  promise,  oral  or  written  ; 
the  statute  also  requires  that,  if  it  is  a  promise  to  answer  for  the  debt 
of  another,  it  shall  be  in  writing.  When  the  original  debtor  remains 
liable,  yet  if  the  creditor,  in  consideration  of  the  new  promise,  releases 
some  interest  or  advantage  relating  to  or  affecting  the  original  debt,  and 
enuring  to  the  benefit  of  the  new  promisor,  his  promise  is  considered  as 
a  promise  to  answer  for  his  own  debt,  and  the  case  is  not  within  the 
statute.  But  if  no  consideration  moves  from  the  creditor  to  the  new 
promisor,  and  the  original  debtor  still  remains  liable  for  the  debt,  the 
fact  that  the  promisee  gives  up  something  to  that  debtor,  or  that  a  trans- 
fer of  property  is  made  or  other  consideration  moves  from  that  debtor 
to  the  new  promisor  to  induce  the  latter  to  make  the  new  prom- 
ise, does  not  make  this  promise  the  less  a  promise  to  answer  for  the 
debt  of  another ;  but,  on  the  contrary,  the  fact  that  the  only  new  con- 
sideration either  enures  to  the  benefit  of  that  other  person,  or  is  paid 
b}'  him  to  the  new  promisor,  shows  that  the  object  of  the  new  promise 
is  to  answer  for  his  debt.  This  is  well  settled  in  Massachusetts  by  the 
judgments  of  this  Court,  delivered  by  Chief  Justice  Shaw. 
•  In  Nelson  v.  Boynton,1  it  was  held  that  a  promise  to  pa}'  the  debt  of 
another  (which  had  been  secured  b}'  suit  and  attachment  of  his  property, 
in  which  the  new  promisor  had  no  interest),  in  consideration  of  the 
creditor's  discontinuing  the  suit,  without,  however,  giving  up  or  dis- 
charging that  debt,  was  within  the  statute  ;  and  the  Chief  Justice  dis- 
tinguished the  case  from  those  in  which  the  creditor  had  a  claim  or  lien 
upon  property,  which  was  discharged  at  the  request  and  for  the  benefit 
of  the  party  promising;  and  said,  "The  rule  to  be  derived  from  the 
decisions  seems  to  be  this  :  that  cases  are  not  considered  as  coming 
within  the  statute,  when  the  party  promising  has  for  his  object  a  benefit 
which  he  did  not  before  enjo}',  accruing  immediately  to  himself;  but 
when  the  object  of  the  promise  is  to  obtain  the  release  of  the  person  or 
property  of  the  debtor,  or  other  forbearance  or  benefit  to  him,  it  is 
within  the  statute." 

The  rule  is  more  precisely  defined  in  the  latter  case  of  Curtis  v. 
Brown,2  which  cannot  be  distinguished  from  the  present  (at  least  in 
any  particular  favorable  to  this  plaintiff)  and  which  is  conclusive 
upon  the  point  that  a  consideration  moving  from  the  original  debtor 
to  the  new  promisor  is  not  sufficient  to  take  the  case  out  of  the 
statute.  The  plaintiff  there  offered  to  show  that  the  defendants,  own- 
ing land  on  which  one  Coffin  was  building  houses  under  a  contract, 
proposed  to  Coffin  to  release  them  from  the  building  contract  and  as- 
sign to  them  the  building  materials  then  on  the  premises,  which  Coffin 
refused  to  do  unless  the  defendants  would  agree  to  pa}T  all  bills  then 
outstanding  for  labor  and  materials,  the  amount  of  which  he  mentioned, 
and  of  which  the  plaintiff's  was  one  ;  that  the  defendants  thereupon,  in 
consideration  of  such  a  release  and  assignment,  and  with  the  sole  mo 

1  3  Met.  396.  2  5  Cush.  488. 


SECT.  I.]  FURBISH   V.    GOODNOW.  35 

tive  of  procuring  that  benefit,  which  they  did  not  before  enjoy,  agreed 
to  pay  those  bills  ;  told  Coffin  to  inform  the  creditors  of  the  agreement, 
which  he  did  ;  and  took  possession  of  the  land  and  materials.  It  was 
held  that  the  promise  made  by  the  defendants  to  Coffin,  and  communi- 
cated b}r  him  at  their  request  to  the  plaintiff,  was  equivalent  to  a  direct 
promise  by  the  defendants  to  the  plaintiff;  but  was  within  the  Statute 
of  Frauds  and  would  not  support  an  action,  because,  in  the  words  of 
the  Chief  Justice,  "  where  the  original  debt  still  subsists,  and  where  the 
plaintiff  has  relinquished  no  interest  or  advantage,  which  has  enured  to 
the  benefit  of  the  defendant,  it  is  not  an  original  contract,  but  a  con- 
tract to  pa}T  another's  debt,  and  must  be  in  writing ;  "  and,  in  the  par- 
ticular case,  "  the  promise  of  the  defendants,  supposing  it  to  have 
been  made  directly  to  the  plaintiff,  was  a  promise  to  pay  the  debt  due 
to  him  from  Coffin  ;  the  plaintiff  did  not  release  Coffin,  or  relinquish 
any  lien  or  benefit ;  and,  although  there  was  a  good  consideration  in 
law  for  the  defendant's  promise,  it  was  a  consideration  moving  from 
Coffin,  and  not  from  the  plaintiff." 

The  later  decisions  of  this  Court,  cited  in  behalf  of  the  plaintiffs, 
contain  nothing  to  vary  this  rule.  In  Alger  v.  Scoville,1  the  plaintiff 
transferred  to  the  defendant  the  greater  part  of  the  stock  in  a  corpora- 
tion, and  the  defendant  received  it  and  agreed  to  indemnify  the  plaintiff 
against  his  indorsements  on  the  outstanding  notes  of  the  corporation  ; 
so  that  not  only  was  the  defendant's  promise  a  promise  to  pa\r  the  debt 
of  the  promisee,  but  the  consideration  for  it  was  a  transfer  of  property 
from  the  promisee  to  the  promisor;  and  Chief  Justice  Shaw  cited  with 
approval  Nelson  v.  Bojnton,  and  Curtis  v.  Brown,  above  quoted.  See 
also  Jepherson  u.  Hunt,2  Dexter  v.  Blanchard,  Burr  v.  Wilcox.3  In 
Wood  v.  Corcoran,4  the  original  debtor  was  released  at  the  time  of  the 
new  promise. 

In  England,  the  settled  construction  of  the  statute  seems  to  be  in 
accordance  with  that  which  has  prevailed  in  this  court.  The  rule  wa9 
laid  down  by  Sergeant  Williams  in  the  notes  to  Forth  v.  Stanton,5  as 
the  result  of  the  earlier  authorities,  that  "  the  question,  whether  each 
particular  case  comes  within  this  clause  of  the  statute  or  not,  depends 
not  on  the  consideration  for  the  promise,  but  on  the  fact  of  the  original 
party  remaining  liable,  coupled  with  the  absence  of  any  liability  on  the 
part  of  the  defendant  or  his  property,  except  such  as  arises  from  his 
express  promise."  This  proposition  has  since  been  considered  as  stat- 
ing the  true  test.  Green  v.  Creswell.  In  Fitzgerald  v.  Dressier,6 
Lord  Chief  Justice  Cockburn  (with  whom  the  other  judges  agreed  on 
this  point)  said  of  it,  "I  quite  concur  in  that  view  of  the  doctrine, 
provided  the  proposition  is  considered  as  embracing  the  qualification 
at  the  conclusion  of  the  passage  ;  for,  though  I  agree  that  the  consid- 
eration alone  is  not  the  test,  but  that  the  party  taking  upon  himself 

1  1  Gray,  391.  2  2  Allen,  423. 

3  13  Allen,  269.  *  1  Allen,  405 

*  1  Saund.  (5th  ed.)  211  e.  6  7  C.  B.  n.  s.  392. 


36  FURBISH  V.    GOODNOW.  [CHAP.  L 

the  otw^ation  upon  which  the  action  is  brought  makes  himself  respon- 
sible for  the  debt  or  default  of  another,  still  it  must  be  taken  with  the 
qualification  stated  in  the  note  above  cited,  viz.,  an  absence  of  prior 
liability  on  the  part  of  the  defendant  or  his  property  —  it  being,  as  I 
think,  truly  stated  there  as  the  result  of  the  authorities,  that,  if  there 
be  something  more  than  a  mere  understanding  to  pay  the  debt  of  an- 
other, as  where  the  property  in  consideration  of  the  giving  up  of  which 
the  party  enters  into  the  undertaking  is  in  point  of  fact  his  own  or  is 
property  in  which  he  has  some  interest,  the  case  is  not  within  the  pro- 
vision of  the  statute."  In  Tomlinson  v.  Gell,1  Mr.  Justice  Patteson 
said,  according  to  one  report,  "  In  the  cases  in  which  it  has  been  held 
that  the  promise  to  pay  the  debt  of  another  need  not  be  in  writing,  some 
sacrifice  has  been  made  by  the  plaintiff,  such  as  giving  up  a  lien,  or 
the  original  debt;  "  or,  according  to  the  other  report,  "The  cases  on 
that  point  have  been  where  something  has  been  given  up  by  the  plain- 
tiff and  acquired  by  the  party  making  the  promise  ;  as  the  security  of 
goods  for  a  debt."  In  a  very  recent  case,  the  plaintiff  had  contracted 
to  supply  a  firm  with  goods,  to  be  paid  for  on  deliver}'.  It  was  after- 
wards agreed  between  that  firm,  the  plaintiff,  and  the  broker  who  made 
this  contract  in  behalf  of  that  firm,  and  who  had  no  interest  in  its  per- 
formance, that  the  plaintiff,  instead  of  receiving  payment  in  cash,  should 
draw  upon  that  firm  at  one  month,  and  allow  the  broker  three  per  cent 
upon  the  amount  of  the  invoice,  in  consideration  of  which  the  broker 
was  to  pa}-  the  plaintiff  cash,  and  take  the  draft  without  recourse,  or, 
in  other  words,  buy  the  draft  of  the  plaintiff.  It  was  argued  that  this 
was  an  original  contract  by  the  broker,  in  consideration  of  the  advan- 
tages which  would  accrue  to  him  from  the  performance  of  the  plaintiff's 
contract  with  the  firm.  But  it  was  held  by  the  Courts  of  Common  Pleas 
and  Exchequer  Chamber  that  it  was  a  promise  to  answer  for  the  debt  of 
the  firm,  and  within  the  Statute  of  Frauds.  Mallet  v.  Bateman.  The 
other  English  cases  cited  by  the  plaintiff  do  not  touch  this  point ;  for 
in  Browning  v.  Stallard,2  the  new  promise  was  accepted  by  the  creditor 
as  a  substitute  for  the  original  one,  and  the  first  debtor  discharged  from 
liability  ;  and  in  Hodgson  v.  Anderson,3  the  new  promise  was  to  pa}-  to 
the  plaintiff  the  promisor's  own  debt  to  a  third  person. 

There  is  a  want  of  consistency  in  the  American  authorities  upon  this 
subject.  Chancellor  Kent  was  of  opinion  that  a  guaranty  of  a  pre- 
viously existing  debt  of  another  was  within  the  statute,  unless  it  arose 
out  of  some  new  and  original  consideration  of  benefit  or  harm  moving 
between  the  newly  contracting  parties.  Leonard  v.  Vredenburgh.4  In 
Jackson  v.  Rayner,5  the  Supreme  Court  of  New  York  held  that  an  oral 
promise,  which  a  father,  who  had  taken  an  assignment  of  his  son's 
property,  made  to  one  of  his  son's  creditors  to  pay  his  debt,  was  within 

1  1  Nev.  &  P.  594,  and  6  Ad.  &  El.  571. 

2  5  Taunt.  450.  3  3  B.  &  C.  842,  and  5  D.  &  R.  735. 
4  8  Johns.  39  ;  3  Kent  Com.  (6th  ed.)  123. 

6  12  Johns.  291. 


SECT.  I.]  BARKER   V.    BUCKLIN.  37 

the  statute.  The  decision  of  this  Court  in  Curtis  v.  Brown,  above  cited, 
has  been  followed  in  Clapp  v.  Lawton,1  and  recognized  in  Robinson  v. 
Gilman.2  And  the  decision  in  Emerson  v.  Slater,8  is  not  opposed  to 
it;  for  in  that  case  the  promise  of  the  defendant  was  an  original  un- 
dertaking on  a  good  and  valid  consideration  moving  from  the  plaintiff 
to  the  defendant. 

The  other  cases  cited  for  the  plaintiff  indeed  show  that  by  the  later 
decisions  in  New  York,  Maine,  and  Vermont,  the  application  of  the 
statute  has  been  so  far  relaxed  in  those  States  as  to  treat  a  transfer  of 
property  from  the  original  debtor  to  the  new  promisor  as  taking  the 
promise  of  the  latter  to  the  original  creditor  out  of  the  statute.  But 
where  the  authorities  are  conflicting,  it  is  important  that  this  Court 
should  follow  its  own  decisions,  unless  clearly  satisfied  that  the}'  are 
erroneous,  and  thus  at  least  preserve  uniformit}'  in  the  law  of  this 
Commonwealth. 

In  this  action,  brought  upon  an  express  promise  of  the  defendant  to 
pay  the  debt  of  a  third  person  to  the  plaintiff,  no  evidence  being  offered 
of  a  discharge  of  the  original  debtor,  or  of  any  consideration  whatever 
moving  between  the  creditor  and  the  new  promisor,  but  the  onby  con- 
sideration being  a  conveyance  of  real  estate  to  the  latter  from  the 
original  debtor,  the  new  promise  was,  according  to  the  weight  of  au- 
thority, and  in  our  opinion,  on  principle,  a  promise  to  answer  fof 
the  debt  of  another,  within  the  statute,  and  the  action  cannot  be 
maintained.  Exceptions  overruled} 


BARKER  v.   GEORGE  R.   BUCKLIN. 

In  the  Supreme  Court,  New  York,  January,  1846. 

[Reported  in  2  Denio,  45.] 

By  the  Court,  Jewett,  J.5  The  case  at  bar  is  a  parallel  case  with 
Farlej-  v.  Cleveland,6  so  far  as  the  principle  upon  which  the  plaintiff's 
claim  and  defendant's  liability  rest.  The  defendant,  as  appears  by 
the  evidence  of  Francis  B.  Bucklin,  purchased  of  the  witness  a  pair 
of  horses  at  the  price  of  $160,  which  he  agreed  to  pay  to  the  plaintiff 

1  31  Conn.  95.  2  43  ^  jj.  491.  3  22  How.  28. 

4  Clapp  v.  Lawton,  31  Conn.  95  ;  Curtis  v.  Brown,  5  Cush.  488  ;  Brightman  v. 
flicks.  108  Mass.  246;  Brown  v.  Hazen,  11  Mich.  219;  Halsted  v.  Francis,  31  Mich. 
113  ;  Shoemaker  v.  King,  40  Pa.  107 ;  1  Pearson,  206,  s.  c. ;  Maule  v.  Bucknell,  50 
Pa.  53.  (But  see  Townscnd  v.  Long,  77  Pa.  143;  Taylor  v.  Preston,  79  Pa.  436; 
Fehlinger  v.  Wood,  134  Pa.  517),  Accord.  —Ed. 

5  Everything  is  omitted  except  the  opinion  of  the  Court  upon  the  point  of  the 
Statute  of  Frauds.  —  Ed. 

6  4  Cow.  432 ;  9  Cow.  639. 


38  BARKER   V.    BUCKLIN.  [''HAP.  I. 

to  be  applied  upon  a  debt  owing  by  the  witness  to  him,  involving,  as  I 
think,  no  question  under  the  Statute  of  Frauds,  but  merely  the  question 
whether,  where  one  person  makes  a  promise  to  another  for  the  benefit 
of  a  third,  the  third  may  maintain  an  action  upon  it,  though  the  consid- 
eration does  not  move  from  him. 

In  Ellwood  v.  Monk,1  the  question  arose  on  demurrer.  The  case 
made  by  the  second  special  count  of  the  declaration  was  this :  The 
plaintiff  was  the  payee  and  holder  of  three  notes  made  by  one  Johannes 
Monk,  each  for  a  quantity  of  hemlock  boards,  dated  in  November, 
1819,  and  payable  in  January,  1822,  1823,  and  1824.  On  the  1st 
of  January,  1823,  the  defendant,  Jacob  Monk,  in  consideration  that 
Johannes  Monk  then  gave  and  delivered  to  him  a  large  portion  of  prop- 
erty of  great  value,  to  wit,  of  the  value  of  five  hundred  dollars,  under- 
took and  promised  to  pay  among  certain  creditors  named  of  said 
Johannes,  the  said  demand  of  the  plaintiff  arising  upon  said  notes, 
averring  that  the  plaintiff's  demand  against  Johannes  was  three  hun- 
dred dollars,  and  that  he,  confiding  in  the  defendant's  promise,  stayed 
all  proceedings  and  the  collection  of  his  debt  against  Johannes.  The 
Court  held  that  the  contract  set  forth  was  obligatory  upon  the  defend- 
ant, without  being  reduced  to  writing.  It  was  said,  however,  that 
"  the  promise  was  to  pa}'  the  debt  of  a  third  person,  but  yet  it  is  not 
within  the  Statute  of  Frauds,  being  made  upon  a  new  and  distinct  con- 
sideration," citing  Farley  v.  Cleveland  as  authority  for  that  principle. 
1  agree  that  the  case  was  well  decided  ;  but,  as  I  think,  a  wrong  reason 
was  given  for  it.  It  is  difficult,  it  seems  to  me,  to  hold  that  a  particu- 
lar promise  is  to  pay  the  debt  of  a  third  person  and  obligator}'  on  the 
promisor,  and  not  within  the  provisions  of  the  Statute  of  Frauds,  al- 
though not  in  writing,  because  it  is  founded  upon  a  new  and  distinct 
consideration.  The  idea  of  the  necessity  of  a  new  consideration  to 
uphold  a  promise  of  one  person  to  pay  another's  debt,  I  apprehend  is 
only  applicable  to  such  promise  made  in  a  negotiation  between  the 
creditor  and  such  person  proposing  to  pay  the  debt  of  another  to  the 
creditor  ;  there  it  is  well  settled  that  a  promise  by  such  person  even  in 
writing  to  pay  a  debt  already  incurred,  is  not  available  if  there  be  no 
new  consideration  (Chitty,  jun.  on  Contracts,  ed.  of  1842,  p.  52  ;  Leonard 
y.  Vredenburgh.) 2  And  where  there  is  a  new  consideration  for  a  promise 
by  one  to  pay  the  debt  of  another,  the  promise  is  void  by  the  provisions 
of  the  statute,  unless  the  agreement,  or  some  note  or  memorandum 
thereof  expressing  the  consideration  shall  be  in  writing.  An  agree- 
ment on  the  part  of  a  creditor  to  forbear  to  sue  a  debtor,  is  a  good 
consideration  to  uphold  a  promise  of  a  third  person  to  pay  the  debt ; 
so  undoubtedly  a  like  promise  to  a  creditor  in  consideration  of  the 
transfer  by  the  creditor  to  the  promisor  of  property  would  be  available 
to  the  creditor,  if  such  agreement  should  be  in  writing  as  provided  by 
the  statute  ;  but  otherwise  the  agreement  would  be  void,  notwithstand- 

1  5  Wend.  235.  2  8  Johns.  29. 


SECT.  I.J  BARKER   V.    BUCKLIN.  39 

ing  the  new  and  distinct  consideration  for  such  promise.  To  consti- 
tute a  valid  agreement  to  pay  the  debt  of  another,  therefore,  there 
must  be  not  only  a  good  consideration,  but  the  agreement  must  be  in 
writing  and  must  express  the  consideration.  Both  ingredients  must 
concur,  or  the  agreement  will  be  void. 

There  cannot  be  any  objection  arising  under  the  statute  to  the  en 
forcing  a  promise  made  upon  good  consideration,  by  a  third  person  to 
a  debtor,  to  pay  his  creditor  a  specified  debt,  although  such  agreement 
is  not  in  writing.  The  statute  does  not  embrace  such  agreement,  but 
only  an  agreement  by  which  one  party  promises  the  other  to  answer 
for  the  debt,  &c.  of  another  person.  A  special  promise  made  by  A  to 
B  to  pay  the  debt  of  the  latter  to  C,  the  creditor  of  B,  is  not  within 
the  terms  or  meaning  of  the  Statute  of  Frauds,  and  therefore  need  not 
be  in  writing  to  be  valid.  And  I  think  it  may  be  laid  down  as  a  rule 
admitting  of  no  exception,  that  when  a  promise  is  made  to  a  creditor 
b\'  a  third  person  to  answer  for  the  debt,  &c.  of  the  debtor,  another 
person,  it  cannot  be  upheld,  although  founded  upon  a  new  consideration 
from  the  creditor,  unless  the  agreement  between  the  creditor  and  such 
third  person  shall  be  in  writing  ;  and  that  no  agreement  made  between 
a  debtor  and  a  third  person  by  which  the  latter  promises  upon  suffi- 
cient consideration  to  pa}r  a  debt  owing  by  the  former  to  his  creditor, 
is  within  the  statute,  whether  in  writing  or  hy  parol.  In  Ell  wood  v. 
Monk  there  was  a  good  consideration  advanced  by  Johannes  Monk, 
the  debtor  of  Ellwood,  to  Jacob  Monk  the  defendant,  to  support  his 
promise  to  pay  his  debt,  and  which  Ellwood,  for  whose  benefit  the 
promise  was  made,  had  a  legal  right  to  enforce.  And  so  in  the  case 
at  bar,  the  defendant's  promise  I  think  was  obligator}'  on  him,  whether 
in  writing  or  by  parol,  and  not  within  the  Statute  of  Frauds.  It  was 
not  a  promise  to  answer  for  the  debt  of  another  person,  but  merely  to 
pay  the  debt  of  the  party  making  the  promise  to  a  particular  person 
designated  by  him  to  whom  the  debt  belonged,  and  who  had  a  right 
to  make  such  payment  a  part  of  the  contract  of  sale.  Such  promise 
was  no  more  within  the  Statute  of  Frauds  than  it  would  have  been  if 
the  defendant  had  promised  to  pay  the  price  of  the  horses  directly  to 
his  brother  of  whom  he  purchased  them.1 

1  Mason  v.  Hall,  30  Ala.  599 ;  Locke  v.  Humphries,  60  Ala.  107 ;  Coleman  v. 
Hatcher,  77  Ala.  217 ;  McLaren  v.  Hutchinson,  22  Cal.  187 ;  Mulvany  v.  Gross,  1  Colo. 
Ap.  112;  American  Co.  v.  Wolfe,  30  Fla.  360;  Wilson  v.  Bevans,  58  111.  232;  Neagle 
v.  Kelly,  146  111.  460 ;  Scudder  v.  Carter,  43  111.  Ap.  252 ;  Wolke  v.  Fleming,  103  Ind. 
105;  Deering  v.  Armstrong  (Ind.  1895),  42  N.  E.  B.  372;  Boole  v.  Hintrager,  60 
Iowa,  180;  Blano  Co.  v.  Burrows,  40  Kas.  361  ;  Williams  v.  Sogers,  14  Bush,  776; 
Maxwell  v.  Haynes,  41  Me.  559 ;  Watson  v.  Perrigo,  87  Me.  202  ;  Calkins  v.  Chandler, 
36  Mich.  320;  Starika  v.  Greenwood,  28  Minn.  521 ;  Holt  v.  Dollarhide,  61  Mo.  433; 
Green  v.  Estes,  82  Mo.  337 ;  Keithley  v.  Pitman,  40  Mo.  Ap.  596 ;  Lee  v.  Newmau,  55 
Miss.  365  ;  Clay  v.  Tyson,  19  Neb.  530;  Wills  v.  Bank  (Nevada,  1895),  42  Pac.  K.  490; 
Berry  v.  Doremus,  30  N.  J.  399;  Gold  v.  Phillips,  10  Johns.  412  ;  Farley  v.  Clevelaud, 
*  Cow.  432,  9  Cow.  639;  Barker  v.  Bradley,  42  N.  Y.  316;  F.  N.  Bank  v.  Chalmers, 
144  N.  Y.  432  ;  Moore  v.  Stovall,  2  Lea,  543  (overruling  Campbell  v.  Findley,  3  Hum 


40  DOCK   V.    BOYD.  [CHAP.  I. 

Tne  testimony  however  does  not  sustain  either  count  in  the  declara- 
tion. The  contract  set  out  in  each  of  the  special  counts  is  widely 
variant  from  the  one  proved.1  The  motion  to  set  aside  the  nonsuit 
must  therefore  be  denied.  Neio  trial  denied. 


DOCK  v.  BOYD  &  CO. 
In  the  Supreme  Court,  Pennsylvania,  January  12,  1880. 

[Reported  in  93  Pennsylvania  Reports,  92.] 

January  12th,  1880.  Before  Sharswood,  C.  J.,  Mercur,  Gordon, 
Paxson,  and  Trunkey,  JJ.     Sterrett  and  Green,  JJ.,  absent. 

Error  to  the  Court  of  Common  Pleas,  No.  1,  of  Philadelphia  County : 
Of  January  Term,  1879,  No.  118. 

Case  by  William  S.  Boyd  and  Charles  S.  Boyd,  trading  as  William 
S.  Bo3'd  &  Co.,  against  Luther  Dock. 

F.  G.  Miller,  doing  business  as  F.  G.  Miller  &  Co.,  owed  the  plain- 
tiffs Si, 428. 11,  partly  on  book  account  and  partly  on  a  note  for  $1,000 
maturing  November  29th,  1875.  The  plaintiffs  drew  on  Miller  &  Co. 
for  $428.11,  the  excess  of  their  claim  over  the  note,  and  the  draft 
came  back  protested,  whereupon  the  plaintiffs  wrote  to  them,  threaten- 
ing legal  proceedings.  F.  G.  Miller  &  Co.  sent  the  plaintiff's'  letter  to 
the  defendant  Dock,  who  was  a  joint  owner  with  F.  G.  Miller,  one  of 
the  firm  of  Miller  &  Co.,  and  one  Mitchell,  of  certain  lumber  lands  on 
Lick  Run,  on  which  they  carried  on  the  lumber  business  in  partner- 
ship. Dock,  with  plaintiffs'  letter  in  his  hands,  went  to  their  store,  and, 
as  the}T  testified,  though  he  in  his  evidence  denied  it,  said  that  Miller 
had  sent  him  the  letter  ;  that  he,  Dock,  had  come  to  intercede  for  them  ; 
that  they  were  "  in  tight  papers,"  and  he  did  not  wrant  them  pushed  ; 
that  he  had  money  or  other  property  of  theirs  in  his  hands,  and  he 
would  sell  it  and  pay  the  plaintiffs  ;  that  he  would  not  give  his  own 
note,  but  his  word  was  as  good  as  his  bond  ;  that  he  would  not  fix  a 

330) ;  Lookout  Co.  v.  Houston,  85  Tenn.  224 ;  McCrary  v.  Van  Hook,  35  Tex.  631 ; 
Morris  v.  Gaines,  82  Tex.  255;  Fullam  v.  Adams,  37  Vt.  391  ;  Keyes  v.  Allen,  65  Vt. 
667;  Wright  v.  Smith,  81  Va.  777  (semble);  Silsby  v.  Frost,  3  Wash.  T.  388;  Hoile  v 
Bailey,  58  Wis.  434 ;  Martin  v.  Davis,  80  Wis.  376,  Accord. 

In  New  Hampshire  and  Rhode  Island  the  Statute  of  Frauds  ceases  to  apply  as  soon  as 
the  creditor  of  A  claims  the  benefit  of  the  defendant's  promise  to  A  to  pay  the  latter's 
debt,  because,  as  it  is  said,  such  a  claim  by  the  creditor  necessarily  operates  as  a  re- 
lease of  A  and  so  effects  a  novation.  Lang  v.  Henry,  54  N.  H.  57 ;  Wood  v.  Moriarty, 
15  R.  I.  518,  16  R.  I.  202;  Aldrich  v.  Carpenter,  160  Mass.  166,  170  (applying  R.  \. 
law).  —  Ed. 

1  The  counts  alleged  a  promise  to  the  plaintiff.  The  evidence  showed  a  promise 
to  Bucklin  to  pay  to  the  plaintiff.  —  Ed. 


SECT.  I.]  DOCK    V.    BOYD.  41 

time  for  payment,  which  might  be  next  week,  or  not  for  thirty  or  sixty 
days  ;  that  there  was  no  danger  of  the  property  being  taken  out  of  his 
hands  by  other  creditors,  for  he  had  it  so  fixed  that  that  could  not  be 
done  ;  that  the  plaintiffs  were  secure,  and  he  would  see  them  paid. 
Upon  this,  as  the  plaintiffs  testified,  they  agreed  not  to  push  Miller 
without  notifying  Dock,  and  made  a  memorandum  to  that  effect  on  the 
protested  draft.  Dock  sent  Miller  $1,000  to  take  up  his  note  for  that 
amount  to  the  plaintiffs,  which  matured  on  the  29th  of  November, 
1875,  and  Miller  received  it,  but  did  not  pa}-  plaintiff's  note,  and  ab- 
sconded. Plaintiffs  subsequently  sued  Miller  &  Co.  on  their  claims 
and  got  judgments. 

It  also  appeared  that  Miller  was  largely  indebted  to  Dock,  but  that 
Dock  had  in  his  hands  lumber  in  which  Miller  was  interested,  which 
was  taken  from  the  above-mentioned  tract  of  lumber  land. 

The  third  and  fourth  points  of  the  defendant  were  as  follows  : 

3.  "  The  jury  must  upon  the  evidence  find  for  the  defendant,  there 
being  no  sufficient  evidence  to  show  that  defendant  ever  had  in  his 
hands  property  of  Miller's,  which,  as  between  him  and  said  Miller,  he 
was  bound  to  apply  to  the  payment  of  his  debt  to  the  plaintiffs." 

4.  "  If  the  jury  find  that,  as  between  the  plaintiffs  and  Miller,  the 
liability  of  the  latter  was  never  given  up  or  abandoned,  but  still  remains 
existing  and  unaffected,  the  agreement  of  the  defendant,  as  alleged  b}r 
plaintiffs,  was  collateral  to  said  liability^  of  Miller,  the  Statute  of 
Frauds,  requiring  a  writing,  applies,  and  the  jury  must  find  for 
defendant." 

In  answer  to  these  points,  the  Court  said  :  "  If  you  believe  Boyd  & 
Co.,  although  they  did  not  abandon  their  claim,  had  been  induced  to 
give  time  to  Mr.  Miller  through  Mr.  Dock's  promise,  it  would  be 
enough." 

In  the  general  charge,  the  Court,  inter  edict,  said:  "If  Mr.  Dock 
agreed  to  appby  the  means  in  his  hands  to  the  payment  of  Miller's 
debt,  with  Miller's  acquiescence,  he  is  bound  by  that  agreement,  and 
it  is  not  necessary  it  should  be  in  writing." 

The  verdict  was  for  plaintiffs  for  $1, 270.66,  and  after  judgment 
thereon  the  defendant  took  this  writ,  and  alleged  that  the  Court  erred 
in  the  answer  to  the  points,  and  in  the  foregoing  portion  of  the  charge. 

H.  A.  L.  Pyle  and  Chapman  Biddle,  for  plaintiff  in  error. 

George  Junkin,  for  defendants  in  error.1 

The  judgment  of  the  Supreme  Court  was  entered,  January  26th,  1880. 

Per  Curiam.  That  Dock  had  means  in  his  hands  belonging  to 
Miller  was  in  evidence,  but  if  the  contrary  had  appeared  he  would  have 
been  estopped  by  his  own  declarations,  upon  the  faith  of  which  his 
verbal  promise  to  pay  the  debt  was  accepted.  Such  being  the  case,  it 
was  clearly  not  within  the  Statute  of  Frauds.  When  the  promise  is  to 
apply  the  funds  or  property  of  the  debtor  in  the  hands  of  the  party,  it 

1  The  arguments  of  counsel  are  omitted.  —  Ed. 


42  BELKNAP  V.    BENDER.  [CHAP.  I. 

is  not  necessary  that  the  creditor  should  give  up  his  recourse  against 
the  debtor  upon  the  original  claim.  The  promise  is  not  a  collateral 
but  an  original  one,  founded  on  sufficient  consideration. 

Judgment  affirmed.1 


A.  J.  BELKNAP,  Appellant,  v.  W.  M.  BENDER,  Respondent. 

In  the  Court  of  Appeals,  New  York,  December,  1878. 

[Reported  in  75  New  York  Reports,  446.] 

Earl,  J.2  In  1872,  the  plaintiff  was  engaged  with  his  men  and 
teams  in  managing  a  saw-mill  for  the  firm  of  Ward  &  McVicker,  and 
they  were  indebted  to  him,  for  labor  performed,  in  the  sum  of  $1,500, 
and  were  also  largely  indebted  to  the  defendant  and  other  parties.  The 
defendant  then,  for  the  purpose  of  securing  his  debt,  entered  into  the 
following  agreement  with  the  firm  :  — 

"Agreement  made  20th  August,  1872. 

"  W.  M.  Bender  hereby  agrees  with  Ward  &  McVicker  to  take  their 
mill,  called  Shedd's  mill,  to  run  the  said  mill,  and  to  saw  up  their  logs 
now  lying  in  their  log-yard,  to  ship  the  lumber  and  to  sell  the  same, 
and  to  apply  the  proceeds  thereof  to  the  payment  of  the  current  ex- 
penses of  sawing  and  shipping  said  lumber,  and  also  to  the  payment  of 
the  judgment  claims,  amounting  to  $4,872.29,  and  the  claim  of  said 
Bender,  say  $7,000,  and  the  rent  of  mill,  $1,000,  now  due,  and  the 
back  wages  of  their  hands,  say  $1,500,  as  stated  in  schedule  annexed, 
and  the  balance,  if  any,  to  pay  over  to  said  Ward  &  McVicker,  for  the 
consideration  of  ten  per  cent  on  the  amount  of  said  sales  ;  and  the  said 
Bender  agrees,  in  case  of  any  sale  of  said  logs  or  lease  of  said  mill, 
under  any  judgment,  to  bu}'  the  same  and  to  hold  them  in  order  to 
carry  out  the  true  intent  of  this  agreement,  it  being  understood  that 

1  It  is  everywhere  agreed  that  the  section  of  the  Statute  of  Frauds  relating  to 
guaranties  has  no  application  in  cases  where  the  defendant  has  promised  to  pay  the 
debt  of  A  to  B  out  of  property  put  into  his  hands  for  that  purpose.  It  is  simply  a 
case  of  trust.  Andrews  v.  Smith,  2  C.  M.  &  R.  627  ;  Goddard  v.  Mockbee,  5  Cranch, 
C.  C.  666  ;  Hitchcock  v.  Lukens,  8  Port.  (Ala.)  333;  Woodruffe  v.  Scaife,  83  Ala.  152 
(but  doctrine  misapplied,  there  being  no  trust-res)  ;  Hughes  v.  Lawson,  31  Ark.  613  ; 
Lucas  v.  Payne,  7  Cal.  92 ;  Hamill  v.  Hall,  4  Colo.  Ap.  290 ;  Ledbetter  v.  McGhees, 
84  Ga.  227  ;  Prather  v.  ATineyard,  9  111.  40  (see  also  Power  v.  Rankin,  114  111.  52) ; 
Bott  v.  Barr,  95  Ind.  243  ;  Hilton  v.  Dinsmore,  21  Me.  410  (semble)  ;  Mitts  v.  McMor- 
ran,  64  Mich.  664,  85  Mich.  94;  Dilts  v.  Parke,  4  N.  J.  219  (semble);  Wyman  v. 
Smith,  2  Sandf.  331  ;  May  v.  Nat.  Bank,  9  Hun,  108;  Phelps  v.  Rowe,  75  Hun,  414; 
Praughan  v.  Bunting,  9  Ired.  10;  Mason  v.  Wilson,  84  N.  Ca.  51  ;  Stoudt  v.  Hinev 
45  Pa.  30  ;  Smith  v.  Exchange  Bank,  110  Pa.  508  ;  Fehlinger  v.  Wood,  134  Pa.  517  ; 
Peck  v.  Goff,  18  R.  I.  94  ;  Fullam  v.  Adams,  37  Vt  391  (semble). 

See  also  Hedges  v.  Strong,  3  Oreg.  18. — Ed. 

2  Only  the  opinion  of  the  Court  is  given.  —  Ed. 


SECT.  I.]  BELKNAP  V.   BENDER.  43 

s:iid  Bender  is  only  to  pay  said  several  claims  as  mentioned  above  from 
the  proceeds  of  said  lumber  as  aforesaid. 

"Bender,  Son,  &  Co. 

"  Ward  &  McVicker." 

To  this  agreement  was  annexed  a  schedule  of  the  debts  to  be  paid 
under  the  agreement,  among  which  was  the  debt  due  the  plaintiff. 

In  pursuance  of  this  agreement,  the  defendant  took  possession  of  the 
mill,  and  the  stock  of  logs  and  lumber  on  hand,  and  at  the  time  of 
the  commencement  of  this  action  had  disposed  of  about  half  of  the 
lumber. 

This  action  is  brought  by  plaintiff,  not  for  an  accounting  under  the 
agreement  and  to  recover  his  share  of  the  proceeds  of  the  lumber,  but 
to  recover  the  whole  sum  due  him  from  Ward  &  McVicker,  upon  the 
theory  that  defendant  had  absolutely  promised  to  pay  it  to  him. 

Upon  the  trial  the  plaintiff  testified  that  the  defendant  came  to  him 
and  told  him  to  keep  on  working  at  the  mill,  and  he  would  pay  him  for 
his  work  at  the  same  rate  which  Ward  &  McVicker  had  been  paving 
him,  and  that  he  had  bought  the  stock  of  Ward  &  McVicker,  and  had 
made  an  arrangement  with  them  to  pa}'  him  what  was  due  him  from 
them,  and  if  he  would  keep  on  working  for  him  he  would  pay  him  for 
his  work,  and  in  a  day  or  two  would  pay  him  $1,000  upon  the  amount 
due  him  from  Ward  &  McVicker ;  and  he  testified  that  he  went  on  and 
worked  for  the  defendant,  but  that  the  defendant  had  failed  to  pay 
him  the  amount  due  him  from  Ward  &  McVicker.  The  plaintiff  re- 
covered $1,000  and  interest. 

The  promise  of  the  plaintiff  to  work  for  the  defendant  at  what  ap- 
peared to  be  a  full  compensation  did  not  furnish  a  consideration  for 
defendant's  promise  to  pay  Ward  &  McVicker's  debt.  Pfeiffer  v. 
Adler.1  And  the  trial  judge  so  held.  But  from  plaintiff's  evidence 
standing  alone,  it  might  have  been  inferred  that  defendant  had  pur- 
chased the  saw-mill  stock  of  Ward  &  McVicker,  and  had  agreed  with 
them  to  pay  a  portion  of  the  purchase  price  to  him  in  satisfaction  of 
the  debt  due  him  from  them  ;  and  in  that  case,  under  the  rule  laid  down 
in  Lawrence  v.  Fox,2  and  other  similar  cases,  the  plaintiff  could  have 
recovered.  But  at  a  later  stage  of  the  case,  the  written  agreement 
between  defendant  and  Ward  &  McVicker  was  proved,  and  that  shows 
precisely  what  defendant  agreed  with  them  to  do.  Under  that  agree- 
ment he  did  not  become  personally  liable  to  pa}'  the  plaintiff;  he  did 
not  agree  to  pay  plaintiff  absolutely,  or  with  his  own  funds.  He  did 
not  purchase  the  stock  ;  he  simply  agreed  to  saw  the  logs  and  market 
the  lumber,  and  apply  the  net  proceeds  in  payment  of  the  debts  speci- 
fied. He  incurred  no  personal  liability  for  the  debts,  and  was  required 
only  to  be  faithful  in  the  discharge  of  the  trust  assumed. 

The  defendant  could  not  become  bound  to  pay  to  the  plaintiff  the 

l  37  N.  Y.  164.  2  20  N.  Y.  268 


44  BELKNAP  V.    BENDER.  [CHAP.  L 

debt  due  hirn  from  Ward  &  McVicker  by  any  verbal  promise  made  to 
him.  Such  a  promise,  to  be  binding  within  the  Statute  of  Frauds,  must 
be  in  writing,  and  founded  upon  a  sufficient  consideration  passing  be- 
tween the  parties.  But  if  Bender  had  purchased  lumber  of  Ward  & 
McVicker,  and  thus  become  indebted  to  them,  and  in  consideration 
thereof  had  agreed  to  pay  a  portion  of  his  debt  to  the  plaintiff  in  satis- 
faction of  the  amount  due  him  from  Ward  &  McVicker,  such  a  promise,, 
as  stated  above,  would  not  have  been  within  the  Statute  of  Frauds. 
But  the  difficulty  here  is  that  there  was  no  such  debt  to  Ward  & 
McVicker,  and  no  such  promise  by  the  defendant.  .But  the  trial  judge 
held  that  if  the  jmy  were  satisfied  that  the  defendant  agreed  to  pay  the 
$1,000,  as  testified  to  by  plaintiff,  the  plaintiff  could  recover  upon  the 
theory  that  the  property  had  been  placed  in  the  hands  of  the  defendant 
for  sale,  and  that  he  would  be  liable  to  pay  the  plaintiff  after  he  had 
disposed  of  it,  and  hence  that  he  could  waive  the  delay  and  be  bound 
by  his  promise  to  pay  before  he  had  realized  the  proceeds.  And  it  is 
upon  this  theory  in  part  that  the  plaintiff  now  seeks  to  uphold  the 
recovery  at  the  circuit. 

The  case,  then,  stands  thus :  The  defendant,  by  his  agreement  with 
Ward  &  McVicker,  was  not  personally  bound  to  pay  this  debt.  He 
was  bound  only  to  pay  it  out  of  the  proceeds  of  the  property  when 
realized.  The  property  was  placed  in  his  hands  upon  the  consideration 
expressed  in  the  paper,  and  he  had  it  at  the  time  of  the  alleged  promise 
to  the  plaintiff.  What  consideration  is  there  to  uphold  the  promise? 
Clearl}'  none.  That  promise,  if  valid,  imposed  upon  him  an  entirely 
new  obligation  ;  it  bound  him  to  pay  the  $1,000  personally  whether  he 
realized  sufficient  to  pay  it  from  the  sale  of  the  lumber  or  not;  it  cre- 
ated a  personal  liability  when  none  existed  before.  Such  a  promise  to 
be  valid,  aside  from  the  Statute  of  Frauds,  must  be  based  upon  a  con- 
sideration. The  plaintiff  furnished  none,  and  the  lumber  which  had 
been  before  placed  in  defendant's  hands  upon  a  different  consideration 
furnished  none.  After  this  promise  the  defendant's  interest  in  the 
lumber  and  control  thereof  were  no  greater  than  before. 

But  the  counsel  for  the  plaintiff  strenuously  contends  that  the  promise 
of  the  defendant  is  without  the  Statute  of  Frauds,  and  founded  upon  a 
si'fficient  consideration,  simply  because  Ward  &  McVicker  placed  in 
defendant's  hands  property  upon  trust  to  pay  this  debt ;  and  there  are 
some  general  expressions  in  reported  cases  which,  literally  taken,  sup- 
port this  construction. 

In  Mallory  v.  Gillett,  Judge  Comstock  says  that  when  the  debtor 
puts  a  fund  into  the  hands  of  the  promisor,  either  by  absolute  transfer 
or  upon  a  trust  to  pa}'  the  debt,  the  promise  to  pa}'  it  is  not  within  the 
Statute  of  Frauds.  This  general  language  needs  some  limitation  or 
explanation.  If  the  promise  in  such  case  be  made  to  the  debtor  in  con- 
sideration of  the  transfer,  it  is  no  doubt  valid.  If  it  be  made  to  the 
creditor  after  it  has  become  the  duty  of  the  promisor,  under  his  arrange- 
ment with  the  debtor,  to  pa}',  then  it  is  valid ;   as  if  in  this  case  Bender 


3ECT.  I.]  BELKNAP   V.    BENDER.  45 

bad  converted  the  property  into  money,  and  then  promised  the  plaintiff 
to  pay  the  debt,  he  could  have  been  sued  directly  on  such  promise. 
That  would  have  been  an  original  promise  to  discharge  his  own  obliga- 
tion to  the  plaintiff.  As  said  by  Judge  Comstock  in  that  case:  "The 
law  would  imply  an  obligation  on  the  defendant's  part  to  pay  over  the 
money  to  the  plaintiff  after  selling  the  goods ;  and  when  the  law  will 
imply  a  debt  or  duty  against  an}'  man,  his  express  promise  to  pay  the 
same  debt,  or  perform  the  same  duty,  must  in  its  nature  be  original." 
Poland,  C.  J.,  in  Fullam  v.  Adams,1  after  laying  down  the  rule  in 
substantially  the  same  language  as  that  used  by  Judge  Comstock, 
says  the  true  principle  why  the  promise  to  the  creditor  in  such  a  case 
is  valid  is,  that  "  the  part}'  making  the  promise  holds  the  funds  of  the 
debtor  for  the  purpose  of  paying  his  debt ;  and  as  between  him  and 
the  debtor  it  is  his  duty  to  pa}'  the  debt,  so  that  when  he  promises  ti.e 
creditor  to  pa}'  it,  in  substance  he  promises  to  pay  his  own  debt,  and 
not  that  of  another."  Throop,  in  his  work  on  Verbal  Agreements 
(vol.  i.  p.  535),  lays  down  the  rule  as  follows:  "When  the  promisor 
absolutely  controls  the  fund,  but  his  application  thereof  to  the  payment 
of  the  debt  due  to  the  promisee  will  acquit  him  of  a  duty  which  he  owed 
to  the  person  who  furnished  it,  the  promise  is  not  within  the  statute." 
Here  the  defendant  owed  Ward  &  McVicker  no  duty  to  pay  the  debt. 
The  only  duty  he  owed  them  was  to  convert  the  property  and  apply  the 
proceeds  upon  the  debts  specified.  When  this  action  was  commenced, 
he  was  not  in  any  default  in  the  discharge  of  that  duty,  and  the  action 
was  not  brought  upon  such  a  theory. 

To  test  this  case  further.  Suppose  a  voluntary  assignee  of  an  insol- 
vent debtor  after  he  had  taken  possession  of  the  property  assigned,  but 
before  he  has  converted  it  into  money,  and  before  the  duty  to  pay  has 
arisen,  promises  without  any  further  or  new  consideration  to  pay  the 
debt  of  one  of  the  preferred  creditors,  could  such  a  promise  be  enforced  ? 
Suppose  one  takes  a  conveyance  of  real  estate  from  a  debtor  upon  the 
agreement  with  him  that  he  will  rent  it,  and  accumulate  the  rent  for  ten 
years,  and  then  pay  the  net  amount  to  his  creditors,  and  the  next  day 
without  any  new  consideration  he  promises  at  once  to  pay  the  creditors, 
could  such  a  promise  be  enforced?  These  cases  are  analogous  to  the 
one  in  hand  ;  and  no  authority —  certainly  no  case,  and  that  would  be 
regarded  as  authority  in  this  State  —  can  be  found  which  would  autho- 
rize the  enforcement  of  such  promises.  They  would  be  void  at  common 
law  as  without  any  consideration,  and  void  also  under  the  Statute  of 
Frauds  as  not  in  writing.2 

i  37  Vt.  391. 

2  Jackson  v.  Rayner,  12  Johns.  291  ;  Ackley  v.  Parmenter,  98  N.  Y.  425;  Hornet 
v.  Sidway,  124  N.  Y.  538,  547  (semble) ;  F.  N.  Bank  v.  Chalmers,  144  N.  Y.  432,  434 
{semble) ;  Shaaber  v.  Bushong,  105  Pa.  514  (semble) ;  McKenzie  v.  Nat.  Bank,  9  Wash. 
442,  Accord. 

Lippincott  v.  Ashfield,  4  Sandf.  611  (a  promise  to  pay  out  of  a  special  fund  assigned 
by  the  debtor  to  the  promisor,  and  that  the  fund  should  realize  enough  to  pay  the  debt 
of  the  assignor),  Contra. —  En. 


46  HOWES    V.    MAETIN.  [CHAP.  1 

But  we  can  go  one  step  farther  in  this  case.  Even  if  the  promise  had 
been  made  after  the  defendant  had  converted  the  proceeds,  it  could 
have  been  enforced  against  him  onty  to  the  extent  of  the  proceeds 
applicable  to  this  debt.  Ardern  v.  Rowney.1  If  the  amount  applicable 
to  this  debt  had  been  less  than  the  $1,000,  then  for  the  excess  of 
the  debt  the  promise  would  have  been  without  consideration.  De- 
fendant in  such  a  case  would  have  owed  the  duty  to  pay  the  plaintiff 
his  share  of  the  proceeds,  and  his  promise  to  that  extent  would  have 
been  valid  as  one  to  discharge  his  own  obligation.  But  his  promise  for 
more  would,  as  to  the  excess,  not  have  been  to  pa}'  anything  for  which 
he  was  liable  in  any  wa}',  but  to  pay  the  debt  of  Ward  &  McVicker, 
and  hence  within  the  Statute  of  Frauds.  Here  the  complaint  was  not 
framed,  and  the  trial  was  not  conducted  for  a  recovery  upon  such  a 
theoiy.  There  was  no  proof  that  the  property  was  sufficient  to  pa}r 
the  $1,000,  but,  on  the  contrary,  the  proof  showed  that  it  was  not 
sufficient. 

The  plaintiff's  counsel  upon  the  argument  claimed  that  the  case  of 
Young  v.  French 2  was  very  much  in  point  in  his  favor.  But  in  that 
^ase  there  was  a  new  consideration  for  the  promise  sued  on,  moving 
from  the  plaintiff  to  the  defendant,  and  hence  that  case  is  unlike  this. 

It  is  difficult  to  perceive  how  the  doctrine  of  waiver  can  apply  in 
a  case  like  this.  A  person  may  waive  some  act  or  condition  which 
another  is  to  perform  to  or  for  him.  He  may  choose  to  pajr  a  debt 
before  due  ;  but  in  a  legal  sense  he  waives  nothing  by  so  doing.  Here, 
however,  there  was  no  debt  of  the  defendant,  and  he  could  not  by  such 
a  waiver,  if  we  call  it  such,  based  upon  no  consideration,  impose  upon 
himself  an  entirety  new  obligation. 

It  follows,  therefore,  that  the  order  of  the  General  Term  must  be 
affirmed,  and  judgment  absolute  rendered  against  the  plaintiff,  with 
costs. 

All  concur.  Order  affirmed  and  judgment  accordingly. 


HOWES   v.   MARTIN. 
At  Nisi  Prius,  Coram  Lord  Kenyon,  C.  J.,  July  15,  1794. 

[Reported  in  1   Espinasse,  162.] 

Assumpsit  for  money  laid  out  and  expended,  to  the  use  of  the  defend- 
ant, with  the  common  counts. 

Plea  of  the  general  issue. 

The  circumstances  of  the  case  in  evidence  were,  that  the  plaintiff  and 
defendant  having  lived  in  habits  of  intimacy,  the  plaintiff  had  been 
induced,  out  of  motives  of  friendship,  and  merely  to  accommodate  th* 

l  5  Esp.  254.  2  35  Wis.  111. 


SECT,  I.]  HOWES   V.    MARTIN.  47 

defendant,  to  accept  several  bills  of  exchange  on  his  account.  These 
bills  had  all  been  regularly  taken  up,  when  they  became  payable  by  the 
defendant,  except  the  last,  whicli  was  for  £20.  This  bill  had  come  into 
the  hands  of  one  Greensill,  and  the  defendant,  being  unable  to  take  it 
up  when  due,  had  prevailed  upon  Greensill  to  accept  £1G  in  part,  and 
the  plaintiff's  acceptance  for  six  guineas  being  tbe  balance  of  the  bill, 
with  the  interest  then  due  for  the  remainder. 

This  bill  for  six  guineas  not  being  paid  when  due,  Greensill  brought 
his  action  on  it  agaiust  Howes  the  now  plaintiff,  as  the  acceptor,  in  the 
Court  of  Common  Pleas.  On  the  action  being  brought,  the  plaintiff 
acquainted  Martin  with  the  circumstance,  and  he  desired  the  present 
plaintiff  to  defend  the  action,  representing  to  her,  that  as  she  had  never 
had  any  consideration  for  the  acceptance,  she  might  safely  do  it.  In 
consequence  of  which  representation  she  did  defend  the  action,  and 
Greensill  the  plaintiff  in  that  action  obtained  a  verdict  against  her  for  the 
amount  of  the  bill,  which  with  the  costs  amounted  to  £32.  To  recover 
which  sum,  the  present  action  was  brought. 

Garroio,  for  the  defendant,  upon  this  evidence  objected,  that  under 
the  Statute  of  Frauds  this  action  was  not  maintainable,  inasmuch  as 
there  was  no  note  in  writing.1 

Lord  Kenyon  overruled  the  objection,  and  held  that  the  case  was 
not  within  the  Statute  of  Frauds.  His  Lordship  said  that  in  this  case  it 
appeared  that  the  plaintiff  never  had  any  consideration  whatever  for  her 
acceptances,  which  were  given  merely  on  the  defendant's  account  and 
for  his  use  ;  that  the  defence  to  the  action  on  the  note  was  on  his  account, 
and  from  whence  he  could  have  derived  a  benefit :  that  as  he  therefore 
was  personally  interested,  and  directed  the  defence  to  be  made,  by 
which  he  might  have  been  benefited,  that  the  money  must  be  consid- 
ered to  have  been  laid  out  b}T  the  plaintiff  on  his  account,  and  to  his  use, 
and  that  she  therefore  was  entitled  to  recover  it  back  from  him.2 

Mrshine  and  ttyrinasse,  for  the  plaintiff. 

Garrow,  for  the  defendant. 

1  The  arguments  of  counsel  are  omitted.  —  Ed. 

2  Adams  v.  Dansey,  G  Bing.  506  ;  Lerch  v.  Gallup,  67  Cal.  595 ;  Marcy  v.  Craw- 
ford, 16  Conn.  549;  Goodspeed  v.  Fuller,  46  Me.  141 ;  Weld  v.  Nichols,  17  Pick.  538; 
Green  v.  Brookins,  23  Mich.  48  ;  Allaire  v.  Onland,  2  Johns.  Cas.  52 ;  Evans  v.  Mason, 
1  Lea,  26  ;  Dorwin  v.  Smith,  35  Vt.  69  ;  Hull  v.  Brown,  35  Wis.  652,  Accord.  — Ed. 


48  THOMAS   V.    COOK.  [CHAP.  I. 


W.  THOMAS   v.    WILLIAM   COOK. 
In  the  King's  Bench,  Michaelmas  Tekm,  1828. 

[Reported  in  8  Barneicall  and  Cresswell,  728.] 

Assumpsit.  The  declaration  stated  that  on,  &c.,  a  certain  partner- 
ship in  trade  between  one  W.  Cook,  since  deceased,  and  one  N.  D. 
Morris,  was  dissolved  ;  that  it  was  agreed  between  W.  Cook,  since 
deceased,  and  Morris,  that  the  former  should  take  upon  himself  the 
payment  of  certain  debts  (specified  in  the  declaration) ;  and  that  it  was 
also  agreed  that  a  bond  of  indemnity,  executed  by  W.  Cook,  since  de- 
ceased, and  two  other  persons,  should  be  given  to  Morris,  to  save  him 
harmless  from  the  payment  of  the  said  debts.  And  thereupon,  after- 
wards, to  wit,  on,  &c. ,  in  consideration  that  the  plaintiff,  at  the  request  of 
the  defendant,  would,  together  with  the  defendant  and  W.  Cook,  since 
deceased,  execute  a  bond  of  indemnity  to  Morris  in  the  sum  of  £4,100 
conditioned  to  save  him  harmless  from  the  said  debts  ;  the  defendant 
undertook  and  promised  the  plaintiff  that  he,  the  defendant,  would 
save  harmless  and  indemnify  him  from  all  payments,  damages,  costs, 
and  expenses  which  he  (plaintiff)  should  or  might  incur,  bear,  pa}', 
sustain,  or  be  put  unto  by  reason  or  means  of  his  so  executing  the 
said  writing  obligatory.  Averment,  that  plaintiff  was  afterwards  com- 
pelled to  pay  on  account  of  the  said  debts  the  sum  of  £360,  and  that 
defendant  had  not  indemnified  him.  The  second  and  third  counts  were 
in  substance  the  same.  The  fourth  count  alleged,  that  in  considera- 
tion that  the  plaintiff,  at  the  request  of  the  defendant,  would,  as  surety 
for  W.  Cook,  since  deceased,  together  with  the  said  W.  Cook  and  the 
defendant,  make  and  draw  a  certain  bill  of  exchange  for  £500  upon 
certain  persons  (named),  and  would  indorse  and  deliver  the  same  to 
Morris,  in  order  that  he  might  negotiate  the  same  for  his  own  use,  the 
defendant  undertook  to  indemnify  the  plaintiff  from  any  loss  or  dam- 
age b}r  reason  of  his  drawing  and  indorsing  the  bill.  Averment,  that 
plaintiff  did  draw  and  indorse  the  bill  in  manner  aforesaid,  and  was 
afterwards  by  reason  thereof  compelled  to  paj'  it,  whereof  the  defend- 
ant had  notice,  but  did  not  indemnify  him.  Counts  for  money  lent, 
paid,  had,  and  received,  and  on  an  account  stated.  Plea,  the  general 
issue.  At  the  trial  before  Park,  J.,  at  the  Hereford  Lent  assizes,  1828, 
it  appeared  that  the  plaintiff  and  defendant  had  executed  the  bond, 
and  drawn  the  bill  mentioned  in  the  declaration  ;  that  the  defendant 
had  requested  the  plaintiff  to  do  so,  and  promised  that  he  should  not 
be  a  loser.  It  was  also  proved,  that  on  account  of  payments  made  by 
the  plaintiff  towards  the  debts  specified,  and  the  bill  of  exchange,  a 
sum  of  £400  remained  due  to  him  in  1825.  .After  this  time  the  plain- 
tiff received  from  the  estate  of  W.  Cook,  since  deceased,  £100,  leaving 
a  deficiency  of  £300.  For  the  defendant  it  was  contended,  that  the 
plaintiff  conld  not  recover  on  the  special  counts  for  want  of  a  writ- 


SECT.  I.]  GREEN    V.    CRESSWKLL.  49 

ten  agreement,  the  promise  there  laid  being  to  answer  for  the  debt 
of  a  third  person,  and  consequently  that  he  could  only  recover  against 
the  defendant  as  co-suret}-  on  the  count  for  money  paid,  one  moiety 
of  the  £300.  The  learned  judge  directed  the  jury  to  find  a  verdict  for 
the  plaintiff  for  £300,  and  gave  the  defendant  leave  to  move  to  reduce 
it  to  £150.  A  rule  rtisi  for  that  purpose  was  obtained  in  last  Easter 
Term,  against  which 

Taunton  and  Chilton  now  showed  cause. 

Russell,  Sergt.,  and  Curwood,  contra.1 

Bayley,  J.  It  is  provided  b}-  the  fourth  section  of  the  Statute  of 
Frauds,  that  "No  action  shall  be  brought  to  charge  the  defendant 
upon  an}-  special  promise  to  answer  for  the  debt,  default,  or  miscarriage 
of  another  person,  unless  the  agreement  upon  which  such  action  shall 
be  brought,  or  some  memorandum  or  note  thereof,  shall  be  in  writing, 
and  signed  by  the  party  to  be  charged  therewith,  or  by  some  other  per- 
son thereunto  bty  him  lawfully  authorized."  Here  the  bond  was  given 
to  Morris  as  the  creditor ;  but  the  promise  in  question  was  not  made  to 
him.  A  promise  to  him  would  have  been  to  answer  for  the  default  of 
the  debtor.  But  it  being  necessaiy  for  W.  Cooke,  since  deceased,  to 
find  sureties,  the  defendant  applied  to  the  plaintiff  to  join  him  in  the 
bond  and  bill  of  exchange,  and  undertook  to  save  him  harmless.  A 
promise  to  indemnify  does  not,  as  it  appears  to  me,  fall  within  either 
the  words  or  the  policy  of  the  Statute  of  Frauds  ;  and  if  so,  there  was 
sufficient  evidence  to  entitle  the  plaintiff  to  a  verdict  for  £300. 

Parke,  J.  This  was  not  a  promise  to  answer  for  the  debt,  default, 
or  miscarriage  of  another  person,  but  an  original  contract  between 
these  parties,  that  the  plaintiff  should  be  indemnified  against  the  bond. 
If  the  plaintiff,  at  the  request  of  the  defendant,  had  paid  monej'  to  a 
third  person,  a  promise  to  repay  it  need  not  have  been  in  writing,  and 
this  case  is  in  substance  the  same.  The  rule  for  reducing  the  verdict 
ought,  therefore,  to  be  discharged.  Mule  discharged. 


GREEN  v.   CRESS  WELL. 
In  the  King's  Bench,  June  4,  1839. 

[Reported  in  10  Adolphus  $-  Ellis,  453.] 

Assumpsit.  The  first  count  of  the  declaration  stated  that,  on  2d 
Februaiw,  1836,  a  capiat,  directed  to  the  sheriff  of  Warwickshire,  issued 
from  the  Court  of  Exchequer  against  one  Joseph  Hadley,  at  the  suit  of 
one  John  Rea}',  which  was  indorsed  for  bail  for  £35,  and  was  delivered 
to  the  sheriff,  who,  on  the  day  and  year  aforesaid,  arrested  Hadley; 

1  The  arguments  are  omitted,  and  the  statement  of  the  case  is  slightlv  abridged.  — 
Ed. 

4 


50  GREEN   V.    CRESSWELL.  [CHAP.  L 

that  afterwards,  to  wit,  9th  February,  1836,  in  consideration  that  plain- 
tiff, at  the  request  of  defendant,  would  become  bail  and  surety  for 
Hadley,  and  would,  as  such  bail  and  surety,  seal,  and  as  his  act  and 
deed  deliver  to  the  said  sheriff,  a  bail  bond,  conditioned  for  putting  in 
special  bail  by  Hadley,  defendant  then  promised  plaintiff  that  he, 
defendant,  would  save  harmless  and  indemnify  plaintiff  from  all  pay- 
ments, damages,  costs,  and  expenses  which  he,  plaintiff,  should  or 
might  incur,  bear,  pay,  sustain,  or  be  put  unto  by  reason  or  by  means 
of  so  becoming  bail  and  surety  ;  that  plaintiff,  confiding,  etc.,  did  after- 
wards, to  wit,  on  the  day  and  year  last  aforesaid,  at  the  request,  etc., 
seal  and  deliver  the  bail  bond,  but  that  Hadley  did  not  put  in  special 
bail,  whereby  the  bond  became  forfeited  ;  that  afterwards,  to  wit,  15th 
February,  1836,  the  sheriff  assigned  the  bail  bond  to  Rea}-,  who  there- 
upon afterwards,  to  wit,  on  the  day  and  year  last  aforesaid,  sued  the 
present  plaintiff  on  the  bond  in  the  Court  of  Exchequer,  and  recovered 
judgment  for  £75  5s.  damages  and  costs;  and  afterwards,  to  wit,  11th 
August,  1836,  sued  out  execution  b}'  fieri  facias  against  the  now 
plaintiff,  who  was  thereby  compelled  to  pay  £98  6s. ;  of  all  which 
defendant  had  notice.  Breach,  that  defendant  had  not  indemnified 
plaintiff,  nor  repaid  him  any  of  the  £98  6s.,  nor  divers  other  sums 
expended  for  costs,  etc.,  to  wit,  £50,  etc. 

Pleas.     1.    Nbn  assumpsit.     Issue  thereon. 

2.    The  Statute  of  Frauds. 

On  the  trial  before  Park,  J.,  at  the  Warwickshire  Summer  Assizes,. 
1837,  evidence  was  given  of  the  promise,  as  stated  in  the  declaration  ; 
but  no  evidence  was  given  of  airy  writing.  The  learned  judge  was  of 
opinion  that  the  case  was  not  within  the  Statute  of  Frauds ;  and  a  ver- 
dict was  found  for  the  plaintiff,  on  the  replication  to  the  second  plea. 
In  Michaelmas  Term,  1837,  Goulburn,  Sergeant,  obtained  a  rule  for  a 
new  trial,  or  arrest  of  judgment. 

Balguy  now  showed  cause. 

Goulburn,  Sergt.,  and  Mellor,  contra. 

Lord  Denman,  C.  J.,  afterwards,  in  this  term  (June  11th),  delivered 
the  judgment  of  the  Court.  After  stating  the  facts,  his  Lordship  pro- 
ceeded as  follows  :  — 

A  motion  has  been  made  in  arrest  of  judgment,  the  promise  appear- 
ing by  the  plea  not  to  have  been  in  writing,  and  the  replication  only 
averring  in  answer  that  it  was  not  a  special  promise  to  answer  for  the 
debt  or  default  of  another. 

The  promise  in  effect  is,  "If  3'ou  will  become  bail  for  Hadley,  and 
Hadley,  b}-  not  paying  or  appearing,  forfeits  his  bail  bond,  I  will  save 
you  harmless  from  all  the  consequences  of  your  becoming  bail.  If 
Hadley  fails  to  do  what  is  right  towards  you,  I  will  do  it  instead  of 
him." 

If  there  had  been  no  decisions  on  the  subject,  it  would  appear  im- 
possible to  make  a  reasonable  doubt  that  this  is  answering  for  the 
default  of  another.     The  case  most  relied  on  by  the  plaintiff  is  that  of 


SECT    I.]  GREEN   V.    CRESSWELL.  51 

Thomas  v.  Cook,  where  this  Court  held  that  a  promise  of  B  to  hold  A 
harmless  against  the  eonsequences  of  his  entering  with  B  and  C,  at 
B's  request,  into  a  joint  bond  to  indemnify  D  against  debts  due  from 
C  and  D  was  binding,  though  not  in  writing  ;  Bayley,  J.,  and  Parke,  J., 
the  only  judges  present,  saying  that  a  promise  to  indemnify  does  not 
fall  within  the  words  or  policy  of  the  statute.  But  the  reasoning  in 
this  case  does  not  appear  to  us  satisfactory  in  support  of  the  doctrine 
there  laid  clown,  which,  taken  in  its  full  extent,  would  repeal  the  stat- 
ute. For  every  promise  to  become  answerable  for  the  debt  or  default 
of  another  ma}-  be  shaped  as  an  indemnity  ;  but,  even  in  that  shape, 
we  cannot  see  why  it  may  not  be  within  the  words  of  the  statute. 
Within  the  mischief  of  the  statute  it  most  certainly  falls. 

Adams  v.  Dansey  1  does  not  bear  out  the  general  doctrine.  That  was 
a  promise  by  one  parishioner  to  indemnify  another  against  the  conse- 
quences of  resisting  a  claim  of  tithe.  This  is  not  becoming  responsible 
for  debt  or  default  of  an}-  other,  but  merely  promising  to  pay  what  the 
promisee  may  lose  by  defending  the  promisor's  interests  in  a  suit. 

In  some  of  the  cases  the  language  employed  seems  to  assume  that 
the  debt,  default,  or  miscarriage  must  have  been  incurred  at  the  time 
of  making  the  promise.  But  the  common  case  of  becoming  responsible 
for  goods  supplied  to  another  on  the  faith  of  that  promise,  and  of 
course  after  it,  shows  that  criterion  to  be  inadmissible. 

A  distinction  was  also  hinted  at,  from  the  circumstance  of  Hadley's 
debt  being  due  to  a  third  person,  and  the  default  therefore  incurred 
towards  him,  not  towards  the  bail.  But  here  again  is  the  surmise  of  an 
intention  in  the  legislature  which  none  of  its  language  bears  out ;  and, 
besides,  ma}*  it  not  be  said  that  the  arrested  debtor,  who  obtains  his 
freedom  by  being  bailed,  undertakes  to  his  bail  to  keep  them  harmless, 
by  paying  the  debt,  or  surrendering? 

There  does  not  appear  any  objection  to  the  test  laid  clown  in  the 
note  to  1  Williams's  Saunders,  211  c. ;  and  it  is  decisive  in  favor  of  the 
objection.  The  original  party  remained  liable;  and  the  defendant 
incurred  no  liability  except  from  his  promise. 

Mule  absolute  for  arresting  the  judgment? 

1  6  Bing.  506. 

2  In  Cripps  v.  Hartnoll,  4B.&S.  414  (reversing  s.  c.  2  B.  &  S.  29),  Pollock,  C.  B., 
delivering  the  opinion  of  the  Court,  said  (p.  419) :  "  But  there  is  a  great  distinction 
between  that  case  [Green  v.  Cresswell]  and  the  present.  Here  the  bail  was  given  in  a 
criminal  proceeding ;  and,  where  bail  is  given  in  such  a  proceeding,  there  is  no  con- 
tract on  the  part  of  the  person  bailed  to  indemnify  the  person  who  became  bail  for 
him.  There  is  no  debt,  and  with  respect  to  the  person  who  bails,  there  is  hardly  a 
duty;  and  it  may  very  well  be  that  the  promise  to  indemnify  the  bail  in  a  criminal 
matter  should  be  considered  purely  as  an  indemnity,  which  it  has  been  decided  to  be. 
Now  it  has  been  laid  down,  that  a  mere  promise  of  indemnity  is  not  within  the  Statute 
of  Frauds,  and  there  are  many  cases  which  would  exemplify  the  correctness  of  that 
decision.  On  the  other  hand,  an  undertaking  to  answer  for  the  debt  or  default  of 
another  is  within  the  Statute  of  Frauds,  and  no  doubt  some  cases  might  be  put  where 
it  is  both  the  one  and  the  other ;  that  is  to  say,  where  the  promise  to  answer  for  the 
debt  or  default  of  another  would  involve  what  might,  very  properly  and  legally,  be 
called  an  indemnity.     Where  that  is  the  case  (which  it  is  not  here),  in  all  probability 


52  WILDES  V.    DUDLOW.  [CHAP.  L 


WILDES    v.  DUDLOW. 
In  Chancery,  before  Sir  R.  Malins,  V.  C,  December  8,  9,  1874. 

[Reported  in  Law  Reports,  19  Equity,  198.] 

This  was  a  suit  for  the  administration  of  the  estate  of  John  Dudlow, 
who  died  in  1854.  The  bill  was  filed  in  1868  by  legatee.  The  cause 
was  heard  in  1870,  and  the  common  administration  decree  was  made. 
The  estate  proved  insufficient  to  pa}'  the  legacies  in  full.  Thereupon 
the  plaintiffs  took  out  a  summons  to  vary  the  chief  clerk's  certificate  by 
striking  out  a  sum  of  £1,000,  which  John  Noble  Dudlow,  the  son  and 
one  of  the  executors  of  the  testator,  had  been  allowed  to  charge  against 
the  estate  and  retain  under  the  following  circumstances  :  — 

In  the  year  1853,  the  testator,  who  had  often  assisted  his  son-in-law, 
Heniy  Atkinson  Wildes,  in  raising  mone}',  requested  his  son,  John 
Noble  Dudlow,  to  join  Henry  Atkinson  Wildes  in  a  joint  and  several 
promissoiy  note  for  £1,000,  saying  that  he  (the  testator)  did  not  like 
his  (the  testator's)  name  going  so  often  to  Randall  &  Co.,  from  whom 
Henry  Atkinson  Wildes  intended  to  raise  the  said  sum,  and  offering  to 
indemnify  the  said  John  Noble  Dudlow  from  any  loss  that  might  arise 
from  his  joining  in  the  said  note.  John  Noble  Dudlow  was  afterwards 
compelled  to  pay  the  said  sum,  and  the  chief  clerk  had  allowed  his  claim 
in  respect  of  such  payment.1 

J//'.  Glasse,  Q.  C,  and  Mr.  Herbert  Smith,  for  the  plaintiffs. 

Mr.  Higgins,  Q.  C,  and  Mr.  Grosvenor  Woods,  for  the  defendant 
Dudlow. 

Sir  R.  Malins,  V.  C.  The  question  is,  wdiether  this  contract  is, 
within  the  4th  section  of  the  Statute  of  Frauds,  required  to  be  in  writ- 
ing. The  words  of  that  clause  are,  "charge  the  defendant  upon  any 
special  promise  to  answer  for  the  debt,  default,  or  miscarriage  of 
another."  What  was  the  promise  made  by  the  testator  in  this  case  to 
the  defendant  John  Dudlow?  It  was  not,  "I  engage  with  you  to  be 
answrerable  to  you  for  the  debt  of  Wildes,"  because  Wildes  did  not  owe 
Dudlow  anything,  but  he  says,  "  If  you  will  do  a  certain  act,  —  namely, 
render  yourself  liable  for  that  debt,  —  I  will  indemnify  you."  I  think  it 
perfectly  clear  that  the  only  contract  which  I  have  to  consider  is,  that 
between  father  and  son.  It  is  not  that  he  will  pay  the  debt  of  Wildes, 
but  that  if  the  son  will  guarantee  Wildes'  debt,  he  will  see  him  harm- 
less, or,   in  other  words,  indemnify   him.     If  one   man  could  induce 

the  undertaking  would  be  considered  as  within  the  Statute  of  Frauds  if  it  were  to 
answer  for  the  debt  or  default  of  another,  notwithstanding  it  might  also  be  an  indem- 
nity. This  view  of  the  subject  creates,  I  think,  a  broad  distinction  between  the  pres- 
ent case  and  Green  v.  Cresswell,  which  we  are  not  called  upon  either  to  overrule  or  to 
say  that  we  entirely  support." 

1  The  statement  of  the  case  is  taken  from  23  W.  R.  435.  The  arguments  of  coun- 
sel are  omitted.  —  Ed. 


SECT.  I.]  WILDES   V.    DUDLOW.  53 

another  to  alter  his  line  of  conduct  in  that  way,  and  then  meet  him 
with  the  Statute  of  Frauds,  that  statute,  instead  of  being  a  protection 
against  fraud,  would  be  the  direct  means  of  fraud.  The  statute  enacts 
that  if  one  man  promises  to  pa}-  the  debt  of  another  the  promise  is 
void  unless  it  is  in  writing,  and  no  one  doubts  that  to  be  the  law  ;  but 
it  appears  to  me,  upon  principle,  so  plain  that  the  present  case  is  not 
within  the  statute,  that  I  am  very  glad  to  find  that  what  occurred  to 
me  as  being  the  proper  view  of  the  case  is  finally  decided  to  be  the  law 
on  the  subject.  There  has  been  a  conflict  of  authority,  and  I  confess  I 
am  surprised  to  find  that  there  has  been  so  much  conflict.  The  point 
was  originally  decided  by  two  of  the  most  eminent  judges  known  on 
the  bench  (Mr.  Justice  Bayley  and  Mr.  Justice  Parke,  afterwards  Lord 
^Yensleydale)  in  the  case  of  Thomas  r.  Cook,  and  they  decided  it  upon 
the  plainest  principles  of  common  sense  and  justice.  I  was  therefore 
surprised  to  find  that  in  a  later  case  of  Green  v.  Cresswell  the  same 
Court,  constituted  at  that  time  of  other  judges,  had  taken  a  different 
view,  and  a  view  which,  if  it  had  been  maintained,  I  possibly  should 
not  have  felt  myself  obliged  to  follow.  But  I  am  happy  to  find  that, 
the  matter  having  been  most  carefully  and  elaborately  considered  in 
the  case  of  Reader  v.  Kingham,1  when  the  full  number  of  judges  was 
present,  the  case  of  Green  v.  Cresswell  was  overruled,  and  the  law  as 
laid  down  by  Thomas  v.  Cook  restored.  The  learned  judges  com- 
mented upon  those  cases,  and  said  that  the  law  was  accurately  laid 
down  in  Thomas  v.  Cook  ;  and  I  entirely  agree  in  that  expression  ot 
opinion.  I  accordingly  decide  that  where  one  person  induces  another 
to  enter  into  an  engagement,  by  a  promise  to  indemnify  him  against 
liability,  that  is  not  an  agreement  within  the  Statute  of  Frauds,  and 
does  not  require  to  be  in  writing.  This  is  a  case  in  which  a  father 
induced  his  son  to  guarantee  the  debt  of  his  son-in-law  upon  a  promise 
that  he  would  see  him  harmless.  Upon  every  principle  of  justice  he  is 
bound  to  indemnify  him  ;  and  I  think,  therefore,  that  the  son  is  per- 
fectly right  in  helping  himself  out  of  the  estate  which  has  come  into  his 
hands.  The  force  of  the  decision  in  Reader  v.  Kingham  *  was  somewhat 
shaken  by  the  opinion  expressed  b}r  Mr.  Justice  Blackburn  in  Mount- 
Stephen  v.  Lakeman  2 ;  but.  as  the  decision  of  the  Queen's  Bench  in  that 
case  was  reversed  in  the  Exchequer  Chamber,3  and  also  in  the  House 
of  Lords,4  the  law  rests  on  the  plain  and  reasonable  ground  upon  which 
it  was  put  in  Reader  v.  Kingham.1  The  decision  is,  therefore,  entirely 
in  favor  of  the  defendant ;  and  I  hold  that  the  Chief  Clerk  has  done 
perfectly  right  in  allowing  this  £1,000  with  interest.  Therefore  the 
motion  to  vary  the  certificate  in  that  respect  must  be  dismissed  with 
costs.6 

1  13  C.  B.  n.  s.  344.  2  Law  Rep.  5  Q.  B.  613. 

3  Law  Rep.  7  Q.  B.  196.  4  Law  Rep.  7  H.  L.  17. 

5  Batson  v.  King,  4  H.  &  N.  739  (semble) ;  In  re  Bolton,  8  Times  L.  R.  668 ;  W.  N. 
[1892]  163;  36  Sol.  J.  608,  s.c. ;  Hoyle  v.  Hoyle,  '93,  1  Ch.  84  (semble);  Guild  v.  Con- 
rad, '94,  2  Q.  B.  885 ;  Godden  v.  Pierson,  42  Ala.  370  (but  see  Brown  v.  Adams,  1  Stew. 
61) ;  Reed  v.  Holcomb,  31  Conn.  360;  Smith  v.  Delaney,  64  Conn.  264  (but  see  Clem 


54  HARRISON    V.    SAWTEL  [CHAR  L 


HARRISON   v.  SAWTEL, 
In  the  Supreme  Court,  New  York,  May,  1813. 

[Reported  in  10  Johnson,  242.] 

Per  Curiam.1  This  was  not  a  promise  to  pay  the  debt,  or  answer 
for  the  default,  of  another  person.  It  was  an  original  promise  between 
the  parties  to  it,  that  one  of  them  would  indemnify  the  other,  if  he 
would  become  special  bail  for  a  third  person  whom  the  defendant  was 
bound  to  protect  and  save  harmless  in  the  suit.  It  was  done  at  the 
request,  and  for  the  benefit,  of  the  defendant,  as  it  saved  him  from 
becoming  bail  himself,  or  procuring  some  other  person  to  become  bail. 
The  case  had  nothing  to  do  with  the  Statute  of  Frauds,  and  there  was 
a  consideration  for  the  promise,  the  advantage  resulting  to  the  defend- 

ent's  App.  52  Conn.  464);  Jones  v.  Shorter,  1  Ga.  294;  Resseter  v.  Waterman,  151 
111.  169  (but  see  Brand  v.  Whelan,  18  111.  Ap.  186) ;  Horn  v.  Bray,  51  Ind.  555;  Ander- 
son v.  Spence,  72  Ind.  315  (overruling  Brush  v.  Carpenter,  6  Ind.  78) ;  Keesling  v. 
Frazier,  119  Ind.  185;  Mills  v.  Brown,  11  Iowa,  314;  Patton  v.  Mills,  21  Kas.  163; 
Dunn  v.  West,  5  B.  Mon.  376 ;  Lucas  v.  Chamberlain,  8  B.  Mon.  276 ;  George  v.  Hos- 
kins  (Ky.  1895),  30  S.  W.  R.  406;  Smith  v.  Sayward,  5  Me.  504;  Alger  v.  Scoville,  1 
Gray,  391 ;  Aldrich  v.  Ames,  9  Gray,  76;  Rose  v.  Wollenberg  (Oreg.  1896),  44  Pac.  R. 
382;  Boyer  v.  Soules  (Mich.  1895)*62  N.  W.  R.  1000  (but  see  First  Bank  v.  Bennett, 
33  Mich.  520) ;  Fidelity  Co.  v.  Lawlor  (Minn.  '96),  66  N.  W.  R.  143  ;  Minick  v.  Huff,  41 
Neb.  516;  Holmes  v.  Knights,  10  N.  H.  175 ;  Demeritt  v.  Bickford,  58  N.  H.  523;  Ap- 
gar  v.  Hiler,  24  N.  J.  812;  Cortelyou  v.  Hoagland,  40  N.  J.  1  ;  Chapin  v.  Merrill,  4 
Wend.  657  ;  Barry  v.  Ransom,  12  N.  Y.  462 ;  Sanders  v.  Gillespie,  59  N.  Y.  250 ;  Tighe 
v.  Morrison,  116  N.  Y.  263  (overruling  Kingsley  v.  Balcom,  4  Barb.  131)  ;  Jones  v. 
Bacon,  145  N.  Y.  446;  Shook  v.  Vanmater,  22  Wis.  532;  Vogel  v.  Melms,  31  Wis. 
306,  Accord. 

Winckworth  v.  Mills,  2  Esp.  484  (overruled);  May  v.  Williams,  61  Miss.  125;  Gar- 
ner v.  Hutchins,  46  Mo.  399  (semble);  Bissig  v.  Britton,  59  Mo.  204;  Draughan  v. 
Bunting,  9  Ired.  10;  Easter  v.  White,  12  Oh.  St.  219;  Kelsey  v.  Hibbs,  13  Oh.  St. 
340;  Nugent  v.  Wolfe,  111  Pa.  471  (but  see  Elkin  v.  Timlin,  151  Pa.  491);  Simpson 
v.  Nance,  1  Speers,4;  Macey  v.  Childress,  2  Tenn.  Ch.  438,  Contra.  (But  in  Ohio  and 
Pennsylvania,  if  the  promisor  and  promisee  in  the  promise  of  indemnity  are  co-sureties 
for  a  third  person,  the  Statute  of  Frauds  is  held  not  to  apply.  Farrell  v.  Maxwell, 
28  Oh.  St.  383 ;   Mickley  v.  Stocksleger,  10  Pa.  Co.  C.  345.) 

In  Adams  v.  Russell,  20  Vt.  205,  the  Court  declined  to  express  an  opinion  upon  this 
controverted  question. 

In  Guild  v.  Conrad,  '94,  2  Q.  B.  885,  Lindley,  L.  J.,  said  (p.  892):  "The  nature  of 
the  promise  is  all-important ;  because  if  it  was  a  promise  to  pay  if  the  Demerara  firm 
did  not  pay,  then  it  is  void  under  the  Statute  of  Frauds  as  not  being  in  writing.  But 
if,  on  the  other  hand,  it  was  a  promise  to  put  the  plaintiff  in  funds  in  any  event,  then 
it  is  not  such  a  promise  as  is  within  the  Statute  of  Frauds."  Lopes,  L.  J.,  said  (p.  895 ) . 
"  A  promise  to  be  liable  for  a  debt  conditionally  on  the  principal  debtor  making  de- 
fault is  a  guaranty,  and  is  a  promise  to  make  good  the  default  of  another  within  the 
statute.  On  the  other  hand,  a  promise  to  become  liable  for  a  debt  whenever  the  per- 
son to  whom  the  promise  is  made  should  become  liable,  is  not  a  promise  within  the 
Statute  of  Frauds,  and  need  not  be  in  writing."  Davey,  L.  J.,  said  (p.  896) :  "  In  my 
opinion,  there  is  a  plain  distinction  between  a  promise  to  pay  the  creditor  if  the  prin- 
cipal debtor  makes  default  in  payment,  and  a  promise  to  keep  a  person  who  has  entered, 
or  who  is  about  to  enter,  into  a  contract  of  liability  indemnified  against  that  liability 
independently  of  the  question  whether  a  third  person  makes  default  or  not."  —  Ed. 

1  Only  the  opinion  of  the  Court  is  given.  —  Ed. 


SECT.  I.]  ANSTEY   V.    MARDEN.  55 

ant  from  the  plaintiff's  becoming  bail.  The  defendant  being  answerable 
for  the  party  sued,  the  becoming  bail  for  the  party,  at  the  request  of 
the  defendant,  was  as  beneficial  as  if  the  plaintiff  had  become  bail  for 
the  defendant  himself.  The  damages  were  proved  by  the  expenses  the 
plaintiff  had  been  put  to,  in  endeavoring  to  surrender  Foot,  and  the 
defendant  had  acknowledged  the  plaintiff's  demand,  and  paid  a  part 
of  it.  The  recovery,  therefore,  was  just,  and  the  judgment  must  be 
affirmed.  Judgment  affirmed-1 


ANSTEY  v.  MARDEN. 
In  the  Common  Pleas,  November  26,   1804. 

[Reported  in  1  Bosanquet  $■  Puller,  New  Reports,  124.] 

Sir  James  Mansfield,  C.  J.2  At  the  trial  of  this  cause,  it  was  ob- 
jected, on  the  part  of  the  plaintiff,  that  the  promise  by  Weston  was  a 
promise  within  the  Statute  of  Frauds,  and  therefore  no  bar  to  the  plain- 
tiff's demand.  It  appeared  to  me  doubtful  how  far  the  promise  in  this 
case  could  be  deemed  to  be  within  the  statute  ;  and  it  rather  struck  me 
that  being  a  promise  to  pay  only  10*.  in  the  pound,  and  not  to  pay  the 
whole  debt,  it  was  an  original  agreement,  and  therefore  was  not  within 
ihe  statute.  I  did  not  see  how  one  person  could  undertake  for  the  debt 
©f  another  when  the  debt  for  which  he  was  supposed  to  undertake  was 
discharged  by  the  very  bargain.  No  cases,  however,  were  at  that  time 
cited.  We  have  now  been  considering  all  the  circumstances  of  the 
case,  and  the  question  is,  whether  justice  will  not  be  done  by  not  allowing 
the  plaintiff  to  take  more  than  what  the  strictest  rule  of  law  will  entitle 
him  to?  The  facts  were  shortly  these:  The  defendant  was  upon  the 
brink  of  a  bankruptcy  ;  some  of  his  creditors  [the  plaintiff  included] 
met  to  consider  what  should  be  done  ;  and  his  effects  being  found  only 
sufficient  to  pay  7*.  6d.  in  the  pound,  the  creditors  agreed  to  accept 
10s.  in  the  pound  from  Weston  in  full  satisfaction  of  their  debts,  and 
undertook  to  assign  their  debts  to  him.  The  only  object  of  the  deed 
was  the  assignment  of  the  debts  ;   and  Weston  was  to  pay  10*.  in  the 

1  Garner  v.  Hudgins,  46  Mo.  399 ;  Adams  v.  Russell,  20  Vt.  205  (semble),  Accord. 

Similarly,  a  promise  to  A  to  pay  B's  debt  to  A  is  not  within  the  Statute  of 
Frauds,  if  the  promisor,  as  between  himself  and  B,  was  already  bound  to  exonerate 
B.  French  v.  French,  84  Iowa,  655 ;  Burr  v.  Wilcox,  13  All.  269  (semble)  ;  Garner  v. 
Hudgins,  46  Mo.  399  (semble). 

Nor  does  the  Statute  of  Frauds  apply  to  a  promise  to  A  to  pay  him  a  debt  due  to 
him  from  the  promisor  and  B  jointly.  Stephens  v.  Squire,  5  Mod.  205  ;  Orrell  r. 
Coppock,  26  L.  J.  Ch.  269  ;  Lovering  v.  Dixon,  56  Tex.  75  (semble).  This  principle 
is  applied  when  one  promises  to  pay  the  debt  of  a  firm  composed  of  the  promisor  and 
B.  Rice  v.  Barry,  2  Cranch  C.  C.  447  ;  Files  v.  McLeod,  14  Ala.  611  ;  Weatherby  v. 
Hardman,  68  Ga.  592;  Hopkins  v.  Carr,  31  Ind.  260. —  Ed. 

2  The  statement  of  facts,  arguments,  and  the  opinion  of  Rooke,  J.,  are  omitted.  —  Ed. 


56  MALLET    V.    BATEMAN.  [CHAP.  L 

pound  as  the  price  of  those  debts.  After  this  the  plaintiff  went  out 
of  town,  and  some  of  the  creditors  accepted  10s.  in  the  pound,  and 
assigned  their  debts  to  Weston.  The  plaintiff  thought  proper  first  to 
deny  his  agreement,  and  then  to  insist  on  his  right  to  change  his  mind 
and  refuse  to  execute  the  deed.  He  had  a  right  to  change  his  mind, 
but  in  point  of  morality  and  sound  honesty  his  conduct  was  extremely 
bad.  It  was  equivalent  to  obtaining  a  promise  from  Marden  privately 
for  payjnent  of  the  whole  debt  after  agreeing  with  the  rest  of  the  cred- 
itors to  take  a  part  only.  He  now  comes  here  to  set  aside  the  verdict,. 
in  order  to  put  into  his  pocket  the  other  part  of  the  debt  for  his  own 
benefit,  to  which  Weston  is  entitled.  Supposing  the  promise  by  Weston 
to  be  a  good  promise  in  law,  the  plaintiff  cannot  recover  the  original 
debt  due  from  the  defendant  to  himself,  inasmuch  as  he  has  agreed  to- 
accept  10*.  in  the  pound  in  satisfaction  of  that  debt,  and  to  assign  it  to- 
Weston,  who  is  contented  with  the  verdict.  The  plaintiff  has  clearly 
been  guilt}'  of  very  harsh  treatment  towards  the  defendant,  and  I  do- 
not  think  the  Court  called  upon  to  alter  the  verdict  as  a  favor  to  him. 
He  has  acted  altogether  contrarj7  to  honor  and  justice,  and  I  think  the 
verdict  ought  to  stand.  I  would  not  have  it  supposed  that  I  mean  to- 
throw  any  doubt  upon  the  decisions  which  have  been  cited  respecting 
the  Statute  of  Frauds.  The  case  of  Chater  v.  Becket 1  certainly  decides 
that  a  mere  promise,  such  as  that  before  us,  would  be  within  the  statute ; 
and  indeed,  upon  general  principles,  no  one  can  wish  to  restrain  the 
operation  of  the  Statute  of  Frauds.  The  benefits  of  that  statute  are 
much  more  apparent  to  those  who  are  conversant  with  the  practice  of 
the  Court  of  Chancery  than  those  who  have  only  seen  the  practice  of 
the  courts  of  common  law.  But  upon  the  whole  it  appears  to  me  that 
the  agreement  by  Weston  amounted  to  a  purchase  of  the  plaintiff's 
debt,  and  that  this  application  for  a  new  trial  ought  not  to  be  granted. 

Hide  discharged. 


MALLET   v.  BATEMAN. 
In  the  Exchequer  Chamber,  November  29,   1865. 

[Reported  in  Law  Reports,  1   Common  Picas,  163.] 

The  first  count  stated,  that,  in  consideration  that  the  plaintiff  would 
sell  and  deliver  to  certain  persons  trading  under  the  firm  of  G.  J. 
Calvert  &  Co.,  certain  goods,  to  wit,  buckle  plates,  which  the}'  had 
ordered  and  contracted  to  buy  of  the  plaintiff,  without  the  plaintiff 
requiring  payment  in  cash  for  the  prices  of  the  same  on  the  delivery 
thereof,  and  would  take  from  them  their  acceptance  to  a  bill  of  exchange 
drawn  by  the  plaintiff  upon  and  directed  to  them,  for  the  payment  of 
the  prices  of  the  said  goods  to  the  plaintiff's  order  one  month  after  the 
date  thereof,  and  would  indorse  and  deliver  the  same  to  the  defendant, 

1  7  T.  R.  201. 


SECT.  I.]  MALLET    V.    BATEMAN.  57 

and  would  permit  the  defendant  to  deduct  from  the  amount  of  the  said 
bill  a  certain  sum,  to  wit,  at  the  rate  of  £.'5  per  cent,  on  the  amount  of 
the  money  paj'able  by  the  said  bill  for  his  cashing  or  discounting  the 
same  and  indemnifying  and  protecting  the  plaintiff  as  thereinafter  men- 
tioned, the  defendant  promised  the  plaintiff  to  cash  or  discount  the  said 
bill  for  the  plaintiff,  and  indemnify  and  protect  him  from  the  payment 
thereof:  that  the  plaintiff  thereupon  sold  and  delivered  to  the  said  G.  J. 
Calvert  &  Co.  the  said  goods  without  requiring  payment  in  cash  on 
delivery,  and  took  from  them  their  acceptance  to  a  bill  of  exchange 
drawn  by  the  plaintiff  upon  and  directed  to  the  said  G-.  J.  Calvert  &  Co. 
for  the  payment  of  £603  14s.  10«f.,  the  prices  of  the  said  goods,  to  the 
plaintiff's  order,  one  month  after  the  date  thereof;  and  that,  although 
the  plaintiff  was  read}'  and  willing  to  allow  the  defendant  to  make  the 
said  reduction,  &c,  and  all  things  had  happened,  &c,  to  entitle  the 
plaintiff  to  a  performance  by  the  defendant  of  his  said  promise,  and  to 
have  the  said  bill  cashed  or  discounted  by  him,  &c,  yet  the  defendant 
refused  to  cash  or  discount  the  said  bill,  or  to  indemnify  the  plain- 
tiff,  &c. 

At  the  ti'ial,  it  was,  amongst  other  things,  objected  on  the  part  of  the 
defendant  that  he  was  not  liable  on  the  first  count,  as  the  contract 
ought  to  have  been  in  writing,  under  the  Statute  of  Frauds,  29  Car.  2, 
c.  3,  s.  4.  Erle,  C.  J.,  reserved  leave  to  the  defendant  to  move  to 
enter  a  verdict  for  him  on  the  first  count,  if  the  Court  should  be  of 
opinion  that  the  contract  was  one  which  the  statute  required  to  be  in 
writing,  — the  Court,  if  necessary,  to  have  power  to  amend  on  any  terms 
they  might  think  fit.  A  verdict  was  thereupon  taken  for  the  plaintiff 
on  the  fii'st  count  for  £586  3*.  2d.,  and  for  the  defendant  on  the  mone}' 
counts. 

A  rule  was  accordingly  obtained  to  enter  a  verdict  for  the  defendant 
on  the  first  count,  and  afterwards  made  absolute:  see  16  C.  B.  n.  s. 
530;  33  L.J.  (C.  P.)  243. 

The  plaintiff  appealed  ;  and  the  question  for  the  opinion  of  the  Court 
of  Appeal  was,  whether  or  not  the  contract  upon  which  the  action  was 
brought  was  required  to  be  in  writing,  under  the  Statute  of  Frauds. 
If  the  Court  should  be  of  opinion  in  the  negative,  the  verdict  was  to 
be  entered  for  the  plaintiff  on  the  first  count  of  the  declaration,  for 
£586  3s.  2(7.  If  the  Court  should  be  of  opinion  in  the  affirmative,  the 
verdict  was  to  be  entered  for  the  defendant  on  that  count.1 

The  case  was  argued  in  the  Exchequer  Chamber  before  Pollock,  C.  B., 
Ciiannell,  B.,  Blackburn  and  Meller,  JJ.,  Pigott,  B.  and  Shee,  J. 

Coleridge,  Q.  C.  (Prentice  with  him),  for  the  plaintiff.  The  Court 
below  were  wrong  in  holding  that  this  was  a  contract  which,  by  the 
4th  section  of  the  Statute  of  Frauds,  was  required  to  be  in  writing.  It 
was  not  a  contract  or  promise  to  answer  for  any  debt  or  default  of 
Calvert  &  Co. ,  but  a  mere  purchase  by  Bateman  from  Mallet  of  Cat 

1  The  statement  of  the  case  has  been  materially  abridged.  —  Ed. 


58  MALLET    V.    BATEMAN.  [CHAP.  L 

vert  &  Co.'s  acceptance.  At  the  time  the  defendant  refused  to  discount 
the  bill,  there  was  no  existing  debt  due  from  Calvert  &  Co.  The  terms 
of  dealing  between  them  and  the  defendant  had  been  settled  by  the  cor- 
respondence. Instead  of  cash,  the  payments  were  to  be  made  by  bill, 
which  bill  suspended  the  liability  of  Calvert  &  Co.  until  it  arrived  at 
maturity.  A  refusal  on  the  part  of  Calvert  &  Co.  to  give  a  bill  would 
not  have  entitled  Mallet  to  sue  them  for  the  price  of  the  goods,  but 
would  only  have  rendered  Calvert  &  Co.  liable  to  a  special  action  for 
not  accepting  the  bill. 

[Blackburn,  J.  Is  it  essential  that  there  should  at  the  time  have 
been  an  existing  debt  of  Calvert  &  Co.,  capable  of  being  immediately 
enforced  ?  If  A  holds  an  acceptance  of  B,  not  yet  due,  and  C  prom- 
ises to  pay  it  at  maturity  if  the  acceptor  does  not,  surely  that  is  within 
the  statute.] 

The  liability  of  the  defendant  arose,  according  to  the  understanding 
of  the  parties,  before  an}-  liability  arose  on  the  part  of  Calvert  &  Co. 
The  substance  of  the  transaction  was  this:  Bateman  says  to  Mallet, 
"  If  you  will  furnish  the  plates  to  Calvert  &  Co.,  without  insisting 
upon  immediate  payment,  and  will  take  their  bill  at  one  month,  I  will 
discount  it  at  £3  per  cent." 

[Blackburn,  J.     Without  recourse  against  any  part}-.] 

That,  it  is  submitted,  is  no  promise  to  answer  for  the  debt  or  default 
of  Calvert  &  Co.  The  defendant  had  a  great  interest  in  the  perform- 
ance of  the  work  by  Calvert  &  Co.,  and  the  plaintiff  parted  with  his 
lien  on  the  goods,  as  well  as  with  his  claim  on  his  vendees. 

[Blackburn,  J.  Is  not  a  promise  to  give  a  guaranty  as  much  re- 
quired to  be  in  writing  as  a  guaranty  itself? 

Pollock,  C.  B.  This  is  nothing  more  than  a  promise  to  indemnify 
the  holder  against  the  default  of  the  acceptor.  I  think  it  is  clearly 
within  the  statute.] 

So  to  hold  will  be  pushing  the  Statute  of  Frauds  much  further  than 
it  has  ever  }-et  been  carried. 

[Pollock,  C.  B.  Honestly  applying  it,  rather,  and  not  allowing  a 
subtle  device  to  prevail  to  take  a  case  out  of  the  statute.  Every 
contract  which  deviates  in  any  degree  from  the  common  ought  to  be 
in  writing.] 

It  has  been  frequently  held  that  a  contract  for  the  equitable  assign- 
ment of  a  debt  need  not  be  in  writing. 

[Pollock,  C.  B.  Would  a  parol  promise  to  buy  a  bond  be 
binding?] 

It  is  submitted  that  it  would,  but  it  is  enough  to  say  that  that  is  not 
this  case. 

[Blackburn,  J.  The  only  question  is  whether  a  bargain  such  as 
that  stated  in  the  11th  paragraph  of  the  special  case  would,  if  made  by 
word  of  mouth,  be  binding.] 

Is  it  a  contract  or  promise  to  answer  for  the  debt  or  default  of  an- 
other person?     The  bill  is  spoken  of  as  a  thing  "bought"  by  Bate- 


SECT.  I.]  MALLET   V.    BATEMAN.  59 

man.  He  undertakes  to  stand  in  the  vendor's  position.  In  Story  on 
Contracts,  4th  edit.,  p.  398,  §  861,  it  is  said:  "The  statute  only 
applies  to  collateral  engagements,  that  is,  to  engagements  upon  which 
the  guarantor  is  only  conditionally  liable,  upon  the  default  of  some 
other  person  who  is  solely  liable  originally."  Upon'  this  contract  it  is 
plain  that  Calvert  &  Co.  could  not  remain  liable  to  Mallet.  It  was  an 
original  contract  by  Bateman,  in  consideration  of  certain  advantages 
which  would  accrue  to  him  from  the  performance  of  Mallet's  contract 
with  Calvert  &  Co. 

Sir  G.  Hbnyman  (  Watkin  Williams  with  him),  for  the  defendant, 
was  not  called  upon. 

Pollock,  C.  B.  We  are  all  of  opinion  that  it  is  unnecessary  to  hear 
the  counsel  for  the  defendant.  M}-  brother  Blackburn  has,  in  the 
course  of  the  argument,  stated  that  which  appears  to  me  to  dispose  of 
this  case,  viz.,  that  a  contract  to  give  a  guaranty  is  required  to  be  in 
writing  as  much  as  a  guaranty  itself.1  If  we  were  to  hold  that  a  con- 
tract  of  guaranty  must  be  in  writing,  but  that  a  contract  to  give  a 
guaranty  need  not,  we  should,  I  think,  be  committing  the  same  mistake 
as  our  predecessors  did  with  reference  to  the  Statute  of  Uses.  The 
jbject  of  that  statute  was,  that  the  possession  should  go  along  with  the 
use  ;  but  a  construction  was  early  adopted  whereby  the  possession 
should  go  to  A  in  trust  for  B,  and  so  the  effect  of  the  statute  was 
simply  to  add  a  few  words  to  the  conveyance.  Whether  the  decisions 
of  the  courts  of  equity  as  to  uses  and  trusts  were  beneficial  or  not,  I  do 
not  stop  to  inquire  ;  but  undoubtedly  the  whole  doctrine  arose  out  of  a 
desire  to  frustrate  the  intention  of  the  Statute  of  Uses.  I  trust  we  shall 
not  commit  a  similar  mistake  in  construing  the  statute  now  under  con- 
sideration. The  real  question  here  is,  whether  the  contract  declared 
upon  is  not  substantially  a  contract  that,  if  Calvert  &  Co.,  the  buyers 
of  the  goods,  do  not  pay  for  them  at  the  expiration  of  the  month's 
credit,  the  defendant  will  indemnify  the  plaintiff  against  their  default. 
In  consideration  of  a  discount  of  3  per  cent.,  the  defendant  undertakes 
to  hold  the  bill  without  recourse  to  the  plaintiff.  That  is,  in  substance, 
an  engagement  by  which  the  buyers  of  the  goods  are  not  to  be  exoner- 
ated, but  the  defendant  is  to  indemnify  the  seller  against  their  default. 
That  is  clearly  a  contract  within  the  Statute  of  Frauds.  Upon  this 
short  ground,  we  are  all  of  opinion  that  the  judgment  of  the  Court 
below  should  be  affirmed.  Judgment  affirmed? 

1  In  accordance  with  this  principle  the  Statute  of  Frauds  applies  to  a  promise  to 
become  a  party  to  a  hill  or  note  as  security  for  a  third  person,  either  as  an  indorser, 
Smith  v.  Easton,  54  Md.  138;  Willis  v.  Sliinii,  42  N.  J.  138  ;  Carville  o.  Crane,  5  Hill, 
483;  Bronson  v.  Stroud,  2  McMull.  372  ;  Taylor  i>.  Drake,  4  Strob.  431  ;  or  as  maker. 
Dee  v.  Downs,  57  Iowa,  589;  Wilson  v.  Roberts,  5  Bosw.  100;  or  as  acceptor,  Chap- 
line  v.  Atkinson,  45  Ark.  67;  Williams  v.  Caldwell,  4  S.  Ca.  n.  s.  100.  The  rule  is 
the  same  as  to  a  promise  to  sign  a  bond  as  surety  for  a  third  person.  Hayes  o. 
Burkam,  51  Ind.  130. —  Ed. 

2  Dougherty  v.  Bash,  167  Pa.  429,  Accord.  —Ed. 


6C  HARGREAVES  V.   PARSONS.  [CHAP.  I 


HARGREAVES   v.  PARSONS. 
In  the  Exchequer,   Michaelmas  Term,  1844. 

[Reported  in  13  Meeson  Sf  Welsby,  561.] 

The  judgment  of  the  Court  was,  on  the  10th  of  December,  deliv- 
ered by 

Parke,  B.1  This  was  an  action  b}T  the  plaintiff  against  the  defend- 
ant upon  two  contracts  made  by  him  with  the  plaintiff,  on  the  assign- 
ment of  two  other  contracts  between  the  defendant  and  Parker,  for 
taking  from  or  delivering  to  the  defendant,  at  his  option,  certain  shares 
in  a  foreign  railwa}',  at  a  fixed  premium,  on  or  before  the  18th  Febru- 
ary, 1844  ;  and  the  defendant  agreed  to  guarantee  the  delivery  by 
Parker  to  the  plaintiff. 

Three  objections  were  made  by  3fr.  Watson,  at  the  close  of  the 
plaintiff's  case,  and  reserved  by  the  learned  judge.  The  first  and  most 
important  was,  that  a  note  in  writing  was  necessary  under  the  Statute 
of  Frauds,  because  the  agreement  or  guaranty  by  the  defendant,  for 
the  performance  b}'  Parker  of  the  new  agreement,  was  a  promise  to 
answer  for  the  debt  or  default  of  Parker.  The  learned  judge  inti- 
mated his  opinion,  that  this  was  not  a  case  within  the  statute,  but  was 
an  original  promise. 

And  we  are  of  the  same  opinion.  The  statute  applies  only  to  prom- 
ises made  to  the  persons  to  whom  another  is  already,  or  is  to  become, 
answerable.  It  must  be  a  promise  to  be  answerable  for  a  debt  of,  or  a 
default  in  some  duty  by,  that  other  person  towards  the  promisee.  This 
was  decided,  and  no  doubt  rightly,  by  the  Court  of  Queen's  Bench,  in 
Eastwood  y.  Kenyon,  and  in  Thomas  v.  Cook.  In  this  case  Parker 
had  not  contracted  with  the  plaintiff,  nor  was  it  intended  that  he 
should  ;  there  was  no  privity  between  them  ;  the  non-performance  of 
Parker's  contract  with  the  defendant  would  be  no  default  towards 
the  plaintiff,  and,  consequently,  the  undertaking  by  the  defendant  was 
no  promise  to  answer  for  the  default  or  miscarriage  of  Parker  in  any 
debt  or  duty  towards  the  plaintiff.  It  was  an  original  promise  that 
a  certain  thing  should  be  done  by  a  third  person. 

There  must,  therefore,  be  no  rule.  Mule  refused. 

1  Only  the  opinion  of  the  Court  is  given,  and  that,  too,  slightly  abridged.  —  Ed. 


SECT.  I.]  CAKDELL    V.   McNIEL.  61 


CARDELL   v.   McNIEL. 
In  tfie  Court  of  Appeals,  New  York,  March,  1860. 

[Reported  in  21  New  York  Reports,  336.] 

Comstock,  Ch.  J.1  The  contract  for  the  sale  of  the  plaintiff's  horse 
to  the  defendant,  was  concluded  on  the  part  of  the  latter  by  his  agent, 
Acker. 

By  the  terms  of  the  contract,  as  testified  to  b}-  the  plaintiff's  witness, 
Greenfield,  and  as  found  by  the  referee,  the  horse  was  to  be  paid  for 
in  a  span  of  horses  owned  by  the  defendant,  which  were  to  be  delivered 
to  the  plaintiff  ;  by  a  note  of  $110,  to  be  signed  by  the  defendant  and 
one  Ingham  ;  by  a  note  of  $40,  given  by  one  Burk  ;  and  by  a  note  of 
$125,  given  by  one  Cornell,  payable  in  a  buggy,  on  the  29th  of  June, 
1854.  The  defendant,  through  his  agent,  warranted  Cornell  to  be 
"good,"  and  that  the  plaintiff  would  get  the  buggy  when  the  note  be- 
came due.  On  these  terms  the  sale  was  completed,  and  the  plaintiff 
delivered  his  horse.  The  notes  were  to  be  sent  to  the  plaintiff  on  the 
following  day,  and  they  were  sent  accordingly.  There  was  no  written 
guaranty  of  the  note  of  Cornell,  which  turned  out  to  be  worthless. 
The  action  is  founded  on  the  verbal  undertaking. 

We  think  that  the  guaranty  was,  in  effect,  one  of  payment,  according 
to  the  terms  of  the  note,  and  not  for  the  collection  of  the  demand  by 
process  of  law.  The  evidence  and  the  finding  are,  that  the  defendant's 
agent  said  that  the  maker  was  good,  and  that  he  would  warrant  that 
the  plaintiff  would  get  the  buggy  when  the  note  fell  due.  The  obvious 
meaning  of  this  is  that  the  obligation  would  be  paid  at  maturity,  and 
according  to  its  terms.  The  contract  was,  therefore,  broken,  and  the 
defendant  became  liable  to  suit  upon  it,  when  Cornell  failed  to  pay,  after 
payment  was  due. 

It  is  claimed  that  the  guaranty  is  void  by  the  Statute  of  Frauds.  In 
mere  form  it  was  certainly  a  collateral  undertaking,  because  it  was  a 
promise  that  another  person  should  perform  his  obligation.  But,  look- 
ing at  the  substance  of  the  transaction,  we  see  that  the  defendant  paid, 
in  this  manner,  a  part  of  the  price  of  a  horse  sold  to  himself.  In  a 
sense  merely  formal,  he  agreed  to  answer  for  the  debt  of  Cornell.  In 
reality  he  undertook  to  pay  his  own  vendor  so  much  of  the  price  of  the 
chattel,  unless  a  third  person  should  make  the  payment  for  him,  and 
thereby  discharge  him.  The  question  at  this  time  hardly  claims  a 
discussion,  because  it  was,  in  effect,  decided  by  this  Court  upon  the 
fullest  consideration,  in  Brown  v.  Curtiss.  There  the  holder  of  a 
note  transferred  it  in  payment  of  his  own  debt,  indorsing  upon  it  a 
guarant}'  of  the  payment  which  expressed  no  consideration  ;  and  on  that 
ground  the  undertaking  was  claimed  to  be  void.     It  was  conceded  to  be 

1  Everything  is  omitted  except  the  opinion  of  the  Court  relating  to  the  Statute  of 
Frauds.  —  Ed. 


62  BROWN   V.   CURTISS.  [CHAP.  L 

void,  provided  the  statute  applied  to  such  a  case.  It  was,  however, 
held  to  be  a  valid  promise,  on  the  ground  that  the  statute  did  not  apply. 
kt  In  such  cases,"  it  was  observed,  "  where  the  party  undertakes,  for  his 
own  benefit,  upon  a  full  consideration  received  by  himself,  the  promise 
is  not  within  the  statute."  It  is  impossible  to  distinguish,  in  principle, 
between  that  case  and  the  present :  certainly  no  distinction  can  be 
drawn  favorable  to  the  defendant.  Johnson  v.  Gilbert ; x  Nelson  v. 
Boynton.2 

All  the  judges  concurring,  Judgment  affirmed.* 


BROWN,  Plaintiff  in  Error,  v.  CURTISS,  Defendant  in  Error. 
In  the  Court  of  Appeals,  New  York,  May,  1849. 

[Reported  in  2  New  York  Reports,  225.] 

On  error  from  the  Supreme  Court,  where  the  action  was  assumpsit 
upon  a  guaranty,  brought  lw  Curtiss  against  Chester  Brown,  tried  at 
the  Columbia  Circuit,  before  Edmonds,  Circuit  Judge,  in  September, 
1845.  On  the  trial  the  plaintiff  gave  in  evidence  a  promissory  note  as 
follows  :  — 

"  For  value  received  I  promise  to  pay  Chester  Brown  or  bearer  fifty- 
dollars,  six  months  from  date,  with  use. 

"G.  F.  Brown. 
"  Canaan,  April  2,  1838." 

The  plaintiff  also  proved  that  the  defendant  transferred  the  note  to 
him  in  exchange  for  another  note  which  he  held  against  the  defendant 
for  borrowed  money.  When  the  transfer  was  made,  the  plaintiff  said 
to  the  defendant:  "  I  know  nothing  of  the  maker's  circumstances,  but 
if  you  will  guarantee  the  note  I  will  take  it."  The  defendant  thereupon 
executed  the  following  guaranty  on  the  back  of  the  note  :  "I  guaranty 
the  payment  of  the  within.  Chester  Brown."  The  evidence  as  to  the 
consideration  of  the  transfer  and  guaranty  was  objected  to  by  the 
defendant,  and  the  objection  overruled.     The  defendant  excepted.     It 

1  4  Hill,  178.  2  3  Mete.  400. 

3  Beaty  v.  Grim,  18  Ind.  131  (but  see  Hassinger  v.  Newman,  83  Ind.  124) ;  Little  v. 
Edwards,  69  Md.  499;  Wilson  v.  Hentges,  29  Minn.  102;  Johnson  v.  Gilbert,  4  Hill, 
178;  Newell  v.  Chapman,  74  Hun,  111;  Malone  v.  Keener,  44  Pa.  107;  Hopkins  v. 
Richardson,  9  Grat.  485,  Accord. 

See  to  the  same  effect  the  following  cases  in  which  negotiable  notes  payable  to  the 
order  of  A  were  assigned  by  A  without  indorsement,  but  with  a  guaranty  of  payment : 
Mobile  Co.  v.  Jones,  57  Ga.  198;  Smith  v.  Finch.  3  111.  321  ;  Adcock  v.  Fleming,  2 
Dev.  &  B.  225;  Ashford  v.  Robinson,  8  Trod.  114  ;  Rowland  v  Rorke,  4  Jones  (N.  C), 
337;  Hall  v.  Rodgers,  7  Hum.  536  ;  Wyman  v.  Goodrich,  26  Wis.  21.  — Ed. 


SECT.  I.]  BROWN   V.    CURTISS.  63 

was  admitted  that  there  had  been  no  demand  of  the  maker,  nor  any 
notice  of  non-payment.  The  defendant  offered  to  prove  that  from  the 
time  the  note  fell  due  until  the  latter  part  of  the  year  1843  the  maker 
was  able  to  pay  the  note  ;  that  he  then  failed,  and  was  insolvent  at  the 
commencement  of  the  suit,  and  still  remained  so.  This  evidence  was 
objected  to  by  the  plaintiff  and  excluded.     The  defendant  excepted.1 

The  evidence  being-  closed,  it  was  insisted  on  the  part  of  the  defend- 
ant that  the  plaintiff  could  not  recover,  on  the  grounds  :  1.  That  there 
was  no  proof  of  demand  and  notice  ;  2.  That  the  guaranty  was  void  by 
the  Statute  of  Frauds,  there  being  no  consideration  expressed  therein. 
The  circuit  judge  directed  the  jury  to  find  for  the  plaintiff,  and  the 
defendant  excepted.  The  Supreme  Court  sitting  in  the  Third  District 
refused  a  new  trial,  and,  after  judgment  for  the  plaintiff,  the  defendant 
brought  error  to  this  court. 

K.  Miller,  for  plaintiff  in  error. 

C.  L.  Monell,  for  defendant  in  error. 

Buoxson,  J.  The  only  remaining  question  is  on  the  Statute  of 
Frauds.  2  R.  S.  135,  §  2.  If  the  case  is  within  the  statute,  it  is  im- 
possible to  get  over  the  objection  that  no  consideration  is  expressed 
in  the  guarant}-.  I  know  it  was  held  in  Manrow  v.  Durham  a  that  a 
guaranty  like  this  was  a  promissory  note,  which  imports  a  considera- 
tion, and  was  therefore  valid.  But  that  case,  which  has  been  ques- 
tioned elsewhere  (Story,  Prom.  Notes,  5'J7)  as  well  as  at  home,  cannot 
be  law.  An  undertaking  that  another  man  will  perform  his  contract 
is  not  a  promissory  note.  It  is  not  within  any  definition  which  was 
ever  given  of  a  promissory  note,  and  it  cannot  be  held  to  be  such 
without  confounding  all  legal  distinctions  in  relation  to  the  nature  of 
contracts. 

But  I  think  the  Statute  of  Frauds  does  not  apply  to  this  case.  Al- 
though in  form  this  is  a  promise  to  answer  for  the  debt  or  default  of 
another,  in  substance  it  is  an  engagement  to  pay  the  guarantor's  own 
debt  in  a  particular  way.  He  does  not  undertake  as  a  mere  surety  for 
the  maker,  but  on  his  own  account,  and  for  a  consideration  which  has 
its  root  in  a  transaction  entirely  distinct  from  the  liability  of  the  maker. 
The  defendant  was  a  debtor  to  the  plaintiff,  and  gave  the  note,  with  the 
guaranty,  to  satisfy  that  debt.  This  belongs  to  the  third  class  of  cases 
mentioned  by  Kent,  C.  J.,  in  Leonard  v.  Vredenburgh.£  There  was  a 
new  and  distinct  consideration,  independent  of  the  debt  of  the  maker, 
and  one  moving  between  the  parties  to  the  new  promise.  In  such 
cases,  where  the  party  undertakes  for  his  own  benefit,  and  upon  a  full 
consideration  received  by  himself,  the  promise  is  not  within  the  statute. 
It  would  be  good  without  any  writing.  The  point  was  decided  by  the 
Supreme  Court  in  Johnson  v.  Gilbert,4  and  I  do  not  think  it  necessary 
to  refer  to  other  cases  holding  the  same  doctrine. 


c> 


1  The  opinion  of  the  Court  overruling  this  exception  is  omitted,  together  with  the 
toncurring  opinion  of  Strong,  J.,  iu  regard  to  the  Statute  of  Frauds.  —  Ed. 

»  3  Hill,  584.  3  8  John.  3S.  39.  *  4  Hill,  178. 


64  DOWS   V.    SWETT.  [CHAP.  I. 

Jewett,  C.  J.,  and  Gardiner,  J.,  were  of  opinion  that  the  guaranty 
was  within  the  Statute  of  Frauds,  and  therefore  void. 

Judgment  affirmed} 


DOWS  and  Another  v.  SWETT. 
In  the  Supreme  Judicial  Court,  Massachusetts,  January  10,  1883. 

[Reported  in  134  Massachusetts  Reports,  140.] 

C.  Ai.len,  J.  This  case,  unfortunately,  must  be  sent  back  for 
another  trial,  and  it  becomes  desirable  to  state  more  fully  the  prin- 
ciples on  which  its  determination  must  depend.  The  declaration 
alleges,  in  substance,  that  the  defendant  was  indebted  to  the  plaintiffs 
in  the  sum  of  $200  for  the  balance  due  on  a  due-bill  given  to  them  for 
goods  sold  and  delivered  by  them  to  him,  and  that  he  asked  them  to 
take  in  exchange  for  the  sum  due  on  said  due-bill  a  promissory  note 
for  the  same  sum  which  he  had  caused  to  be  made,  and  which  was 
signed  b}-  one  Robinson,  and  made  payable  to  the  order  of  the 
plaintiffs  ;  and,  to  induce  the  plaintiffs  to  make  said  exchange,  the 
defendant  agreed  that,  if  said  note  should  not  be  paid  by  Robinson 
at  its  maturity,  he,  the  defendant,  would  pay  it  himself;  that  upon  this 
verbal  guaranty  the  plaintiffs  received  the  note,  and  gave  therefor  the 
due-bill ;  that  the  note  was  not  paid  by  Robinson,  and  that  the  defend- 
ant refuses  to  fulfil  his  said  agreement.  There  was  evidence  at  the 
trial  tending  to  show  that  in  1874  the  plaintiffs  brought  an  action 
against  the  defendant  upon  their  account  for  goods  sold  and  delivered, 
and  that  at  the  trial  of  said  action  in  1874  it  appeared  that  the  bill  for 
the  goods  was  settled  by  check  and  by  the  said  due-bill,  and  that  the 
due-bill  also  was  paid  by  cash,  merchandise,  and  said  Robinson's  note ; 
whereupon  a  verdict  was  taken  for  the  defendant,  upon  which  judg- 
ment was  rendered. 

The  difficulty  in  the  case  seems  largely  to  depend  upon  the  unusual 
state  of  facts  ;  there  having  been  an  action  brought  by  the  plaintiffs 
against  the  defendant  upon  his  original  indebtedness  to  them,  in  which 
action  a  judgment  was  rendered  for  the  defendant. 

1  Mobile  Co.  v.  Jones,  57  G-a.  198;  Darst  v.  Bates,  95  111.  493;  Jones  v.  Palmer, 
1  Doug.  (Mich.)  379 ;  Thomas  v.  Dodge,  8  Mich.  51  ,  Sheldon  v.  Butler,  24  Minn.  513 ; 
Crane  v.  Wheeler,  48  Minn.  207  ;  Barker  v.  Scudder,  56  Mo.  272  ;  Bruce  v.  Burr,  67 
N.  Y.  237  ;  Milks  v.  "Rich,  80  N.  Y.  269  ;  Fowler  v.  Clearwater,  35  Barb.  143  ;  Daubner 
v.  Blackney,  38  Barb.  432;  Lossee  v.  Williams,  6  Lans.  228:  Allen  r.  Eighmie,  14 
Hun,  559;  Hall  v.  Rogers,  7  Hum.  536;  Wyman  v.  Goodrich,  26  Wis.  21  ,  Eagle  Co. 
v.  Shattuck,  53  Wis.  455,  Accord. 

Wood  v.  Wheelock,  25  Barb.  625,  Contra.  In  Milks  v.  "Rich,  supra,  Earl,  J.,  said 
(p.  271) :  "The  reasoning  to  take  this  promise  out  of  the  statute  is  quite  subtle,  and  1 
should  have  much  difficulty  in  yielding  it  my  assent  but  for  the  authorities  which  I 
think  ought  now  to  control."     See  also  Hassinger  v.  Newman,  83  Ind.  124.  —  Ed. 


SECT.  I.]  DOWS   V.    SWETT.  65 

Where  a  note  of  a  third  party  is  taken  by  a  creditor  from  his  debtor, 
for  or  on  account  of  a  pre-existing  debt,  or  on  a  consideration  then  first 
accruing,  it  may  be  received  either  in  absolute  payment,  conditional 
*pa\  inent,  or  as  collateral  security.  And  in  every  case  it  may  be  shown 
by  evidence  what  was  the  actual  transaction,  and  on  what  terms  the 
note  was  received.  Butts  v.  Dean  ; 1  Parham  Sewing  Machine  Co.  v. 
Brock.2  Where  such  note  is  taken  in  absolute  payment  of  a  pre-exist- 
ing debt,  or  of  a  liability  for  money  lent,  service  rendered,  or  other 
consideration  accruing  at  the  time  of  taking  it,  the  effect,  of  course,  is 
to  extinguish  the  liability  of  the  person  who  transfers  the  note,  and  to 
substitute  therefor  the  liability  of  the  parties  to  the  note,  as  the  sole 
subsisting  obligation.  But  where  the  note  is  taken  as  collateral 
security,  or  in  conditional  payment,  the  right  of  action  against  him 
who  makes  the  transfer  is  not  defeated  altogether,  but  is,  at  most, 
only  suspended  during  the  time  the  note  has  to  run,  and  revives 
again  upon  the  non-payment  of  the  note  at  its  maturit}'.  The  original 
indebtedness  in  such  case  is  not  discharged,  unless  the  note  is  paid. 
The  Kimball ;  8  Byles  on  Bills,  6th  Am.  ed.  236,  380,  385  ;  2  Am. 
Lead.  Cas.  4th  ed.,  250,  251,  and  cases  cited  ;  Belshaw  v.  Bush ; 4 
Valpy  v.  Oakeley  ; 5   Miles  v.  Gorton.6 

In  the  latter  class  of  cases,  the  transaction  is  as  if  the  debtor  said  : 
"  I  owe  you  a  debt.  Take  this  note  and  collect  it  if  you  can.  If 
you  get  the  money  on  it,  that  will  pay  you.  If  you  do  not,  I  will 
myself  pay  you  what  I  owe."  In  all  such  cases  the  defendant's 
promise  is  in  effect  to  pay  his  own  debt,  and  it  is  not  necessary 
that  such  promise  should  be  in  writing,  though  incidentally  the  debt 
of  a  third  person  is  guaranteed.  And  man}'  of  the  decisions  of 
courts,  which  at  first  sight  may  appear  to  hold  that  an  oral  guarant}' 
of  the  note  of  another,  which  is  transferred  on  account  of  a  debt  due 
from  the  guarantor,  is  not  within  the  Statute  of  Frauds,  will  on  a  care- 
ful examination  be  found  not  to  rest  on  the  principle  above  stated,  and 
not  to  be  neeessarilv  inconsistent  with  our  own  conclusion  in  the  pres- 
ent case.  For  example,  in  Milks  v.  Rich,7  Earl,  J.,  after  stating  that 
"  the  reasoning  to  take  this  promise  out  of  the  statute  is  quite  subtle, 
and  I  should  have  much  difficulty  in  yielding  it  my  assent,  but  for  the 
authorities  which  I  think  ought  now  to  control,"  goes  on  to  say  :  "  The 
defendant's  promise  may  be  regarded,  in  effect,  not  as  a  collateral 
promise  to  answer  for  the  default  of  Marsh,  but  as  a  promise  to  pay 
the  plaintiff  for  the  money  he  had  had,  in  case  Marsh  did  not  pa}-  him. 
like  the  promise  of  one  to  pay  his  own  debt,  in  case  a  third  person  did 
not  pay  it."  In  Bruce  v.  Burr,8  the  decision  rests  on  the  same  distinc- 
tion ;  and  both  cases  refer,  for  authority,  to  Cardell  v.  McNiel,  where 
Comstock,  C.  J.,  in  delivering   the    opinion    of  the  Court,  said:  "In 

1  2  Met.  76.  -  113  Mass.  194. 

3  3  Wall.  37.  4  11  C.  B.  191,  206 

5  16  Q.  B.  941 .  6  2  Cr.  &  M.  504   512 

1  80  N.  Y.  269,  271.  8  67  N.  Y.  237- 


66  DOWS    V.    SWETT.  [CHAP.  I. 

mere  form  it  was  certainly  a  collateral  undertaking.  .  .  .  But,  looking 
at  the  substance  of  the  transaction,  we  see  that  the  defendant  paid,  in 
this  manner,  a  part  of  the  price  of  a  horse  sold  to  himself.  In  a  sense 
merely  formal,  he  agreed  to  answer  for  the  debt  of  Cornell.  In  reality 
he  undertook  to  pay  his  own  vendor  so  much  of  the  price  of  the  chattel, 
unless  a  third  person  should  make  the  payment  for  him,  and  thereby 
discharge  him."  In  all  these  cases  it  will  be  observed  that  the  Court 
carefully  put  the  decision  on  the  express  ground  that  the  original 
debtor  is  not  discharged,  and  his  debt  is  not  extinguished,  until  the 
note  is  actually  paid.  80  in  Pennsylvania,  in  Taylor  v.  Preston,1  Mr. 
Justice  Woodward,  a  high  authority,  says,  the  statute  does  not  require 
the  promise  to  be  in  writing  "  where  it  is  in  effect  to  pa}'  the  promisor's 
own  debt,  though  that  of  a  third  person  be  incidentally  guaranteed  ;  it 
applies  to  the  mere  promise  to  become  responsible,  but  not  to  actual 
obligations"  —  i.  e.  of  the  promisor.  "  Buying  the  land,  the  promise 
to  pay  for  it,  whatever  the  form,  was  a  promise  to  pay  their  own  debt." 
It  "  was  not  only  a  stipulation  to  pay  a  debt  which  Preston  owed,  but 
a  stipulation  to  pajT  the  price  of  property  the\"  had  bought."  To  the 
same  effect  are  Townsend  v.  Long.'2  and  Malone  v.  Keener.3 

The  above  suggestions  will  not  reconcile  all  the  cases,  but  in  our 
opinion  they  are  sufficient  to  show  the  just  grounds  on  which  the  appli- 
cation of  the  clause  of  the  Statute  of  Frauds  now  under  consideration 
depends.  When  the  present  case  was  first  before  this  court,4  the 
decision  was  put  expressly  on  the  ground  that  the  defendant's  previous 
liability  had  been  settled  and  discharged,  so  that  the  only  existing 
direct  liability  was  that  of  Robinson  upon  his  note  ;  and  under  this 
state  of  things  the  defendant's  oral  promise  to  pay  the  note,  if  Robin- 
son did  not,  could  not  be  treated  as  a  promise  to  pay  a  subsisting  debt 
of  the  defendant,  but  onl}T  as  a  collateral  promise  to  pay  Robinson's 
debt,  and  as  such  was  within  the  Statute  of  Frauds.  Upon  further 
consideration,  we  adhere  to  that  decision  as  a  correct  exposition  of  the 
law.  When  the  case  came  a  second  time  before  this  court,5  the  point 
determined  was  that  the  plaintiffs  were  not  precluded  by  what  had  hap- 
pened before  from  relying  on  the  second  and  third  counts  ;  and  for  this 
reason  a  new  trial  was  properly  granted.  An  additional  statement  in 
the  opinion  may  have  led  to  the  inference  that,  in  the  view  of  the  Court, 
if  the  leading  and  chief  object  of  the  defendant's  promise  was  in  effect 
to  pay  his  own  debt,  it  should  be  considered  in  substance  that  the 
defendant  guaranteed  his  own  debt,  and  that  therefore  his  promise  to 
pay  Robinson's  note,  if  Robinson  should  not,  was  not  within  the  Statute 
of  Frauds  ;  and  the  learned  judge  of  the  Superior  Court,  upon  the  new 
trial,  so  ruled.  But  we  think  this  ruling  cannot  be  supported,  as  appli- 
cable to  the  case,  as  it  comes  before  us.  If  Robinson's  note  was  not 
taken  in  absolute  payment,  and  if  the  due-bill  was  still  an  existing  lia- 
bility, then  the  defendant's  promise  might  perhaps  be  found,  as  matter  of 

1  79"Tenn.  St.  436,  441.  -  77  Penn.  St.  143. 

3  44  Penn   St.  107.  *  120  Mass.  322.  5  127  Mass.  364. 


SECT.  I.]  WOLFF    V     KOPPEL.  67 

fact,  to  have  been  intended  and  accepted  as  a  promise  to  pay  the  due- 
bill.  But  if  the  note  was  taken  in  absolute  payment,  then  the  liability 
of  the  defendant  was  of  course  extinguished,  and  it  follows  that  the 
only  remaining  direct  liability  was  that  of  Robinson  ion  his  note,  and 
the  promise  of  the  defendant  could  be  treated  only  as  collateral.  The 
declaration  is  on  a  promise  to  guarantee  Robinson's  note,  and  it  is  not 
a  case  for  saying  that  the  declaration  is  inartificial,  and  that  in  sub- 
stance and  effect  it  sets  out  a  promise  by  the  defendant  to  pay  his  own 
debt;  because,  in  the  first  place,  the  declaration  appears  to  have  been 
very  carefully  drawn,  and,  in  the  second  place,  the  evidence  tended  to 
show  that  the  plaintiffs  in  their  former  action  sought  to  recover  on  their 
own  debt,  and  failed. 

It  does  not  distinctly  appear  whether  there  was  then  a  count  upon 
the  due-bill,  as  representing  a  cause  of  action  distinct  from  that  for 
goods  sold  and  delivered.  But  in  the  present  action  the  third  count 
was  upon  the  due-bill,  and  it  has  been  stricken  out,  upon  the  order  of 
the  judge  that  the  plaintiffs  should  elect  upon  which  count  they  would 
proceed  to  trial.  The  due-bill  is  out  of  the  case.  Only  the  first  count 
remains.  The  question,  therefore,  is  now  distinctly  presented,  whether 
the  defendant  can  be  held  liable  on  an  oral  promise  to  guarantee  the 
note  of  a  third  person,  transferred  by  him  to  his  creditor,  when  that 
promise  cannot  by  any  construction  be  enforced  as  in  reality  a  recogni- 
tion of,  or  a  promise  to  pay,  his  own  pre-existing  debt.  To  hold  him 
liable  under  such  circumstances,  would  be  to  hold  him  to  a  greater 
liability  than  if  he  had  put  his  name  upon  the  back  of  the  note,  and 
would  be  inconsistent  with  the  Gen.  Sts.  c.  105,  §  1. 

.Exceptions  sustained.1 

J.  B.  Richardson,  for  the  defendant. 

D.  B.  Gove,  for 'the  plaintiffs. 


WOLFF   AND    HENRI CKS   v.   KOPPEL. 
In  the  Supreme  Court,  New  York,  July,  1843. 

[Reported  in  5  Hill,  458.] 

Error  to  the  New  York  C.  P.,  where  Koppel  sued  Wolff  &  Henricks 
to  recover  the  price  of  certain  goods  alleged  to  have  been  sold  by  the 
latter  as  factors  acting  under  a  del  credere  commission.  The  agree- 
ment del  credt  n  was  by  parol ;  and  one  point  made  in  the  court  below 
was,  that  the  defendant's  engagement,  not  being  in  writing,  was  void 
by  the  Statute  of  Frauds.  The  Court  held  otherwise  ;  and,  after  judg- 
ment in  favor  of  the  plaintiff,  the  defendants  sued  out  a  writ  of  error. 

J.  T.  Brady,  for  the  plaintiffs  in  error. 

E.  C.  Benedict,  for  the  defendant  in  error. 

1  Sheldon  v.  Butler,  24  Minn.  513;  Crane  v.  Wheeler,  48  Minn.  207;  Eagle  Co.  v 
Shattuck.  53  Wis.  455.  Contra.  —  Ed. 


68  WOLFF   V.    KOPPEL.  [CHAP.  L 

By  the  Court,  Cowen,  J.    It  is  objected  that  the  contract  of  a  factor, 
binding  him  in  the  terms  implied  by  a  del  credere  commission,  is  within 
the  Statute  of  Frauds,  and  should  therefore  be  in  writing.     Such  is  the 
opinion  expressed  by  Theobald  (Pr.  and  Surety,  64,  65),  and  in  Chit.  On 
Contr.   209,  210,  Am.   ed.  of  1842.     The  question  was  also  mooted  in 
Gall  v.  Comber,1    but  not  decided,  as  seems  to  be  implied  in  the  care- 
less manner  in  which  the  case  is  quoted  by  Chitty.     All  the  authority 
presented  on  the  argument  grows  out  of  the  nature  of  the  contract 
as  held  by  the  K.  B.  in  Morris  v.  Cleasby.2     That  case  certainly  defines 
the  liability   of  the    factor   somewhat   differently    from    what   several 
previous  cases  seem   to  have  done.     The   effect  of  acting  under  the 
commission  is  said  to  be,  that  the  factor  becomes  a  guarantor  of  the 
debts  which  are  created  ;    that  is  to  say,  they  are  debts  due  to  the 
merchant,  and   the  factor's  engagement  is  secondary  and  collateral, 
depending  on  the  fault  of  the  debtors,  who  must  first  be  sought  out 
and  called  upon  by  the    merchant.     See  also  Hornby  v.  Lacy,3  Peele 
v.  Northcote,4  Leverick  u.  Meigs.5     On  this  we    have   the  opinion  of 
learned   writers   that  if  the   agreement   del   credere  be   made  without 
writing,    the   case   comes    within    the   statute.      On   the   other   hand, 
approved  writers  assert  that  this  is  not  so.     1  Beawes,  46,  6th  Lond. 
ed.  ;  3  Chit.  Commercial  Law,  220,  221.     It  is  true,  these  latter  go  on 
the  more  stringent  obligation  supposed  by  Lord  Mansfield,  — that  of  a 
principal  debtor  on  the  part  of  the  factor,  the  accessorial  obligation 
lying  rather  on  the  purchaser.     This  view  of  the  matter  was  no  longer 
correct  after  the  cases  I  have  mentioned  were  decided.     The  conse- 
quence sought  to  be  derived,  however,  by  writers,  is  merely  specula- 
tive ;  and  the  contrary  has  of  late  been  directly  held  by  the  Supreme 
Court  of  Massachusetts,  in  Swan  v.  Nesmith.6     It  is  said  this  was  with- 
out the  Court  being  aware  of  Morris  v.  Cleasby.     Be  that  as  it  ma}', 
the}'  seem  to  have  been  fully  aware  of  the  rule  laid  down  in  that  case, 
and  to  have  recognized  it  as  correct.     They  considered  the  obligation 
as  a  guaranty.     But  a  guaranty,  though  by  parol,  is  not  always  within 
the  statute.     Perhaps,  after  all,  it  may  not  be  strictly  correct  to  call 
the  contract  of  the   factor  a  guaranty,  in   the  ordinary  sense  of  that 
word.     The  implied  promise  of  the  factor  is  merely  that  he  will  sell  to 
persons  in  good  credit  at  the  time  ;  and  in  order  to  charge  him,  negli- 
gence must  be  shown.     He  takes  an  additional  commission,  however, 
and  adds  to  his  obligation  that  he  will  make  no  sales  unless  to  persons 
absolutely  solvent;   in  legal  effect,  that  he  will  be  liable  for  the  loss 
which  his  conduct  may  bring  upon  the  plaintiff,  without  the  onus  of 
proving  negligence.     The  merchant  holds  the  goods,  and  will  not  part 
with  them  to  the  factor  without  this  extraordinary  stipulation,  and  a 
commission  is  paid  to  him  for  entering  into  it.     What  is  this,  after  all, 
but  another  form  of  selling  the  goods  ?     It's  consequences  are  the  same 

i  1  B.  Moor.  279;  8  Taunt.  558,  s.c.  2  4  Maule  &  Selw.  566,  574,  575. 

3  6  Maule  &  Selw.  166,  171,  172.  4  7  Taunt.  478,  484;  1  B.  Moor.  178,  s.  C. 

&  1  Cowen,  645,  664.  6  7  Pick.  220. 


SECT.  I.]  WOLFF   V.    KOPPEL.  69 

in  substance.     Instead  of  paying  cash,  the  factor  prefers  to  contract  a 
debt  or  duty  which  obliges  him  to  see  the  money  paid.     This  debt  or 
duty  is  his  own,  and  arises  from  an  adequate  consideration.     It  is  con- 
tingent,  depending  on   the  event  of  his   failing  to  secure  it  through 
another,  —  some  future  vendee,  to  whom  the  merchant  is  first  to  resort. 
Upon   non-payment  by   the   vendee,  the  debt  falls   absolutely  on  the 
factor.     As  remarked  by  Parker,  C.  J.,  in  Swan  v.  Nesmith,  the  form 
of  the  action  does  not  seem  to  be  material  in  such  case ;  that  is  to  sa}r, 
whether  the  merchant  sue  for  goods  sold,  or  on  the  special  engage- 
ment.    The  latter  is  perhaps  the  settled  form ;   but  still  the  action  is, 
in  effect,  to  recover  the  factor's  own  debt.     In  the  late  case  of  Johnson 
r.  Gilbert,  the  defendant,  in  consideration  of  money  paid  for  him  by  the 
plaintiff,  assigned  a  chattel  note  and  guaranteed  its  payment.     In  such 
a  case  the  declaration   must  be  on   the  guaranty  to  pay  the  debt  of 
another ;  but  this  is  so  in  form  merely.     We  held  that  the  contract  was 
to  pay  the  defendant's  own  debt;  that  it  was  not  a  contract  to  pay  as 
the  surety  of  another.     All  such  contracts  and   many  others  are,  in 
form,  to  pay  the  debt  of  another,  and  so  literally  within  the  statute, 
but  without  its  intent.     A  promise  by  A  to  B,  that  the  former  will  pay 
a  debt  due  from   the  latter,  is   not  within   the   meaning,  though  it  is 
within  the  words.     Conkey  v.  Hopkins  ;  x  Eastwood   v.  Kenyon.     So 
are  a  numerous  class  of  cases,  where  the  promise  is  made  in  considera- 
tion of  the  creditor  relinquishing  some  lien,  fund,  or  security.     Theo- 
bald, Pr.    and  Surety,  45,  and  the   cases   there  cited.     The  merchant 
gives  up  his  goods  to  be  sold,  and  pays  a  premium.     Is  not  this  in 
truth  as  much  and  more  than  many  of  those  cases  require  which  go  on 
the  relinquishment  of  a  security?     Suppose  a  factor  agrees  by  parol  to 
sell  for  cash,  but  gives  a  credit.     His  promise  is  virtually  that  he  will 
pay  the  amount  of  the  debt  he  thus  makes.     Yet  who  would  say  his 
promise  is  within  the  statute?     The  amount  of  the  argument  for  the 
defendant  would  seem  to  be,  that  an  agent  for  making  sales,  or  indeed 
a  collecting  agent,  cannot,  by  parol,  undertake  for  extraordinary  dili- 
gence, because  he  may  thus  have  the  debt  of  another  thrown  upon  him. 
But  the  answer  is,  that  all  such  contracts  have  an  immediate  respect  to 
his  own  duty  or  obligation.     The  debt  of  another  comes  incidentally  as 
a  measure  of  damages.  Judgment  affirmed? 

1  17  John.  113. 

2  Affirmed  iu  2  Den.  368. 

In  Couturier  v.  Hastie,  8  Ex.  40,  Parke,  B.,  delivering  the  opinion  of  the 
Court,  said  (p.  55)  :  "  The  other  and  only  remaining  point  is,  whether  the  defendants 
are  responsible  by  reason  of  their  charging  a  del  credere  commission,  though  they 
have  not  guaranteed  by  writing  signed  by  themselves.  We  think  they  are.  Doubt- 
less, if  they  had  for  a  percentage  guaranteed  the  debt  owing,  or  performance  of  the 
contract  by  the  vendee,  being  totally  unconnected  with  the  sale,  they  would  not  be 
liable  without  a  note  in  writing  signed  by  them ;  but  being  the  agents  to  negotiate 
the  sale,  the  commission  is  paid  in  respect  of  that  employment;  a  higher  reward  is 
paid  in  consideration  of  their  taking  greater  care  iu  sales  to  their  customers,  and  pre- 
cluding all  question  whether  the  loss  arose  from  uegligence  or  not,  and  also  for 
assuming  a  greater  share  of  responsibility  than  ordinary  agents;  uamely,  responsibility 


70  SUTTON  V.    GREY.  [CHAP,  t 


SUTTON    &   CO.    v.    GREY. 
In  the  Queen's  Bench  Division,  June  28,  1893. 

[Reported  in  69  Law  Times  Reports,  354. i] 

Bowen,  L.  J.-  This  is  an  action  for  a  contribution  to  cover  the 
loss  incurred  by  the  plaintiffs,  as  stockbrokers,  in  certain  transactions 
which  the  plaintiffs  allege  were  entered  into  under  a  contract  between1 
themselves  and  the  defendant  that  he  should  contribute  to  the  plaintiffs! 
half  the  loss  that  they  might  incur  in  those  transactions.  The  plaintiffs- 
had  embarked  upon  the  transactions  in  question  for  a  client  named 
Robertson,  who  had  been  introduced  to  them  b}'  the  defendant.  The 
plaintiffs  alleged  (though  this  was  disputed  by  the  defendant),  that  they 
had  employed  the  defendant  to  introduce  clients,  Robertson  amongst 
others,  on  terms  that  he  should  contribute  proportionately  toward  an}' 
loss  that  the  plaintiffs  might  sustain  in  the  operations  which  they 
effected  for  these  clients.  [His  Lordship  stated  that  there  had  been 
an  acute  conflict  of  evidence,  and  continued  :]  I  have  weighed  the 
matter  very  carefully,  and  observed  the  parties  in  the  box,  and  I  have 
come  to  the  conclusion  that  the  plaintiffs  are  correct  in  saying  that  it 
was  arranged  between  them  and  the  defendant  that  he  should  contribute 
to  an}'  loss  that  might  occur  to  them  upon  Robertson's  transactions. 
That  being  so,  the  only  question  which  remains  is  whether  or  not  this 
contract  is  a  promise  to  answer  for  the  debt,  default,  or  miscarriage 
of  another  within  sec.  4  of  the  Statute  of  Frauds,  which  requires  such 
a  contract  to  be  in  writing  as  a  condition  preliminaiy  to  its  enforcement 
in  a  court  of  law.  The  defendant  maintains  that  it  is  such  a  contract. 
But  the  plaintiffs  allege  that  this  agreement  is  not  a  promise  to  answer 
for  the  debt  or  default  of  another  within  the  meaning  of  the  Statute 
of  Frauds,  and  they  put  their  case  on  the  same  sort  of  ground  as 
that  on  which  Parke,  B.,  decided  in  Couturier  v.  Hastie.3  Since  that 
decision,  it  must  be  taken  to  be  the  view  of  the  courts  that,  at  all 
events  in  the  case  of  a  del  credere  agent,  who  is  employed  to  sell  on  the 

for  the  solvency  and  performance  of  their  contracts  by  their  vendees.  This  is  the 
main  object  of  the  reward  being  given  to  thorn ;  and  though  it  may  terminate  in  a 
liability  to  pay  the  debt  of  another,  that  is  not  the  immediate  object  for  which  the  con- 
sideration is  given  ;  and  the  case  resembles  in  this  respect  those  of  Williams  v.  Leper, 
3  Burr.  1886,  and  Castling  v.  Aubert,  2  East,  325.  We  entirely  adopt  the  reasoning 
of  an  American  judge  (Mr.  Justice  Cowen),  in  a  very  able  judgment  on  this  very 
point  in  Wolff  v.  Ko'ppel,  5  Hill,  N.Y.  Rep.  458." 

See  to  the  same  effect,  Wickham  v.  Wickham,  2  K.  &  J.  478  (semble) ;  Swan  v. 
Nesmith,  7  Pick.  220;  Suman  v.  Inman,  6  Mo.  Ap.  384;  Sherwood  v.  Stone,  14  N.Y. 
267 ;  Guggenheim  v.  Rosenfeld,  9  Baxt.  (Tenn.)  533 ;  Bradley  v.  Richardson,  23  Vt. 
720.  — Ed. 

1  1893  Q.  B.,  s.  c.  —  Ed. 

2  Everything  is  omitted  except  the  opinion  of  the  Court  upon  the  Statute  of 
Frauds.  —  Ed. 

3  8  Ex.  40. 


SECT.  I.]  SUTTON    V.    GKEY.  71 

terms  of  guaranteeing  the  solvency  of  the  buyer,  the  promise  which  he 
makes  is  not  a  promise  to  answer  for  the  promise  of  another  within 
the  Statute  of  Frauds.  Couturier  v.  Ilastie,  as  is  well  known,  is  based 
on  a  previous  American  decision,  Wolff  v.  Koppel,  which  has  ever  since 
been  referred  to  as  a  leading  authority,  and  has  been  explained  in 
different  ways  in  different  cases.  That  Couturier  v.  Hastie  was  in  some 
cases  a  strong  decision,  having  regard  to  the  express  words  of  the 
statute,  may,  I  think,  be  taken  to  be  the  view  of  many  judges  ;  and  I 
would  refer  in  particular  to  the  case  of  Wickham  v.  Wickham,1  from 
which  I  think  it  appears  that  the  case  is  one  which  has  been  supposed 
to  have  gone  to  an  extreme  in  distinguishing  between  promises  which 
are,  and  which  are  not,  within  the  statute.  Nevertheless,  it  seems  to 
me  to  have  been  the  view  of  the  Court  in  Couturier  v.  Ilastie  that 
sect.  4  of  the  Statute  of  Frauds  does  not  strike  at  promises  which  are 
not  in  the  direct  object  of  the  giving  of  the  consideration,  and  that 
therefore  the  terms  of  a  del  credere  agency,  which  included  a  guaranty 
for  the  future  debt  of  the  person  to  whom  goods  were  to  be  sold,  was 
really  to  be  regarded  rather  as  a  contract,  the  object  of  which  was  not 
to  guarantee  the  debt,  but  to  settle  the  terms  upon  which  the  agent 
should  be  employed  to  sell.  It  seems  to  me  that  although  Couturier  v. 
Hastie  is  not  exactly  in  point,  it  would  be  perhaps  introducing  too  fine 
a  distinction  if  I  were  to  endeavor  to  distinguish  between  it  and  the 
present  case.  It  is  certain  that  the  object  of  the  contract  in  the  pres- 
ent case  was  that  the  defendant  should  introduce  responsible  persons 
to  the  plaintiffs,  and  the  contract  included  a  guaranty  that  he  would 
indemnify  the  firm  against  his  not  doing  so.  That,  I  think,  is  really  a 
contract  which  regulates  the  terms  of  the  agency,  and  the  defendant's 
liability  to  answer  for  the  debt  of  another  is  only  an  ulterior  conse- 
quence of  the  terms  in  which  the  contract  is  framed.  I  think  I  am 
bound  to  abstain  from  drawing  too  fine  distinctions  between  the  present 
case  and  Couturier  v.  Hastie,  and  I  therefore  hold  that  the  defendant  is 
not  shielded  from  liability  by  the  provisions  of  the  Statute  of  Frauds, 
because  this  is  not  a  promise  to  answer  for  the  debt  of  another  within 
sect.  4.  Of  course,  if  this  is  a  partnership,  the  second  point  does  not 
arise.  I  therefore  give  judgment  for  the  plaintiff  for  the  amount 
claimed,  £1,143  4s.  M.  Judgment  for  plaintiffs.2 

i  2  K.  &  J.  478. 

2  Affirmed  in  the  Court  of  Appeal,  '94,  1  Q.  B.  285.  —  Ed. 


72  WILLIAMS    V.    LEPER.  [CHAP.  L 


WILLIAMS   v.    LEPER. 
In  the  King's  Bench,  May  2,  1766. 

[Reported  in  3  Burrow,  1886.] 

One  Taylor,  a  tenant  to  the  plaintiff,  being  three  quarters  of  a  year 
(which  amounted  to  £45)  in  arrear  for  rent,  and  insolvent,  conveyed  all 
his  effects  for  the  benefit  of  his  creditors.1  They  employed  Leper,  the 
defendant,  as  a  broker,  to  sell  the  effects  ;  and,  accordingly,  he  adver- 
tised a  sale.  On  the  morning  advertised  for  the  sale,  Williams  the 
landlord  came  to  distrain  the  goods  in  the  house.  Leper,  having  notice 
of  the  plaintiff's  intention  to  distrain  them,  promised  to  pay  the  said 
arrear  of  rent,  if  he  would  desist  from  distraining ;  and  he  did  there- 
upon desist. 

At  the  trial,  a  verdict  was  found  for  the  plaintiff,  for  £45. 

The  question  was  whether  the  verdict  should  be  entered  up  for  £45 
or  for  a  smaller  sum  (£7  os.),  the  promise  not  having  been  reduced  to 
writing. 

It  was  now  argued  by  Mr.  Morton  and  Mr.  Walker  for  the  plaintiff; 
and  by  Sir  Fletcher  Norton  and  Mr.  Wallace  for  the  defendant. 

The  counsel  for  the  plaintiff  spoke  to  this  effect :  — 

It  is  objected  on  the  part  of  the  defendant,  "  That  this  is  an  under- 
taking or  special  promise  for  the  debt  of  another  person,  within  the 
Statute  of  Frauds  ;  and  therefore  ought  to  have  been  reduced  into 
writing." 

Answer :  — 

But  this  is  not  such  a  special  promise  for  the  debt  of  another,  as  is 
within  the  Statute  of  Frauds.  That  statute  only  meant  to  prevent 
parol  promises,  where  there  was  no  new  consideration  moving  from  the 
party  making  the  promise  to  the  party  to  whom  it  was  made  :  it  was 
not  meant  to  prevent  direct  undertakings  ;  but  only  collateral  ones,  for 
the  debt,  default,  or  miscarriage  of  others.  Whereas  here  was  a  new 
consideration  ;  for,  the  goods  of  Leper  were,  at  the  time  of  the  promise, 
liable  to  the  landlord's  distress. 

The  case  of  Rothery  v.  Curry  ~  in  C.  B.  has  been  urged  by  the  defen- 
dant's counsel,  as  in  point.  But  that  was  only  putting  him  off  from 
suing,  "in  consideration  that  the  plaintiff  would  not  sue  A.  B."  It 
was  held  to  be  within  the  statute. 

Bnckmyr  v.  Darnall  —  "In  consideration  that  the  plaintiff  would 
lend  two  geldings  to  A.  B.  and  C.  D.  the}'  should  return  them"  —  was 
held  to  be  collateral  and  within  the  statute. 

Fish  v.  Hutchinson 3  was  for  a  debt  of  another  :  "  J.  S.  being  indebted 
to  the  plaintiff  in  £8  4s.  the  defendant  promised  to  pay  the  costs,  if  the 

1  By  the  report  of  the  case  in  2  Wils.  308,  it  appears  that  Leper  was  the  grantee  in 
the  conveyance  by  Taylor  in  trust  for  his  creditors.  —  Ed. 

2  Tr.  21  G.  2.  3  2  Wils.  94. 


SECT.  I.J  WILLIAMS    V.    LEPER.  73 

plaintiff  would  discontinue  the  action,"  which  he  did.  The  promise,  not 
being  in  writing",  was  holden  void,  by  the  whole  court. 

But  those  were  mere  naked  promises  by  persons  not  obliged  to  an- 
swer for  the  debt  or  demand,  on  their  own  account.  The  present 
case  is  a  direct  undertaking,  for  himself,  and  not  for  another.  The 
plaintiff  had  a  legal  interest  in  these  goods,  prior  to  the  bill  of  sale, 
and  has  been  deprived  by  the  defendant  of  an  advantage  which  he 
can  never  have  again.  The  property  of  these  goods  was  in  Leper,  as 
trustee  for  the  creditors,  at  the  time  when  he  made  this  promise.  It  is 
an  original  undertaking. 

The  case  of  Reid  v.  Nash  is  in  point —  "•  hi  consideration  that  the 
plaintiff  would  withdraw  his  record,  and  not  try  the  cause,  he  promised 
to  pay  £50."  That  was  an  original  undertaking.  So,  in  Stephens  v. 
Squire,1  —  It  was  not  a  promise  for  a  debt  of  another  person  :  the  de- 
fendant was  himself  originally  liable.  It  was  a  promise  to  pa}'  £10  and 
costs  of  suit,  in  consideration  "  That  the  plaintiff  would  not  prosecute 
the  action." 

This  promise  "To  pay  the  arrears,  if  the  plaintiff  would  desist  from 
distraining,"  is  a  new  express  promise,  and  not  within  the  statute. 
Therefore  it  was  not  necessary  that  this  promise  should  be  in  writing. 
It  was  not  a  collateral  undertaking,  but  an  original  one. 

The  counsel  for  the  defendant  insisted,  that  upon  this  declaration, 
coupled  with  the  facts  given  in  evidence,  the  plaintiff  had  no  right  to 
recover  this  £45.  For  the  declaration  expressly  charges  "  That  Taylor 
was  indebted  to  the  plaintiff  in  £45  for  |  of  a  year's  rent;  and  that  the 
defendant  undertook  to  pay  it,"  which  is  directly  within  the  words  of 
the  Statute  of  Frauds,  "a  special  promise  to  answer  for  the  debt  of 
another  person." 

Leper  was  in  possession  of  the  goods  of  the  tenant,  who  owed  the 
plaintiff  three  quarters'  rent ;  and  about  to  sell  them.  The  landlord 
comes  to  distrain  for  this  three  quarters  of  a  year's  rent.  Leper  prom- 
ises to  pay  it,  "if  he  will  desist  from  distraining."  He  promises 
absolutely  —  "  to  pa}T  it ;  "  not  '•'  to  pay  it  out  of  the  goods  sold,"  or 
under  any  other  restriction. 

A  forbearance  to  sue  is  a  good  consideration  for  an  assumpsit. 

Before  the  Statute  of  Frauds,  all  promises  were  binding,  whether 
original  or  collateral.  But  that  statute  says,  that  "  where  one  promises 
for  the  debt,  default,  or  miscarriage  of  another  the  promise  must  be  in 
writing." 

The  cases  of  Fish  v.  Hutchinson  2  and  Reid  v.  Nash  are  both  upon  the 
same  principle  :  both  were  collateral  promises.  The  second  promise 
did  not  extinguish  the  original  debt ;  it  did  not  extinguish  the  action. 
Therefore  both  were  liable  for  the  same  debt.  The  original  debtor 
remained  liable  ;  and  therefore  the  promise  was  collateral,  and  con- 
sequently within  the  act.     Indeed,  if  the  original  debtor  is  discharged, 

1  5  Mod.  205.  3  i  Wils.  94. 


74  WILLIAMS    V.   LEPEK.  [CHAP.  I. 

then  it  is  an  original  promise  and  not  collateral,  which  was  the. case  of 
Reid  v.  Nash  :  that  was  an  action  of  trespass  for  assault  and  battery 
brought  by  Reid  against  Johnson  ;  and  the  defendant  promised  "  That 
if  the  plaintiff  would  withdraw  his  record,  he  would  pay  £50,  &c."  It 
was  an  original  tort.  Therefore  that  case  was  not  contrary  to  Fish  v. 
Hutchinson,  but  determined  upon  the  same  principle. 

The  plaintiff  cannot  recover  upon  this  declaration  :  it  is  upon  a  prom- 
ise "  to  pa}'  the  debt  to  which  Taylor  was  before  liable  ;  "  and  Taylor 
still  remains  liable,  till  actual  satisfaction.  Therefore  this  is  a  collateral 
promise,  and  both  are  liable.     Consequently,  'tis  within  the  act. 

If  indeed  the  declaration  had  averred  "That  Leper  promised  to  pay 
it  out  of  the  produce  of  the  goods  when  sold  ;  and  that  in  consideration 
of  that  promise,  he  had  desisted  from  distraining,"  —  that  had  been  a 
different  case. 

Lord  Mansfield.  The  evidence  went  further  than  the  declaration 
states.  The  declaration  does  not  state  whether  the  promise  was  in 
writing  or  not ;  the  evidence  shows  it  was  not.     But  both  are  consistent. 

This  case  has  nothing  to  do  with  the  Statute  of  Frauds. 

The  res  gesta  would  entitle  the  plaintiff  to  his  action  against  the 
defendant. 

The  landlord  had  a  legal  pledge.  He  enters,  to  distrain  ;  he  has  the 
pledge  in  his  custody.  The  defendant  agrees  "'That  the  goods  shall 
be  sold,  and  the  plaintiff"  paid  in  the  first  place."  The  goods  are  the 
fund  ;  the  question  is  not  between  Taylor  and  the  plaintiff.  The  plain- 
tiff had  a  lien  upon  the  goods.  Leper  was  a  trustee  for  all  the  creditors, 
and  was  obliged  to  pa}'  the  landlord,  who  had  the  prior  lien.  This  has 
nothing  to  do  with  the  Statute  of  Frauds.  It  is  rather  a  fraud  in  the 
defendant,  to  detain  the  £45  from  the  plaintiff,  who  had  an  original 
lien  upon  the  goods. 

Me.  Justice  Wilmot  thought  this  case  out  of  the  Statute  of  Frauds. 
This  is  not  a  collateral  promise  to  pay  the  debt  of  another. 

The  case  of  Reid  v.  Nash  does  not  clash  with  the  other  determinations 
on  the  Statute  of  Frauds.  That  was  an  original  undertaking :  the 
debtor  was  never  liable  for  that  particular  sum  of  £50. 

But  this  case  is  not  within  the  spirit  or  meaning  of  the  act.  The 
tenant  was  here  the  original  debtor.  The  plaintiff  had  two  remedies 
against  him.  The  defendant  made  a  bill  of  sale  of  the  goods  liable  to 
the  plaintiff's  distress.  The  plaintiff  is  in  possession  of  the  goods, 
having  entered  with  intent  to  distrain  them.  Leper  was  the  agent  for 
the  creditors.  He  makes  this  promise,  in  order  to  discharge  the  goods 
of  this  distress.  I  consider  this  distress  as  being  actually  made.  Leper 
says,  "  if  you  will  quit  the  goods  and  disencumber  the  fund,  I  will  pay 


vou." 


Leper  became  the  bailiff  of  the  landlord  ;  and  when  he  had  sold  the 
goods,  the  money  was  the  landlord's  (as  far  as  £45)  in  his  own  bailiffs 
hands.  Therefore  an  action  would  have  lain  against  Leper  for  money 
had  and  received  to  the  plaintiff's  use. 


SECT.  I.]  WILLIAMS   V.    LEPER.  75 

Mr.  Justice  Yates.  It  was  not  necessary  to  state  in  the  declaration, 
"  That  the  promise  was  in  writing." 

This  declaration  states  a  promise  "  to  pay  the  arrear  of  rent  amount- 
ing to  £45  '*.  (a  specific  sum).  The  defendant  was  in  possession  of  the 
goods,  and  about  to  sell  them.  The  plaintiff  entered,  with  intent  to 
distrain  them  for  £45.  The  defendant  says  —  "Let  me  go  on  to  sell 
them,  and  I  will  pay  you  the  £45."  He  undertook  to  pay  this,  in  all 
events,  peremptorily  and  absolutely.  This  is  an  original  consideration 
to  the  defendant. 

Therefore  he  concurred  in  being  of  opinion  for  the  plaintiff,  and  that 
the  verdict  should  be  entered  for  the  sum  of  £45. 

Mr.  Justice  Aston.  If  this  was  a  promise  to  pay  the  debt  of  Taylor, 
I  should  think  it  within  the  statute,  upon  Sir  Pletcher  Norton's  distinc- 
tions, which  are  the  true  ones. 

But  I  look  upon  the  goods  here  to  be  the  debtor ;  and  I  think  that 
Leper  was  not  bound  to  pay  the  landlord  more  than  the  goods  sold  for, 
in  case  they  had  not  sold  for  £45. 

The  goods  were  a  fund  between  both,  and  on  that  foot  I  concur. 

But  otherwise,  I  should  have  thought  (with  Sir  Fletcher)  "  That  the 
case  of  Reid  v.  Nash  does  not  clash  with  the  other  determinations  about 
collateral  promises." 

Postea  to  be  delivered  to  the  plaintiff ,  and  the  verdict  to  stand 
for  the  ivhole  £45. l 

1  Castling  v.  Aubert,  2  East,  325;  Edwards  v.  Kelly,  6  M.  &  Sel.  204;  Bampton  v. 
Timlin,  4  Bing.  264,  12  Moo.  497,  s.  C. ;  Walker  v.  Taylor,  6  C.  &  P.  752  ;  Fitzgerald  v. 
Dressier,  7  C.  B.  n.  s.  374;  Blount  v.  Hawkins,  19  Ala.  100;  Westmoreland  v.  Torter, 
75  Ala.  452  (semble) ;  Scott  v.  White,  71  III.  287  ;  Bunting  v.  Darbyshire,  75  111.  408; 
Borehsenias  v.  Canutson,  100  111.  82  ;  Luerk  v.  Malone,  34  Ind.  444  (qualifying  Spooner 
v.  Dunn,  7  Ind.  81) ;  Conradt  v.  Sullivan,  45  Ind.  180;  Crawford  v.  King,  54  Ind.  6; 
Mitchell  v.  Griffin,  58  Ind.  559;  Barker  v.  Dillingham,  129  Ind.  542;  Morrison  v. 
Hogue,  49  Iowa,  574  ;  llelt  r.  Smith,  74  Iowa,  667  ;  Fish  v.  Thomas,  5  Gray,  45  ;  Burr 
v.  Wilcox,  13  All.  269;  Hodgkins  v.  Ileaney,  15  Minn.  185  ;  Abbott  v.  Nash,  35  Minn. 
451  ;  Kansas  Co.  v.  Smith,  36  Mo.  Ap.  608 ;  Hogers  v.  Emkie,  24  Neb.  653 ;  Joseph  v 
Smith,  39  Neb.  259  ;  First  Bank  c.  Dohm,  52  N.  J.  363  ;  Ludwick  v.  Watson,  3  Oreg. 
-256;  Arnold  v.  Stedman,  45  Ta.  186  ;  Landis  v.  Royer,  59  Ta.  95  ;  Smith  v.  Exchange 
Bank,  110  Fa.  508;  Bailey  v.  Marshall  (Fa.  1896),  34  Atl.  R.  326  ;  Lampson  v.  Hobart, 
28  Vt.  697  ;  Cross  v.  Bichardson,  30  Vt.  641  ;  Templeton  v.  Bascom,  33  Vt.  132;  Weisel 
v.  Speuce,  59  Wis.  301  ;  Green  v.  Hadfield,  89  Wis.  138,  Accord. 

Warner  v.  Willoughby,  60  Conn  471,  Contra. 

See  4  Harv.  L.  Rev.  290.  —  Ed. 


76  MALLOKY    V.    GILLETT  [CHAr.  1 


MALLORY    v.   GILLETT. 
In  the  Court  of  Appeals,  New  York,  June,  1860. 

[Reported  in  21  New  York  Reports,  412.] 

Comstock,  Ch.  J.1  This  case  ought  to  be  one  of  first  impression. 
By  the  Statute  of  Frauds,  all  promises  to  answer  for  the  debt  of  a  third 
person  are  void  unless  reduced  to  writing.  One  Haines  owed  the  plain- 
tiff a  debt  for  repairs  on  a  boat,  for  which  the  latter  had  a  lien  on  the 
chattel.  In  consideration  of  the  relinquishment  of  that  lien,  and  of  for- 
bearance to  sue  the  original  debtor,  the  defendant  promised  the  plaintiff, 
without  writing,  to  pay  the  debt  at  a  certain  future  time.  There  is  no 
pretence  that  the  defendant's  promise  was  given  or  accepted  as  a  sub- 
stitute for  the  original  demand,  or  that  such  demand  was  in  any  manner 
extinguished.  The  promise  was,  therefore,  to  answer  for  the  existing 
and  continuing  debt  of  another,  or,  in  the  language  of  the  books,  it  was 
a  collateral  promise.  The  consideration  was  perfect,  but  as  there  was 
no  writing,  the  case  seems  to  fall  within  the  very  terms  of  the  statute. 
Authorities  need  not  be  cited  to  prove  that  the  sufficiency  of  the  con- 
sideration never  takes  a  case  out  of  the  statute.  Indeed,  there  can  be 
no  question  under  the  Statute  of  Frauds  in  any  case,  until  it  is  ascer- 
tained that  there  is  a  consideration  to  sustain  the  promise.  Without 
that  element,  the  agreement  is  void  before  we  come  to  the  statute. 
A  naked  promise  is  void  on  general  principles  of  law,  although  it  be 
in  writing.  The  mere  existence  of  a  past  debt  of  a  third  person  will  not 
sustain  an  agreement  to  pay  it,  unless  there  be  forbearance  to  sue,  or 
some  other  new  consideration.  In  such  a  case,  when  we  find  there  is  a 
new  consideration,  we  then,  and  not  till  then,  reach  the  inquiry  whether 
the  agreement  must  be  in  writing.  Such  is  this  case.  It  is  nothing  to 
say  that  here  was  a  new  consideration.  If  such  were  not  the  fact,  there 
would  be  no  question  in  the  case. 

There  is  sometimes  danger  of  error  creeping  into  the  law  through  a 
mere  misunderstanding  or  misuse  of  terms.  The  words  "original" 
and  "  collateral  "  are  not  in  the  Statute  of  Frauds,  but  they  were  used  at 
an  early  day,  —  the  one  to  mark  the  obligation  of  a  principal  debtor,  the 
other  that  of  the  person  who  undertook  to  answer  for  such  debt.  This 
was,  no  doubt,  an  accurate  use  of  language  ;  but  it  has  sometimes  hap- 
pened that,  by  losing  sight  of  the  exact  ideas  represented  in  these  terms, 
the  word  "  original  "  has  been  used  to  characterize  any  new  promise  to 
pay  an  antecedent  debt  of  another  person.  Such  promises  have  been 
called  original,  because  they  are  new  ;  and  then  as  original  undertak- 
ings are  agreed  not  to  be  within  the  Statute  of  Frauds,  so  these  new 
promises,  it  is  often  argued,  are  not  within  it.  If  the  terms  of  the 
statute  were  adhered  to,  or  a  more  discriminating  use  were  made  of 


1  Everything  is  omitted  except  the  opinion  of  Co.mstock,  C.  J.  —  Ed, 


SECT.  I.]  MALLORY    V.    GILLETT.  77 

words  not  contained  in  it,   there  would  be  no  danger  of  falling  into 
errors  of  this  description. 

What  is  a  promise  to  answer  for  the  "debt  or  default"  of  another 
person?  Under  this  language,  perplexing  questions  may  arise,  and 
many  have  arisen,  in  the  courts.  But  some  propositions  are  extremely 
plain;  and  one  of  them  is,  that  the  statute  points  to  no  distinction  be- 
tween a  debt  created  at  the  time  when  the  collateral  engagement  is 
made,  and  one  having  a  previous  existence.  The  requirement  is,  that 
promises  to  answer  for  the  debt,  etc.,  of  a  third  person,  be  in  writing. 
The  original  and  collateral  obligations  may  come  into  existence  at  the 
same  time,  and  both  be  the  foundation  of  the  credit,  or  the  one  may 
exist  and  the  other  be  created  afterwards.  In  either  case,  and  equally 
in  both,  the  inquiry  under  that  statute  is,  whether  there  be  a  debtor 
and  a  surety,  and  not  when  the  relation  was  created.  The  language  of 
the  enactment  is  so  plain  that  there  is  no  room  for  interpretation  ;  and 
its  policj'  is  equalby  clear.  If  A  say  to  B,  "If  you  will  suffer  C  to 
incur  a  debt  for  goods  which  3011  will  now  or  hereafter  sell  and  deliver 
to  him,  I  will  see  you  paid,"  the  promise  is  within  the  statute.  This  no 
one  ever  doubted.  But  if  A  say  to  B,  "  If  you  will  forbear  to  sue  C 
for  six  months  on  a  debt  heretofore  incurred  bv  him  for  ooods  sold  and 
delivered  to  him,  I  will  see  you  paid"  —  is  not  the  case  equalh;  plain? 
So  if,  in  such  a  case,  instead  of  forbearance*,  there  is  some  other 
sufficient  consideration,  for  example,  forgiving  a  part  of  the  debt  or 
relinquishing  some  securit}'  for  it,  the  difference  is  still  one  of  circum- 
stance, but  not  of  principle.  In  the  case  first  put,  the  consideration  of 
the  guaranty  is  the  original  sale  of  the  goods  on  the  faith  of  it :  in  the 
other,  it  may  be  forbearance  or  the  relinquishment  of  some  advantage, 
the  original  debt  still  remaining.  Looking  at  the  comparative  merit  of 
these  considerations,  it  would  seem  to  be  the  highest  in  the  first  case, 
for  the  whole  debt  owes  its  origin  to  the  collateral  promise,  while  in  the 
other  the  debt  remains  as  before,  and  onby  some  collateral  advantage 
is  lost.  But  the  application  of  the  statute  depends  on  no  such  test. 
These  considerations  are,  all  of  them,  sufficient,  and  simply  sufficient, 
to  sustain  the  auxiliary  undertaking.  But  if  they  also  dispense  with  a 
writing,  then,  so  far  as  I  can  see,  there  are  no  cases  to  which  this  branch 
of  the  Statute  of  Frauds  can  be  applied. 

Such  an  extreme  position  has  not  been  taken  ;  but  it  is  said  that  the 
promise  now  in  question  need  not  be  in  writing,  because  it  was  new 
and  original,  and  was  founded  on  the  relinquishment  to  the  debtor  of  a 
security  which  the  creditor  held.  To  say  that  it  was  new  and  original, 
expresses  no  idea  of  any  importance.  Ever}'  promise  is  new  and  original 
that  was  never  made  before.  An  undertaking  to  answer  for  an  old  debt 
of  a  third  person  certainly  has  no  more  of  originality  than  one  to  answer 
for  a  debt  now  contracted.  As  to  the  relinquishment  of  the  lien  or 
security,  this,  although  a  meritorious  consideration,  is,  in  judgment  of 
law,  no  more  so  than  any  other  which  is  sufficient  to  sustain  a  contract. 
Forbearance  to  sue  has  the  same  legal  merit,  and  so  has  the  release  of  a 
part  of  the  debt. 


78  MALLOKY    V.    GILLETT.  [CHAP.  1 

There  is  nothing  so  remarkable  or  peculiar  about  this  case  that  it  may 
not  be  included  in  some  general  proposition  which  involves  a  principle 
of  law.  Now,  one  of  these  two  propositions  must,  I  think,  be  true  : 
1.  The  Statute  of  Frauds  never  applies  to  a  promise,  the  subject  of 
which  is  an  antecedent  debt  of  a  third  person  to  which  it  is  collateral ; 
or,  2.  It  applies  to  all  such  promises  where  the  consideration  moves  solely 
between  the  creditor  and  original  debtor,  and  the  debt  still  remains.  If 
the  first  is  true,  then  the  promise  in  question  is  valid  without  a  writing, 
and  so  would  any  such  promise  be,  without  regard  to  the  particular 
nature  of  the  consideration  ;  it  being  necessary,  of  course,  that  there 
should  be  some  sufficient  consideration.  If  the  first  be  not  true,  and  the 
second  is,  then  the  promise  in  this  case  is  void,  because  it  falls  directly 
within  it.  The  first  proposition  cannot  be  true,  upon  the  plain  terms  and 
evident  policy  of  the  statute  ;  and  no  such  doctrine  was  ever  asserted. 
The  universal  truth  of  the  second  one  necessarily  follows,  unless  the  law 
will  discriminate  between  different  promises  according  as  the  considera- 
tion ma}'  differ  in  the  particular  nature  or  kind.  But  is  such  a  discrimina- 
tion possible,  so  long  as,  in  any  given  case,  the  consideration  is  sufficient 
in  the  eye  of  the  law,  and  moves  solely  between  the  original  parties? 
No  one,  it  seems  to  me,  can  hesitate  to  answer  such  a  question  in  the 
negative.  Yet  we  are  told,  without  reason  or  principle,  that  when  a 
creditor  releases  a  securitv  to  the  debtor,  although  without  releasing  the 
debt,  a  promise  of  another  person,  founded  on  that  peculiar  considera- 
tion, is  not  within  the  statute.  The  inevitable  logic  of  such  a  proposi- 
tion will  include  a  like  promise  founded  on  any  other  consideration 
equally  sufficient  to  sustain  a  contract;  and,  therefore,  we  are  carried 
back  to  the  first  general  proposition  above  stated,  which  is  admitted  to 
be  false.  It  has  already  been  observed,  that,  without  a  consideration, 
no  question  on  the  Statute  of  Frauds  can  arise. 

In  this  elementary  view  of  the  question,  I  do  not  understand  that  much 
difference  of  opinion  exists.  It  is  claimed,  however,  that  the  course  of 
adjudication  has  been  such,  that  we  cannot  determine  the  case  before 
us  according  to  a  consistent  rule  of  law.  This  argument  is  founded 
in  a  misapprehension  of  the  authorities,  some  reference  to  which  will  be 
necessary. 

In  this  State,  an  early  case,  and  one  of  very  high  authority,  is  that  of 
Leonard  v.  Vredenburgh,1  in  which  Chief  Justice  Kent  divided  the  cases 
on  this  branch  of  the  Statute  of  Frauds  into  three  classes,  as  follows: 

1.  Where  the  promise  is  collateral  to  the  principal  contract,  but  is  made 
at  the  same  time,  and  becomes  an  essential  ground  of  the  original  credit. 

2.  "  Cases  in  which  the  collateral  undertaking  is  subsequent  to  the 
creation  of  the  debt,  and  was  not  the  inducement  to  it,  though  the  sub- 
sisting liability  is  the  ground  of  the  promise."  "  Here,"  the  Chief 
Justice  observed,  "there  must  be  some  further  [or  new]  consideration 
shown,  having  an  immediate  respect  to  such  liability  ;  for  the  considera- 

1  8  Johns.  29. 


SECT.  I.]  M.YLLORY    V.    GILLETT.  79 

tion  of  the  original  debt  will  not  attach  to  this  subsequent  promise. 
3.  Cases  where  the  promise  to  pay  the:  debt  of  another  arises  out  of 
some  new  and  original  consideration  of  benefit  or  harm  moving  between 
the  newly  contracting  parties."  "The  two  first  classes,"  be  further 
observed,  "  are  within  the  Statute  of*  Frauds,  but  the  last  is  not."  I  sup- 
pose, in  the  light  of  later  decisions,  that  the  opinion  of  that  great  jurist, 
delivered  in  the  case  cited,  may  contain  some  inaccurate  remarks  respect- 
ing the  right  to  prove  a  consideration  for  a  collateral  agreement  where 
none  appeared  in  the  writing.  It  would  be  so  considered,  especially 
since  the  change  we  have  made  in  the  language  of  the  Statute  of  Frauds, 
requiring  the  consideration  to  be  expressed  in  the  collateral  instrument. 
But  the  above  classification  of  the  cases,  and  the  connected  remarks 
respecting  each  class,  are  strictly  correct,  and  they  have  been  a  land- 
mark of  the  law  for  forty  years.  Does  the  present  case  belong  to-  the 
second  class,  which  is  within  the  statute,  or  to  the  third,  which  is  not? 
Manifestly  it  belongs  to  the  second,  because  that  is  a  class  where  the 
undertaking  is  subsequent  to  the  creation  of  the  debt.  It  does  not  fall 
without  that  class  in  consequence  of  the  newness  of  the  consideration, 
because,  the  learned  Chief  Justice  said,  "here  must  be  some  further 
[new]  consideration  having  an  immediate  respect  to  such  liability." 
It  cannot  fall  within  the  third  class,  because,  if  we  arrange  it  there, 
we  necessarily  compress  the  two  classes  into  one,  or,  more  properly 
speaking,  we  merge  the  second  wholly  into  the  third.  In  such  a  disposi- 
tion of  the  present  question,  no  second  class  is  left  of  collateral  under- 
takings subsequent  to  the  creation  of  the  original  debt,  founded,  as 
they  must  be.  on  some  new  or  "  further  consideration." 

The  classification  referred  to,  on  a  casual  reading,  is  perhaps  open  to 
some  misapprehension,  and  I  think  it  has  been  occasionally  misappre- 
hended. What,  then,  is  the  true  distinction  between  the  second  and 
third  classes?  The}'  are  both  of  them  promises,  in  form  at  least,  to 
pay  the  antecedent  debt  of  a  third  person,  and  in  that  respect  they  are 
alike.  The  distinction,  therefore,  is  in  the  consideration  of  the  prom- 
ises which  belong  to  the  two  classes  ;  not  in  respect  to  its  particular 
nature  or  kind,  but  in  respect  to  the  parties  between  whom  it  moves. 
In  the  one  class,  the  consideration  is  characterized  as  a  ' '  further  one, 
having  immediate  respect  to  the  [original]  liability"  of  the  debtor; 
in  the  other,  as  "  new  and  original  moving  between  the  newly  contract- 
ing parties."  In  the  second  class,  the  new  or  "  further"  consideration 
moves  to  the  primary  debtor.  It  ma}'  consist  of  forbearance  to  sue 
him,  of  a  release  to  him  of  some  security,  or  of  any  sufficient  benefit  to 
him  or  harm  to  the  creditor,  but  in  which  the  collateral  promisor  has  no 
interest  or  concern.  In  the  third  class,  the  consideration,  whatever  its 
nature,  moves  to  the  person  making  the  promise,  and  that  also,  as  in 
all  other  cases  of  contract,  may  consist  of  benefit  to  him  or  harm  to  the 
party  with  whom  he  is  dealing.  This  distinction  is  also  extremely  well 
expressed  b}'  Chief  Justice  Shaw,  of  the  Supreme  Court  of  Massachu- 
setts.    One  class  of  cases  (within  the  statute),  he  says,  is  "where  the 


80  MALLOKY   V.    GILLETT.  |_CHAP.  I 

direct  and  leading  object  of  the  promise  is  to  become  the  surety  or 
guarantor  of  another's  debt;"  the  other  class  (not  within  the  statute) 
is  "  where,  although  the  effect  of  the  promise  is  to  pa}-  the  debt  of 
another,  yet  the  leading  object  of  the  undertaker  is  to  subserve  or 
promote  some  interest  or  purpose  of  his  own."  Nelson  v.  Boynton.1 
Chief  Justice  .Savage,  in  this  State  (Farley  v.  Cleveland'2),  made  the 
same  classification.  "  In  all  these  cases,"  he  observed,  referring  to 
those  which  fall  within  the  third  class,  kt  founded  on  a  new  and  original 
consideration  of  benefit  to  the  defendant  or  harm  to  the  plaintiff,  moving 
to  the  party  making  the  promise,  either  from  the  plaintiff  or  original 
debtor,  the  subsisting  liabilit}'  of  the  original  debtor  is  no  objection  to 
a  recovery."  In  one  respect,  this  language  of  Chief  Justice  Savage  has 
greater  precision  than  that  of  Chief  Justice  Kent.  The  latter  speaks 
of  the  consideration  as  kt  moving  between  the  newly  contracting  parties." 
The  former  characterizes  it  as  moving  to  the  party  making  the  promise. 
This  description  is  more  exact,  as  well  as  more  comprehensive,  because 
it  includes  a  variety  of  cases  found  in  the  books,  where  the  new  consid- 
eration springs  from  the  original  debtor  and  not  the  creditor,  as,  for 
example,  where  the  debtor,  by  conveyance  of  property  or  otherwise, 
places  a  fund  in  the  hands  of  a  third  person,  the  latter  promising,  in 
consideration  thereof,  to  pay  the  debt.  But  the  difference  is  not  one  of 
principle,  because  there  is  a  sense  in  which,  even  in  such  cases,  the  new 
consideration  moves  from  the  creditor  through  the  debtor  to  the  person 
making  the  promise,  and  on  that  ground  many  cases  hold  that  the 
creditor  may  himself  sue  on  the  promise,  although  it  was  made  to  the 
debtor.  Lawrence  v.  Fox.3  Where  the  promise  in  this  particular 
description  of  cases  has  been  made  directly  to  the  creditor,  the  only 
question  has  been  on  the  Statute  of  Frauds  ;  and  the  rule  is  very  prop- 
erlv  settled  that  they  are  not  within  the  statute.  The  cases  of  Farley  v. 
Cleveland,4  Gold  v.  Phillips,5  and  Olmstead  v.  Greenley6  belong  to  tliis 
class. 

Omitting,  then,  the  first  class  of  collateral  undertakings — I  mean 
those  made  at  the  same  time  with  the  creation  of  the  debt  —  as  having 
nothing  to  do  with  the  present  question,  there  are  two  kinds  of  promises 
of  extensive  use  in  the  dealings  of  community,  which,  in  form  and  effect, 
very  much  resemble  each  other  ;  each  being  to  answer  for  or  pay  a  debt 
already  due  or  owing  from  a  third  person,  yet  wholly  different  in 
respect  to  the  motive  and  consideration.  In  the  one  class  the  promisor 
has  no  personal  interest  or  concern,  and  his  undertaking  is  made  solely 
upon  some  fresh  consideration  passing  between  the  creditor  and  his 
debtor.  This  class  is  within  the  statute.  In  the  other,  the  promise 
may  be  in  the  same  form,  and,  when  performed,  may  have  the  same 
effect,  but  it  is  made  as  the  incident  of  some  new  dealing  in  which  the 
promisor  is  himself  concerned,  and  upon  a  consideration  passing  be' 

1  .3  Mete.  396-400.  2  4  Cow.  432,  439. 

3  20  N.  Y.  268,  and  the  cases  cited.  *  4  Cow.  432,  439. 

5  10  John.  412.  6  18  Id.  12. 


SECT.  I.J  MALLOKY    V.    GILLETT.  81 

tvveen  the  creditor  or  the  debtor  and  himself.  This  class,  which  may 
include  a  great  variety  of  particular  examples,  is  not  within  the  statute. 
The  distinction  is  broad  and  intelligible,  although  the  formal  resemblance 
in  such  transactions  may  have  occasionally  led  to  inaccuracy  of  expres- 
sion or  decision.  The  great  body  of  the  cases,  however,  will  be  found 
to  illustrate  this  distinction,  and  to  establish  it  firmly  as  a  guide  in  this 
branch  of  the  law.  If  such  a  distinction  were  a  questionable  one,  the 
tendency  of  the  doubt  would  necessarily  be  in  the  direction  of  holding 
both  classes  of  cases  to  be  within  the  statute,  but  never  in  the  direction 
of  placing  without  the  statute  any  one  of  the  cases  belonging  to  the  first 
of  these  classes. 

With  this  classification  before  us,  it  will  be  proper  to  notice  more  in 
detail  the  cases  cited  on  the  argument,  and  others  not  cited.   .  .  -1 

It  cannot  fail  to  be  seen  that  nearly  all  the  cases  which  have  been 
•mentioned,  in  fact  all  of  them  which  exhibit  a  promise  to  pay  or  answer 
for  the  debt  of  another  person,  are  essentially  of  one  type.  With  great 
variety  in  the  circumstances,  one  controlling  characteristic  pervades 
them  all.  In  every  instance,  the  consideration  of  the  promise  was  bene- 
ficial to  the  person  promising.  This  was  the  feature  which  imparted 
to  the  promise  the  character  of  originality,  as  that  term  is  used  with 
reference  to  the  Statute  of  Frauds.  In  not  one  of  them  is  it  true  that 
the  undertaking  was  entered  into  upon  a  consideration  merely  bene- 
ficial to  the  debtor  but  of  no  concern  to  the  promisor;  and  I  can  con- 
fidently say  that  not  one  of  those  cases  contains  even  a  dictum  which, 
being  understood,  countenances  the  doctrine  contended  for  on  the  part 
of  the  plaintiff  in  this  case. 

Yet  it  would  not  be  true  to  say  that  the  plaintiff's  position  is  wholly 
unsupported  by  any  authority  in  the  courts  of  this  State.  In  Mercein  v. 
Andrus,2  Savage,  Ch.  J.,  made  this  remark  on  a  motion  for  a  new  trial : 
"The  judge  correctly  stated  to  the  jury  that  where  the  promise  of  one 
person  to  pay  the  debt  of  another  was  founded  upon  the  consideration 
of  surrendering  up  property  levied  on  by  an  execution,  the  promise  was 
an  original  undertaking,  and  need  not  be  in  writing  to  be  valid."  Of 
course,  no  such  point  was  decided,  because  the  decision  granted  a  new 
trial  upon  another  question  not  material  to  the  present  inquiry.  The 
Chief  Justice  cited  no  authority.  If  he  meant  to  lay  down  the  doctrine, 
that  a  new  consideration,  moving  from  the  creditor  to  the  debtor,  the 
debt  still  remaining,  would  sustain  the  unwritten  promise  of  another 
person  to  pay  the  debt,  there  was  no  authority  to  be  cited,  for  no  such 
proposition  had  ever  been  advanced  in  this  State.  If,  however,  the 
charge  at  the  trial  and  the  observation  of  the  Chief  Justice  assumed,  as 

1  The  learned  judge  here  discussed  Gold  v.  Phillips,  10  Johns.  412;  Bailey  v.  Free- 
man, 11  Johns.  221  ;  Nelson  v.  Dubois,  13  Johns.  175  ;  Myers  v.  Morse,  15  Johns.  42.") ; 
<  )lmstead  v.  Greeley,  18  Johns.  12  :  Farley  o.  Cleveland,  4  Cow.  432  ;  Chapin  v.  Merrill, 
4  Wend.  657  ;  Gardiner  v.  Hopkins,  5  Wend.  23  ;  Elwood  v.  Monk,  5  Wend.  235  ;  King  v. 
Despard.  5  Wend.  277  :  and  Meech  v.  Smith,  7  Wend.  315.   -Ed. 

2  10  Wend.  461. 

6 


82  MALLOEY    V.    GILLETT.  [(JIIAP.  L 

the  law  was,  that  the  levy  of  an  execution  extinguished  the  debt,  and 
that  the  release  of  the  levy  remitted  the  creditor  to  the  new  promisor  as 
his  only  remedy,  then  the  remark  was  strictly  correct,  but  it  has  no 
application  to  this  case.  Such  is  probably  the  true  explanation  ;  and  we 
shall  presently  see  there  are  English  cases  under  the  statute  standing 
on  that  ground.  The  plaintiff's  counsel  has  been  able,  however,  to  cite 
one  case  which  is  entirely  to  his  purpose.  In  Fay  v.  Bell,1  the  plaintiff 
had  a  lien  on  a  pair  of  boots  which  he  had  mended,  and  in  consideration 
of  releasing  that  lien  and  giving  up  the  boots,  the  defendant  promised 
to  pay  his  demand,  which  amounted  to  fifty  cents.  So  far  as  appears, 
the  debt  still  remained.  The  case  went  up  from  a  justice's  court, 
through  the  Common  Pleas,  to  the  Supreme  Court,  where  the  question 
was  disposed  of  with  the  single  observation  that  the  promise  was  "  a  new 
undertaking,  founded  on  a  new  and  distinct  consideration,  the  relinquish- 
ment by  the  plaintiff  of  his  lien  on  the  boots,  and  which  was  sufficient 
to  uphold  the  promise  made."  The  remark,  as  made,  is  strictly  true. 
The  consideration  was  clearly  sufficient  to  uphold  the  promise,  but 
the  Statute  of  Frauds  requires  not  only  a  consideration  but  a  writing. 
The  case  was  of  very  slight  importance,  and  the  principles  of  the  question 
were  not  examined.  In  the  same  book  is  another  case,  preciselv  the 
other  way,  the  opinion  being  given  by  another  judge.  In  Van  Slyck  v. 
Pulver,2  the  promise  was  made  in  consideration  that  the  plaintiff  would 
suspend  proceedings  on  an  execution  against  his  debtor.  This  forbear- 
ance was  admitted  to  be  a  sufficient  consideration,  and  it  was  certainly 
a  new  one  ;  but  the  promise  was  held  void  within  the  statute. 

In  all  the  judicial  history  of  this  State,  then,  there  is  but  one  adjudged 
case  which  sustains  the  doctrine  contended  for,  and  that  is  one  entitled 
to  no  great  consideration.  I  will  now  refer  to  several  of  a  very  decisive 
character,  which  furnish  a  true  exposition  of  the  statute,  and  show  that 
the  rule  is  the  other  wa}\  .   .   .3 

These  numerous  authorities  are  decisive.  They  all  present  examples 
where  the  collateral  undertaking  was  founded  on  a  consideration  suffi- 
cient to  sustain  the  promise,  but  of  no  personal  concern  to  the  promisor  ; 
yet  the  promises  were  void,  because  they  fell  within  the  precise  terms 
and  the  undoubted  polic}T  of  the  Statute  of  Frauds.  Certainly,  that  statute 
was  not  enacted  for  cases  where  the  promise  would  be  void  at  the  com- 
mon law  for  want  of  a  consideration  to  sustain  it.  If  it  was  not  enacted 
for  the  very  cases  where  a  new  consideration  arises,  additional  to  the 
original  debt,  that  being  insufficient  according  to  all  authority,  then  why 
was  it  ever  passed  ?  Indeed,  the  struggle  in  the  courts  has  been  to 
withdraw  from  its  influence,  not  such  cases  as  these,  but  others  having 
a  close  formal  resemblance,  yet  distinguishable,  not  because  there  is  a 

1  Lalor's  Supp.  to  Hill  and  Denio,  251.  2  Lalor,  47. 

3  The  learned  judge  here  discussed  Simpson  v.  Patten,  4  Johns.  422;  Jackson  v. 
Bayner,  12  Johns.  291  ;  Smith  v.  Ives,  15  Wend.  182 ;  Packer  v.  Wilson,  15  Wend.  343; 
Watson  v.  Randall,  20  Wend.  201  ;  Barker  v.  Bucklin,  2  Den.  45 ;  and  Kingsley  v. 
Balcom,  4  Barh.  131.— Ed. 


SECT.  I.]  MALLORY    V.    GILLETT.  8 


o 


consideration,  but  because  it  moves  to  the  promisor,  and  so  gives  to 
his  undertaking  an  original  character.  A  person  who  receives  a  con- 
sideration may  be  bound  by  any  lawful  promise  founded  upon  it,  and 
that  promise  may  as  well  lie  to  pay  another  man's  debt  as  to  do  any  ot  her 
act.  The  success  of  this  struggle,  in  a  variety  of  instances  not  within 
the  intent  of  the  statute,  should  not  overthrow  the  very  object  for  which 
it  was  enacted. 

This  discussion  would  be  incomplete  without  referring  to  the  rule 
elsewhere  than  in  this  State.  I  have  already  mentioned  the  case  of 
Nelson  v.  Boy n ton,1  which  may  be  regarded  as  settling  the  question  in 
Massachusetts.  The  creditor  in  that  case  sued  his  debtor  and  seized 
his  property  under  an  attachment.  The  defendant  promised  to  pay 
the  debt  in  consideration  of  a  discontinuance  of  the  suit.  The  suit 
was  discontinued  accordingly,  and  the  lien  of  the  attachment  was 
thereby  lost,  but  the  debt  remained  against  the  original  debtor.  It  was 
held,  upon  the  fullest  consideration,  Chief  Justice  Shaw  giving  the 
opinion,  that  the  promise  was  void  because  it  was  not  in  writing.  I 
regard  the  decision  as  of  great  value,  because  the  cases  were  exam- 
ined, and  the  discrimination  between  the  different  classes  was  made 
with  entire  accuracy.   .   .   .~ 

Without  pursuing  this  discussion  further,  the  general  rule  is,  that  all 
promises  to  answer  for  the  debt  or  default  of  a  third  person  must  be  in 
writing,  whether  the  promise  be  made  before,  at  the  time,  or  after  the 
debt  or  liability  is  created.  Such  is  the  rule,  because  so  is  the  Statute 
of  Frauds.  The  statute  makes  no  exception  of  any  promise  which  is 
of  that  character.  The  courts  have  made  no  exceptions  ;  as  clearly 
they  should  not.  But  a  considerable  variety  of  undertakings,  having 
points  of  resemblance  and  analog}*  to  such  promises,  have  been  held 
not  to  be  within  the  statute.  These  may  be  chiefly,  if  not  wholly, 
arranged  in  the  following  classes:  1.  Where  there  was  no  original 
debt  to  which  the  auxiliary  promise  could  be  collateral ;  for  example, 
where  the  promisee  was  a  mere  guarantor  for  the  third  person  to  some 
one  else,  and  the  promisor  agrees  to  indemnify  him,  or  where  his 
demand  was  founded  in  a  pure  tort.  2.  Where  the  original  debt 
becomes  extinguished,  and  the  creditor  has  onby  the  new  promise  to 
rely  upon  ;  for  example,  where  such  new  undertaking  is  accepted  as  a 
substitute  for  the  original  demand,  or  where  the  original  demand  is 
deemed  satisfied  by  the  arrest  of  the  debtor's  body  or  a  levy  on  his 
goods,  the  arrest  or  levy  being  discharged  by  the  creditor's  consent. 
3.  Where,  although  the  debt  remains,  the  promise  is  founded  on  a  new 
consideration  which  moves  to  the  promisor.     This  consideration  may 

1  3  Mete- 396. 

2  The  learned  judge  here  discussed  the  decisions  in  the  English  courts,  saying  in 
conclusion  :  "I  think  it  may  be  safely  affirmed  that  no  case  has  ever  been  determined 
in  those  courts  tending  to  the  proposition  that  a  parol  promise  to  pay  the  debt  of  an- 
other is  valid  when  the  consideration  is  beneficial  only  to  the  debtor,  and  where  there 
is  a  debt  which  still  remains  against  him."  —  Ed. 


84  MALLORY   V.    GILLETT.  [CHAP.  1 

come  from  the  debtor,  as  where  he  puts  a  fund  in  the  hands  of  the 
promisee,  either  by  absolute  transfer  or  upon  a  trust,  to  pay  the  debt, 
or  it  may  be  in  his  hands  charged  with  the  debt  as  a  prior  lien,  as  in  the 
case  of  Williams  y.  Leper,  and  many  others.  So  the  consideration 
ms.)  originate  in  a  new  and  independent  dealing  between  the  promisor 
and  me  creditor,  the  undertaking  to  answer  for  the  debt  of  another 
neir  »  one  of  the  incidents  of  that  dealing.  Thus,  A.  for  any  compensa- 
te-! agreed  on  between  him  and  B,  may  undertake  that  C  shall  pa}T  his- 
debt  to  B.  So  A,  himself  being  the  creditor  of  C,  ma}'  transfer  the  obli- 
gation to  B  upon  any  sufficient  consideration,  and  guarantee  it  by  parol. 
If  we  go  beyond  these  exceptional  and  peculiar  cases,  and  withdraw 
join  the  statute  all  promises  of  this  nature,  where  the  debtor  alone  is- 
benefited  by  the  consideration  of  the  new  undertaking,  and  the  debt 
»till  subsists,  then  we  leave  absolutely  nothing  for  the  statute  to 
operate  upon. 

The  judgment  should  be  affirmed.1 

Selden,  Denio,  Clerke,  and  Welles,  JJ. ,  concurred.2 

1  Clancy  v.  Piggott,  2  A.  &  E.  473:  Rounce  v.  Woodyard,  8  Law  Times,  186, 
Feunell  v.  Mulcahy,  8  Ir.  L.  R.  434  ;  Dillaby  v.  Wilcox,  60  Conn.  71 ;  Murto  v.  Mc- 
K night,  28  111.  Ap.  238;  Home  Bank  v.  Waterman,  134  111.  461  ;  Vaughn  v.  Smith, 
65  Iowa,  579;  Nelson  v.  Boynton,  3  Met.  396;  Corkins  v.  Collins,  16  Mich.  478  ; 
Stewart  v.  Jerome,  71  Mich.  201  ;  Walther  v.  Merrill,  6  Mo.  Ap.  370  (semble) ;  Cowen- 
hoven  v.  Howell,  36  N.  J.  323  ;  Van  Slyek  v.  Pulver,  Hill  &  D.  47  ;  Stern  v.  Drinker, 
2  E.  D.  Sm.  401;  Brown  v.  Weber,  38  N.  Y.  187  (semble);  White  v.  Rintoul,  108- 
N.  Y.  222  (semble);  Gump  v.  Halberstadt,  15  Oreg.  356  (semble);  Gray  v.  Herman, 
75  Wis.  453  ;  Bray  v.  Parcher,  80  Wis.  16,  Accord. 

Houlditch  v.  Milne,  2  Esp.  86  (semble)  ;  Stewart  v.  Hinkle,  1  Bond,  506 ;  Travis- 
?;.  Allen,  1  St.  &  P.  192  ;  Dunbar  v.  Smith,  66  Ala.  490;  Prout  v.  Webb,  87  Ala.  593 
(semble) ;  Williams  v.  Hill,  3  Mack.  100;  Allen  v.  Thompson,  10  N.  H.  32;  Robinson 
v.  Oilman,  43  N.  H.  485 ;  Fay  v.  Bell,  Hill  &  D.  251  (overruled) ;  Adkinson  v.  Bar- 
field,  1  McC.  575;  Dunlap  v.  Thorne,  1  Rich.  213  (explaining  Boyce  v.  Owens,  2 
McC.  208),  Contra. 

It  seems  now  to  be  everywhere  agreed  that  a  promise  to  a  creditor  to  pay  him  the 
debt  of  another,  in  consideration  of  mere  forbearance  by  the  creditor,  is  within  the  Stat- 
ute of  Frauds.  King  v.  Wilson,  2  Stra.  873;  Fish  v.  Hutchinson,  2  Wils.  94;  Tom- 
linson  v.  Gell,  6  A.  &  E.  564 ;  Westmoreland  v.  Porter,  75  Ala.  452  ;  Scott  v.  Thomas, 
2  111.  58;  Krutz  v.  Stewart,  54  Ind.  178;  Jones  v.  Walker,  13  B.  Mon.  356  ;  Stewart 
v.  Campbell,  58  Me.  439  (overruling  Russell  v.  Babcock,  14  Me.  139)  ;  Thomas  v. 
Delphy,  33  Md.  373;  Dexter  v.  Blanchard,  11  All.  365;  Musick  v.  Musick,  7  Mo. 
495 ;  Lang  v.  Henry,  54  N.  H.  57  ;  Duffy  v.  Wuusch,  42  N.  Y.  243 ;  Roe  v.  Barker, 
82  X.  Y.  431 ;  White  v.  Rintoul,  108  N.  Y.  222  ;  Gump  v.  Halberstadt,  15  Oreg.  356 ; 
Caston  v.  Moss,  1  Bail.  (S.  Ca.)  14  ;  Harrington  v.  Rich,  6  Vt.  606 ;  Young  v.  French, 
35  Wis.   Ill;  Clapp  v.  Webb,  52  Wis.  638. —  Ed. 

2  Bacon,  J.,  delivered  a  dissenting  opinion,  in  which  Davies  and  Weight,  JJ, 
concurred. 


SECT.  I.]  AMES   V.    FOSTEK.  85 


ADAMS   AMES   v.   T.    P.    FOSTER   and   Another. 
In  the  Supreme  Judicial  Court,  Massachusetts,  March,  1871. 

[Reported  in  106  Massachusetts  Reports,  400.] 

Morton,  J.1  The  only  question  involved  in  this  case  arises  under 
that  clause  of  the  Statute  of  Frauds  which  provides  that  no  action  shall 
be  brought  "  to  charge  a  person  upon  a  special  promise  to  answer  for 
the  debt,  default,  or  misdoings  of  another,  unless  the  promise,  or  some 
memorandum  or  note  thereof,  is  in  writing,  and  signed  by  the  party  to 
be  charged,  or  his  agent."     Gen.  Sts.  c.  105,  §  1,  cl.  2. 

The  plaintiffs  in  the  original  action  claim  to  hold  the  defendant  upon 
the  ground  of  an  express  promise  to  pay  the  amount  of  a  debt  due  the 
plaintiffs  by  the  owners  of  the  steamer  "  N.  P.  Banks,"  for  wood  and 
coal  furnished  prior  to  October  1,  18G8.  At  this  time,  McKay  &  Aldus, 
of  Boston,  owned  three-fourths  of  the  steamer,  and  the  other  fourth  was 
owned  by  parties  in  New  York.  In  December,  18G8,  McKay  &  Aldus 
went  into  bankruptcy,  having  previously  mortgaged  their  interest  to  the 
defendant  Ames.  In  the  spring  of  1869  the  plaintiffs  heard  that  the 
steamer  was  to  be  carried  to  New  York  to  be  sold,  and  they  threatened 
to  attach  her,  and  thereupon  Ames  promised  to  pay  the  bill  if  they 
would  not  attach  her. 

It  is  to  be  observed  that  Ames  was  not  originally  liable  upon  the 
bill,  being  merely  a  mortgagee.  Howard  v.  Odell.2  The  plaintiffs  do 
not  claim  that  they  had  a  lien  upon  the  vessel.  They  had  no  right  to 
attach  the  interest  of  McKay  &  Aldus,  who  were  in  bankruptcy.  The 
only  legal  consideration,  therefore,  of  the  defendant's  promise,  was 
the  forbearance  of  the  plaintiffs  to  attach  the  interest  of  the  New  York 
owners.  Upon  this  state  of  facts,  the  learned  judge  who  presided  at 
the  trial  instructed  the  jury  that  "  if,  for  the  benefit  and  at  the  request 
of  Ames,  the  said  Foster  gave  up  or  surrendered  some  advantage 
which  lie  had,  such  as  a  means  of  collecting  his  debt  or  the  like,  and 
in  consideration  thereof  Ames  promised  to  pay  this  bill,  he  would  be 
liable,  although  the  promise  was  not  in  writing."  We  do -not  think 
that  these  instructions,  applied  to  the  facts  of  this  case,  were  correct 
or  sufficient.  As  we  have  seen,  the  only  consideration  of  the  defend- 
ant's promise  was  that  the  plaintiffs  forbore  to  attach  the  interest  of 
the  New  York  owners;  and  we  are  of  opinion  that  the  jury  should  have 
been  instructed  that  such  promise  was  within  the  Statute  of  Frauds. 

The  defendant's  promise  was,  in  its  primary  and  essential  character, 
a  promise  to  guarantee  the  debt  of  another.  Its  object  was,  to  secure 
the  payment  of  the  old  debt,  which  was  not  extinguished.  The  de- 
fendant's liability  was  collateral  and  contingent,  would  exist  as  long 

1  Only  the  opinion  of  the  Court  is  given.  — Ed. 

2  I  Allen,  85. 


S6  AMES    V.    FOSTER.  [CHAP.  I 

as  the  original  debt  existed,  and  would  be  extinguished  whenever  the 
original  debtors  should  pay  that  debt.  It  was  not  in  any  sense  his 
debt ;  the  original  party  remained  liable  ;  and  there  is  an  entire  ab- 
sence of  any  liability  on  the  part  of  the  defendant  or  his  propert}-, 
except  such  as  arises  from  his  express  promise.  Forth  v.  Stanton.1 
When  all  these  elements  concur,  we  know  of  no  case  in  this  Common- 
wealth which  sanctions  the  doctrine  that  such  promise  loses  its  char- 
acter as  collateral,  and  becomes  an  original  promise,  because  there  is 
a  consideration  which  is  beneficial  to  the  promisor. 

In  Alger  v.  Scoville,2  Shaw,  C.  J.,  says,  that  "it  has  been  held  that 
when  the  leading  and  obvious  object  of  the  promisor  was  to  induce  the 
promisee  to  forego  some  lien,  interest,  benefit,  or  advantage  held  b}r 
him,  and  to  transfer  that  interest,  or  confer  that  or  some  equivalent 
benefit  on  the  promisor,  although  the  effect  may  be  to  discharge  neither 
from  an  obligation,  still  it  is  a  new,  independent,  and  original  contract 
between  the  parties,  and  is  not  within  the  Statute  of  Frauds  required  to 
be  in  writing." 

In  Curtis  v.  Brown,8  Shaw,  C.  J.,  states  that  "it  is  no  sufficient 
ground  to  prevent  the  operation  of  the  Statute  of  Frauds,  that  the 
plaintiff  has  relinquished  an  advantage,  or  given  up  a  lien,  in  conse- 
quence of  the  defendant's  promise,  if  that  advantage  has  not  also 
directly  enured  to  the  benefit  of  the  defendant,  so  as  in  effect  to  make 
it  a  purchase  by  the  defendant  of  the  plaintiff.  The  cases  in  which  it 
has  been  held  otherwise  are  those  where  the  plaintiff,  in  consideration 
of  the  promise,  has  relinquished  some  lien,  benefit,  or  advantage  for 
securing  or  recovering  his  debt,  and  where  by  means  of  such  relinquish- 
ment the  same  interest  or  advantage  has  enured  to  the  benefit  of  the 
defendant.  In  such  cases,  although  the  result  is  that  the  payment  of 
the  debt  of  the  the  third  person  is  effected,  it  is  so  incidentally  and 
indirectly,  and  the  substance  of  the  contract  is  the  purchase,  b}-  the 
defendant  of  the  plaintiff,  of  the  lien,  right,  or  benefit  in  question." 

It  is  equally  true  that  it  is  no  sufficient  ground  for  taking  the  case 
out  of  the  statute,  that  the  defendant  has  received  some  benefit  from 
the  consideration  of  his  promise.  If  this  were  so,  then  every  promise 
to  guarantee  the  debt  of  another,  made  upon  a  pecuniaiy  consideration 
paid  by  the  promisee  to  the  promisor,  would  be  taken  out  of  the  stat- 
ute.4    In  all  cases,  the  question  is,  whether  the  promise  is  in  substance 

1  1  Saund.  (6th  ed.)  211,  note. 

2  1  Gray,  391,  396.  s  5  Cush.  488. 

4  "  Suppose  A  owes  B  $100;  B  pays  C  $10,  in  consideration  of  which  C  verhally 
promises  to  guarantee  the  payment  of  the  debt.  There  are  numerous  decisions,  some 
of  which  were  pronounced  by  judges  of  high  authority,  going  far  enough  to  sustain 
an  action  upon  this  promise;  yet  it  is  very  plain  that  this  is  squarely  prohibited  by  the 
statute."     Per  Hibbard,  J.,  in  Lang  v.  Henry,  54  N.  H.  57,  61. 

"  Suppose  A  delivers  property  to  B,  in  consideration  of  his  promise  to  become  surety 
to  him  for  the  payment  of  a  debt  owing  to  him  by  C :  the  case  is  within  the  stat- 
ute, because  B's  obligation,  although  upon  a  consideration  received  by  him,  is  that  of  a 
surety  only  that  C  shall  perform."  Per  Grover,  J.,  in  Brown  v.  Weber,  38  N.  Y.  187, 
191.  — Ed. 


SECT.  I.J  PRIME    V.    KOEIILER.  87 

a  promise  to  pay  the  debt  of  another,  or  whether  it  is  a  promise  by  the 
promisor  to  paj-  his  own  debt,  the  extent  of  which  is  measured  by  the 
amount  due  by  another. 

We  think  the  authorities  in  this  State  have  gone  no  further  than  to 
decide  that  a  case  is  not  within  the  statute,  where,  upon  the  whole 
transaction,  the  fair  inference  is,  that  the  leading  object  or  purpose  and 
the  effect  of  the  transaction  was  the  purchase  or  acquisition  by  the 
promisor  from  the  promisee  of  some  property,  lien,  or  benefit  which  he 
did  not  before  possess,  but  which  enured  to  him  by  reason  of  his  prom- 
ise, so  that  the  debt  for  which  he  is  liable  may  fairly  be  deemed  to  be  a 
debt  of  his  own,  contracted  in  such  purchase  or  acquisition.  Nelson  v. 
Boynton  ; 1  Fish  v.  Thomas  ; 2  Burr  v.  Wilcox  ; 3  Furbish  v.  Goodnow  ; 
Browne  on  St.  of  Frauds  (3d  ed.),  §  214,  c,  d. 

Applying  this  test  to  the  facts  of  this  case,  it  is  clear  that  the  prom- 
ise of  the  defendant  Ames  was  within  the  statute.  It  is  true,  or  prob- 
able, that  he  indirectly  received  some  benefit  from  the  forbearance  of 
the  plaintiffs  to  attach  the  interest  of  the  New  York  owners,  but  the 
purpose  or  effect  of  the  transaction  was  not  to  transfer  to  him  any  lien 
or  advantage.  He  acquired  no  rights  which  he  did  not  before  possess, 
and  it  is  impossible  to  regard  the  promise  as  an  original  promise 
founded  upon  the  consideration  of  a  purchase  by  him.  We  are  of 
opinion,  therefore,  that  the  jury  should  have  been  instructed  in  accord- 
ance with  the  request  of  the  defendant  Ames,  that  the  plaintiff  upon 
the  facts  found  was  not  entitled  to  recover. 

Exceptions  sustained.* 


D.  W.  PRIME  and  Another,  Respondent,  v.  H.   KOEHLER, 

Appellant. 

In  the  Court  of  Appeals,  New  York,  April,  1879. 

[Reported  in  11  New  York  Reports,  91.] 

Andrews,  J.5  The  defendant  upon  the  conveyance  to  him  [by 
Koehler]  did  not  assume  the  payment  of  the  mortgage  [executed  by 
Koehler  to  plaintiff  Prime].  The  mortgage  was  a  lien  upon  the  land, 
and  his  grantor  was  personally  liable  upon  his  bond  for  the  mortgage 
debt,  but  the  defendant  did  not  become  personally  bound  to  pay  the 
mortgage.  After  the  defendant  had  taken  the  conveyance,  default  was 
made  in  the  payment  of  interest,  and  this  default  having  continued  for 
more  than  thirty  days,  the  principal  sum  by  the  terms  of  the  mortgage 
became  due  at  the  option  of  the  mortgagees.  The  defendant  thereupon 
verbally  agreed  with  the  mortgagees  that  if  they  would  not  exact  pay 

1  3  Met.  396.  2  5  Gray,  45.  3  13  Allen,  269. 

4  Winn  v.  Hillyer,  43  Mo.  Ap.  139,  Contra.  —  Ed. 

5  Only  the  opinion  of  the  Court  is  given.  —  Ed. 


S8  PRIME    V.    KOEHLER.  [CHAP.  L 

ment  of  the  principal,  or  foreclose  the  mortgage,  and  would  give  time 
for  the  payment  of  the  interest  then  due,  he  would  when  the  next 
instalment  of  interest  became  due,  pay  the  interest  then  in  arrear, 
together  with  that  which  should  accrue  to  that  time.  The  mortgagees 
assented  to 'this  arrangement,  and  took  no  proceedings  to  collect  the 
mortgage  debt  or  interest  during  the  time  specified  in  the  agreement. 
This  action  is  brought  upon  the  defendant's  promise  to  pay  the  two 
instalments  of  interest,  and  the  only  question  is  whether  the  under- 
taking on  the  part  of  the  defendant  was  to  answer  for  the  debt,  default, 
or  miscarriage  of  another.  If  it  is,  not  being  in  writing,  it  is  void  by 
statute.     2  Rev.  Stat.,  136,  §  3. 

It  does  not  admit  of  doubt  that  the  forbearance  of  the  plaintiff  to 
take  proceedings  to  foreclose  the  mortgage  upon  the  request  of  the 
defendant  was  a  good  consideration  for  his  promise  to  pay  the  interest. 
Addison  on  Contracts,  12;  Parsons  on  Contracts,  vol.  1,  p.  443.  But 
if  the  defendant's  promise  was  to  pay  the  debt  of  another,  the  fact  that 
it  is  supported  by  a  good  consideration  will  not  save  it  from  the  con- 
demnation of  the  statute.  In  addition,  the  promise  must  be  in  writing, 
and  no  matter  what  consideration  exists,  if  the  promise  is  collateral, 
a  writing  is  the  only  competent  evidence  to  establish  it.  Mallory  v. 
Gillett.  But  the  defendant's  promise  was  not  a  promise  to  answer  for 
the  debt  of  another,  within  the  meaning  of  the  statute.  When  it  was 
made,  he  had  the  legal  title  to,  and  possession  of,  the  mortgaged  prem- 
ises. The  mortgage  had  been  reduced  several  thousand  dollars  by  pay- 
ments, and  the  defendant,  by  virtue  of  his  ownership  of  the  land, 
presumptively  had  an  interest  to  protect  it  from  sale  on  foreclosure. 
He  was  enabled  by  virtue  of  the  agreement  to  take  and  control  the 
rents  and  profits  of  the  land  during  the  time  specified  therein,  and  the 
plaintiffs  meanwhile  forbore  to  enforce  their  rights  as  mortgagees.  The 
consideration  of  the  defendant's  promise  was  one  running  directly  to> 
him  from  the  promisees.  The  agreement  was  entered  into  by  the  de- 
fendant for  his  own  benefit,  for  the  purpose  of  protecting  his  interest 
in  the  property  covered  by  the  mortgage.  It  was  an  arrangement  with 
the  lienors,  for  delay  in  enforcing  their  lien  on  the  defendant's  land. 

The  circumstances  bring  the  case  direct]}'  within  the  third  class  of 
cases  enumerated  in  Leonard  y.  Vredenburgh,1  viz. :  where  the  promise 
to  pa}*  the  debt  of  another  arises  out  of  some  new  and  original  con- 
sideration of  benefit  or  harm,  running  between  the  newly  contracting 
parties.  In  this  class  of  cases  the  subsisting  liability  of  the  original 
debtor  is  no  objection  to  a  recovery.  And  when  the  purpose  of  the 
promise  is  to  secure  a  benefit  to  the  promisor,  b}' relieving  his  property 
from  a  lien,  or  securing  and  confirming  his  possession,  the  promise  is 
original  and  not  collateral,  although  a  third  person  may  be  personally 
liable  for  the  debt,  and  the  promise  may  be  in  form  a  promise  to  pay 
such  debt,  and  although  the  performance  of  the  promise  may  result  in 

1  8  J.  K.  28. 


SECT.  I.]  DAVIS    V.    PATKICK.  89 

discharging  the  debt.  Farle}'  v.  Cleveland,  4  Cow.  432  ;  Mallory  v* 
Gillett.  The  case  of  Mallory  v.  Gillett  contains  an  able  and  elaborate 
review  of  the  decisions  upon  the  section  of  the  statute  we  are  now  con- 
sidering, and  the  opinion  of  Comstock,  C.  J.,  recognizes  and  enforces 
the  distinction  between  promises  to  pay  the  debt  of  another,  entered 
into  for  the  benefit  of  the  original  debtor,  and  in  aid  of  the  original 
contract,  and  promises  which  though  in  form  promises  to  pay  the  debt 
of  a  thud  person,  are  not  made  for  the  purpose  of  securing  or  perform- 
ing the  original  duty,  but  for  the  benefit  of  the  promisor,  although  such 
security  or  performance  may  be  the  consequence.  In  a  learned  note  in 
1  Sand.  211  C,  it  is  said  :  "  Whether  a  case  comes  within  the  statute 
depends  not  on  the  consideration  of  the  promise,  but  on  the  fact  of  the 
original  party  remaining  liable,  coupled  with  the  absence  of  any  liability 
on  the  part  of  the  defendant,  or  his  property,  except  such  as  arises 
from  his  express  promise."  We  need  not  consider  whether  this  state- 
ment of  the  doctrine  is  precisely  accurate  in  all  its  parts,  in  view  of  the 
present  state  of  the  decisions,  but  it  recognizes  the  validity  of  a  verbal 
promise  made  under  the  circumstances  of  this  case,  and  in  that  respect 
accords  with  the  authorities  before  cited. 

We  think  the  judgment  is  right,  and  it  should  therefore  be  affirmed* 
All  concur.  Judgment  affirmed.1 


DAVIS   v.   PATRICK. 
In  the  Supreme  Court,  United  States,  November  9,  1891. 

[Reported  in  141  United  States  Reports,  479.] 

The  plaintiff  having  obtained  a  verdict  and  judgment,  the  defendant 
alleges  error  in  regard  to  the  second  .count.  That  count  is  for  the  trans- 
portation of  silver  ore  from  the  Flagstaff  mine,  in  Utah  Territory,  to 
furnaces  in  Sandy,  in  the  same  territory. 

The  relations  between  Davis  and  the  Flagstaff  Mining  Company 
were  disclosed  by  a  written  agreement,  of  date  December  16,  1873. 
By  that  agreement  it  appeared  that  Davis,  on  June  12,  1873,  had  ad- 
vanced to  the  company  £5,000,  at  the  rate  of  six  per  cent,  interest,  a 
sum  then  due ;  that  it  had  sold  to  Davis  and  agreed  to  deliver  at  the 
ore-house  of  the  company,  free  of  cost,  5,195  tons  of  ore,  of  which  it 
had  only  then  delivered  200  tons,  although  Davis  had  paid  in  full  for  the 
entire  amount.  The  agreement  also  recited  that  Davis  was  to  advance 
an  additional  amount,  if  needed,  not  exceeding  £10,000.  It  then 
provided  that  the  mine  should  be  put  under  the  sole  management  of 
J.  N.  H.  Patrick,  to  be  worked  and  controlled  by  him  until  such  time 
as  the  ore  sold  had  been  delivered  and  the  sums  borrowed  had  been 

1  risk  v.  Reser,  19  Colo.  88,  Accord.  —  En, 


90  DAVIS   V.    PATRICK.  [CHAP.  L 

repaid,  with  interest.  This  control  was  irrevocable,  save  at  the  instance 
of  Davis.  Coupled  with  this  agreement  was  a  full  power  of  attorney 
to  Patrick.  The  trial  proceeded  upon  the  theory  that  during  the  time 
the  services  sued  for  were  being  rendered,  Davis  was  the  party  mainly 
and  pecuniarily  interested  in  the  working  of  the  mine,  and  that  he 
assumed  to  Patrick  a  personal  responsibility  for  such  services  ;  and 
the  real  question  tried  was  whether  Davis's  promises  were  collateral 
undertakings  to  pay  the  debts  of  another,  and  void  because  not  in 
writing.1 

Mr.  Justice  Brewer  delivered  the  opinion  of  the  Court. 

That  Davis  was  interested  in  having  the  ore  transported  to  the  fur- 
naces is  clear.  He  was  interested  in  two  respects :  First,  as  to  the 
4,995  tons  to  be  delivered  to  him  at  the  ore-house,  it  being  his  property 
when  thus  delivered,  any  subsequent  handling  was  wholly  for  his 
benefit ;  and  in  respect  to  the  balance,  as  the  transportation  was  one 
step  in  the  process  of  converting  the  product  of  the  mine  into  money, 
it  would  help  to  pay  the  debt  of  the  company  to  him.  Davis,  there- 
fore, was  so  pecuniarily  interested  in,  and  so  much  to  be  benefited  by, 
the  prompt  and  successful  transportation  of  the  ore,  that  any  contract 
which  he  might  enter  into  in  reference  to  it  was  supported  by  abundant 
consideration.  .   .   .2 

Were  these  promises  binding  upon  Davis,  or  of  no  avail  to  the 
plaintiff  because  not  in  writing?  Were  it  not  for  the  Statute  of 
Frauds  there  would  be  no  question,  for  obviously  there  was  both 
promise  and  consideration.  Defendant  relies  upon  that  provision  of 
the  Statute  of  Frauds  which  forbids  the  maintenance  of  an  action  "to 
charge  the  defendant  upon  any  special  promise  to  answer  for  the  debt, 
default,  or  miscarriage  of  another  person,  unless  the  agreement  upon 
which  such  action  shall  be  brought,  or  some  memorandum  or  note 
thereof,  shall  be  in  writing,"  etc.  The  purpose  of  this  provision  was 
not  to  effectuate,  but  to  prevent,  wrong.  It  does  not  apply  to  promises 
in  respect  to  debts  created  at  the  instance  and  for  the  benefit  of  the 
promisor,  but  only  to  those  by  which  the  debt  of  one  party  is  sought  to 
be  charged  upon  and  collected  from  another.  The  reason  of  the  stat- 
ute is  obvious,  for  in  the  one  case  if  there  be  any  conflict  between  the 
parties  as  to  the  exact  terms  of  the  promise,  the  courts  can  see  that 
justice  is  done  by  charging  against  the  promisor  the  reasonable  value 
of  that  in  respect  to  which  the  promise  was  made,  while  in  the  other 
case,  and  when  a  third  party  is  the  real  debtor,  and  the  party  alone 
receiving  benefit,  it  is  impossible  to  solve  the  conflict  of  memory  or 
testimony'  in  any  manner  certain  to  accomplish  justice.  There  is  also 
a  temptation  for  a  promisee,  in  a  case  where  the  real  debtor  has  proved 
insolvent  or  unable  to  pay,  to  enlarge  the  scope  of  the  promise,  or  to 
torture  mere  words  of  encouragement  and  confidence  into  an  absolute 


"ov 


1  The  statement  of  the  case  has  been  slightly  abridged. —  Ed. 

2  The  Court  here  considered  the  evidence,  finding  it  ample  to  prove  repeated  prom 
iSes  by  the  defendant  to  pay  for  the  transportation.  —  Ed. 


SECT.  I.]  DAVIS   V.    PATKICK.  91 

promise  ;  and  it  is  so  obviously  just  that  a  promisor  receiving  no  bene- 
fits should  be  bound  only  by  the  exact  terms  of  his  promise,  that  this 
statute  requiring  a  memorandum  in  writing  was  enacted.  Therefore, 
whenever  the  alleged  promisor  is  an  absolute  stranger  to  the  transac- 
tion, and  without  interest  in  it,  courts  strictly  uphold  the  obligations 
of  this  statute.  But  cases  sometimes  arise  in  which,  though  a  third 
party  is  the  original  obligor,  the  primary  debtor,  the  promisor  has  a 
personal,  immediate,  and  pecuniary  interest  in  the  transaction,  and  is 
therefore  himself  a  party  to  be  benefited  by  the  performance  of  the 
promisee.  In  such  cases  the  reason  which  underlies  and  which 
prompted  this  statutory  provision  fails,  and  the  courts  will  give  effect 
to  the  promise.  As  said  by  this  Court  in  Emerson  v.  Slater  : l  "  When- 
ever the  main  purpose  and  object  of  the  promisor  is  not  to  answer  for 
another,  but  to  subserve  some  pecuniary  or  business  purpose  of  his 
own,  involving  either  a  benefit  to  himself  or  damage  to  the  other  con- 
tracting party,  his  promise  is  not  within  the  statute,  although  it  may  be 
in  form  a  promise  to  pay  the  debt  of  another,  and  although  the  perform- 
ance of  it  may  incidentally  have  the  effect  of  extinguishing  that  lia- 
bility." To  this  may  be  added  the  observation  of  Browne,  in  his  work 
on  the  Statute  of  Frauds,  section  165:  "  The  statute  contemplates  the 
mere  promise  of  one  man  to  be  responsible  for  another,  and  cannot  be 
interposed  as  a  cover  and  shield  against  the  actual  obligations  of  the 
defendant  himself."  The  thought  is,  that  there  is  a  marked  difference 
between  a  promise  which,  without  any  interest  in  the  subject-matter  of 
the  promise  in  the  promisor,  is  purely  collateral  to  the  obligation  of  a 
third  party,  and  that  which,  though  operating  upon  the  debt  of  a  third 
party,  is  also  and  mainly  for  the  benefit  of  the  promisor.  The  case 
before  us  is  in  the  latter  category.  While  the  original  promisor  was 
the  mining  company,  and  the  undertaking  was  for  its  benefit,  yet  the 
performance  of  the  contract  ensured  equally  to  the  benefit  of  Davis  and 
the  mining  company.  Performance  helped  the  mining  company  in  the 
payment  of  its  debt  to  Davis,  and  at  the  same  time  helped  Davis  to 
secure  the  payment  of  the  mining  company's  debt  to  him  ;  and  as  the 
mining  compan}'  was  apparently  destitute  of  any  other  property,  and 
the  payment  of  its  debt  to  Davis  therefore  depended  upon  the  continued 
and  successful  working  of  this  mine,  and  as  the  control  and  working  of 
the  mine  had  been  put  in  the  hands  of  Davis  so  that  he  might  justly 
say,  as  he  did,  "  I  am  practically  the  owner,"  it  follows  that  he  was  a 
real,  substantial  part}'  in  interest  in  the  performance  of  this  contract. 
His  promise  was  not  one  purely  collateral  to  sustain  the  obligations  of 
the  mining  compan}',  but  substantially  a  direct  and  personal  one  to  ad- 
vance his  own  interests.  While  the  mining  company  was  ultimately  to 
be  benefited,  Davis  was  primarily  to  be  benefited  by  the  transportation 
of  the  ore,  for  thereby  that  debt,  which  otherwise  could  not,  would  be 
paid  to  him.  He,  therefore,  in  any  true  sense  of  the  term  occupied  not 
the  position  of  a  collateral  undertaker,  but  that  of  an  original  prom- 

1  22  How.  28,  43. 


92  DAVIS   V.   PATEICK.  [CHAF.  \ 

isor,  and  it  would  be  a  shadow  on  justice  if  the  administiation  of  the 
law  relieved  him  from  the  burden  of  his  promise  on  the  ground  that  it 
also  resulted  to  the  benefit  of  the  mining  company,  his  debtor. 

Counsel  for  Davis  place  stress  on  the  form  of  expression  attributed 
by  Patrick  to  Davis,  to  wit :  "  I  will  be  personally  responsible  ;  I  will 
see  you  paid  ;  "  and  contends  that  the  import  of  such  language  is  that 
of  a  collateral  promise.  There  is  force  in  this  contention,  as  it  implies 
that  some  one  else  was  also  bound,  but  the  real  character  of  a  promise 
does  not  depend  altogether  upon  the  form  of  expression,  but  largely  on 
the  situation  of  the  parties  ;  and  the  question  always  is,  what  the  par- 
ties mutually  understood  by  the  language,  whether  they  understood  it 
to  be  a  collateral  or  a  direct  promise.  Patrick  declares  he  understood  it 
to  be  a  direct  promise,  and  acted  on  the  faith  of  it.  That  Davis  under- 
stood it  in  the  same  way,  is  evidenced  not  only  from  the  circumstances 
surrounding  the  parties  at  the  time,  but  from  the  fact  that  in  a  subse- 
quent interview,  when  charged  to  have  always  promised  to  pay  this 
debt,  he  admits  that  he  believes  that  he  did.  The  plaintiff,  believing 
that  Davis  was,  as  he  said,  practicalby  the  owner,  the  party  primarily 
to  be  benefited  by  the  conversion  of  the  products  of  the  mine  into 
money,  understood  that  Davis  was  making  an  original  promise  to  pay 
for  the  work  which  he  might  do,  and  upon  such  promise  he  might 
surely  rely  as  an  original  promise,  at  least  for  an}'  work  done 
thereafter. 

The  merits  of  the  case,  therefore,  as  disclosed  hy  the  testimony  were 
with  Patrick,  and  the  judgment  in  his  favor  was  right.  It  is  objected 
that  the  Court  in  its  instructions  spoke  of  Davis  as  an  original  prom- 
isor, as  one  promising  to  pay  the  debt,  and  not  as  one  promising  to  be 
responsible  for  the  debt,  or  to  see  it  paid.  But  as  Davis  in  the  second 
conversation  promised  to  pay,  and  in  the  third  admitted  that  he  had 
always  promised  to  pajT  the  debt,  we  cannot  think  that  the  Court  mis- 
interpreted the  scope  and  effect  of  his  words.  It  is  not  probable  that 
the  parties  to  this  transaction  understood  the  difference  between  an 
original  and  a  collateral  promise.  We  must  interpret  Davis's  promises 
in  the  light  of  the  surroundings,  and  of  his  subsequent  admissions,  and 
in  that  light  we  cannot  think  that  the  Court  erred  in  its  construction 
thereof;  and  if  the  jury  believed  that  he  had  made  such  promises,  we 
cannot  doubt  that  the  verdict  should  have  been  as  it  was. 

Affirmed.1 

1  See  also  Emerson  v.  Slater,  22  How.  43;  Patton  v.  Mills,  21  Kas.  163;  Winn  v. 
Hillyer,43  Mo.  Ap.  139  :  Wills  v.  Cutler,  61  N.  H.  405  ;  Muller  v.  Riviere,  59  Tex.  640. 

In  a  few  cases  it  has  been  held  that  a  promise,  in  consideration  that  the  plaintiff 
would  work  for  or  supply  goods  to  the  promisor,  to  pay  both  for  the  work  or 
the  goods,  and  also  for  work  done  or  goods  sold  to  A,  is  not  within  the  Statute  of 
Frauds.  Clifford  v.  Luhring,  69  111.  401  ;  Fitzgerald  v.  Morrissey,  14  Neb.  198;  Mor- 
rissey  v.  Kinsey,  16  Neb.  17  (semble)  ;  Wills  v.  Cutler,  61  N.  H.  405;  Crawford  v. 
Edison,  45  Oh.  St.  239  ;  Muller  v.  Riviere,  59  Tex.  640.  But  see  contra,  Andre  v.  Bod- 
man,  13  Md.  241  ;  Gill  v.  Herrick,  1 1 1  Mass.  501  ;  Ruppe  v.  Peterson,  67  Mich.  437. 
(But  see  McLaughlin  v.  Austin  (Mich.  1895),  62  N.  W.  R.  719.)  Belknap  v.  Bender 
75  N.  Y.  446  ;  Birchall  v.  Neaster,  36  Oh.  St.  331.  —  Ed. 


SECT.  I.]  KAABE   V.    SQUIER.  93 

H.  RAABE   and   Another   v.   A.    C.    SQUIER   and  Others. 
In  the  Court  of  Appeal,  New  York,  December,  1895. 

[Reported  in  148  New  York  Reports,  81.] 

HAionT,  J.1  The  facts  then  as  disclosed  by  the  evidence  are 
substantially  as  follows  :  Jencks  and  Stokes  were  the  owners  of  the 
premises.  Squier  and  Whipple  were  building  the  houses  thereon  for 
them,  Squier  and  Whipple  entered  into  a  contract  with  the  plaintiffs 
to  furnish  the  woodwork  for  the  houses  for  the  sum  of  $20,000.  The 
payments  were  to  be  made  in  instalments  in  cash,  less  ten  per  cent 
discount  on  the  delivery  of  the  material  at  the  buildings.  The  contract 
specifically  designated  the  material  to  be  delivered  upon  each  instal- 
ment. The  plaintiffs  prepared  the  first  instalment  of  material,  and 
delivered  the  same  at  the  buildings,  and  then  called  upon  the  defend- 
ants, Squier  and  Whipple,  for  the  first  payment  due  them  under  the 
contract,  but  the  same  was  delayed  and  not  made  for  the  space  of 
about  three  months.  The  plaintiffs  prepared  and  delivered  the  second 
instalment  of  material,  and  also  demanded  payment  for  that,  which 
was  neglected  and  delayed.  The  plaintiffs  theu  prepared  the  rest  of 
the  material  called  for  by  the  contract,  but  refused  to  deliver  the 
same  until  the  instalments  furnished  by  them  had  been  paid  for. 
Under  these  circumstances  the  defendants  Jencks  and  Stokes  saw  the 
plaintiffs  and  told  them  that  they  were  the  owners  of  the  buildings ; 
that  they  wauted  them  finished,  and  that  if  the  plaintiffs  would  go 
ahead  and  deliver  the  rest  of  the  material  they  would  see  them  paid 
therefor ;  that  if  Squier  and  Whipple  did  not  pay,  they  would  take  it 
out  of  the  amount  going  to  them,  and  would  pay  the  plaintiffs.  It 
further  appears  that,  relying  upon  this  promise,  the  plaintiffs  pro- 
ceeded and  delivered  all  the  material  called  for  by  the  contracts,  but 
that  the  sum  of  $2,800  still  remains  clue  to  them  and  unpaid. 

The  referee  dismissed  the  complaint  as  to  Jencks  and  Stokes  upon 
the  ground,  as  he  says,  that  their  promise  to  pay,  being  oral,  was  void 
under  the  Statute  of  Frauds. 

As  to  the  Statute  of  Frauds,  it  appears  to  us  that  its  provisions  have 
no  application  to  the  case  under  consideration.  In  the  first  place  the 
indebtedness  at  the  time  the  promise  was  made  has  been  paid.  The 
promise,  in  so  far  as  it  is  here  sought  to  be  enforced,  related  to  the 
indebtedness  thereafter  to  be  created.  The  promisors  were  the  owners 
of  the  buildings  in  process  of  construction.  The  woodwork  furnished 
by  the  plaintiffs  was  for  their  benefit.  The  contractors  had  neglected 
to  pay  the  plaintiffs  for  the  material  furnished,  and  they  refused  to 
deliver  more,  as  they  had  the  right  to  do.     Under  such  circumstances 

1  Everything  is  omitted  except  so  much  of  the  opinion  as  relates  to  the  liability  of 
the  defendants,  Jencks  and  Stokes.  —  Ed. 


94  WOOD   V.    BENSON.  [CHAP.  I 

the  promise  was  made,  and  it  was  in  reliance  upon  the  promise  that 
the  plaintiffs  delivered  the  rest  of  the  woodwork.  The  promise  thus 
made  was  original  and  founded  upon  a  new  consideration,  that  of  the 
goods.  It  was  beneficial,  as  we  have  seen,  to  the  promisors,  thus 
bringing  the  case  within  the  rule  stated  by  Finch,  J.,  in  White  v. 
Ivintoul,1  in  which  he  says:  "  Where  the  primary  debt  subsists  and 
was  antecedently  contracted,  the  promise  to  pay  it  is  original  when  it 
is  founded  on  a  new  consideration  moving  to  the  promisor  and  bene- 
ficial to  him,  and  such  that  the  promisor  thereby  comes  under  an 
independent  duty  of  payment  irrespective  of  the  liability  of  the  prin- 
cipal debtor."  Ackley  v.  Parmenter;2  Prime  v.  Koehler ;  Bayles  v. 
Wallace.3 

The  judgment  should  be  reversed  and  a  new  trial  granted,  costs  to 
abide  the  event. 

All  concur.  Judgment  reversed.* 


WOOD  v.  BENSON. 

In  the  Exchequer,  Michaelmas  Term,   1831. 

[Reported  in  2  Crompton  <$•  Jerri*,  94.] 

Assumpsit  by  the  clerk  of  the  Manchester  Gas  Works,  on  the  fol- 
lowing guaranty,  signed  by  the  defendant :  — 

"I,  the  undersigned,  do  hereby  engage  to  pay  the  directors  of  the 
Manchester  Gas  Works,  or  their  collector,  for  all  the  gas  which  may 
be  consumed  in  the  Minor  Theatre,  and  by  the  lamps  outside  the 
theatre,  during  the  time  It  is  occupied  by  my  brother-in-law,  Mr. 
Neville  ;  and  I  do  also  engage  to  pay  for  all  arrears  which  may  be 
now  due.     Witness  my  hand,  this  10th  day  of  August,  1830." 

There  was  a  count  for  gas  and  goods  sold  and  delivered.  Plea,  the 
general  issue. 

At  the  trial,  before  Parke,  J.,  at  the  last  summer  assizes  for  the 
county  of  Lancaster,  it  appeared  that  £13  15s.  6d.  was  due  for  arrears, 
and  £15  4s.  6d.  for  gas  supplied  after  the  guaranty  was  given.  It  was 
objected  that  there  was  no  consideration  apparent  on  the  face  of  the 
instrument  for  the  promise  to  pay  the  arrears  ;  and  that  the  agreement, 
therefore,  being  void  as  to  part  Under  the  Statute  of  Frauds,  was  void 
as  to  the  whole. 

The  learned  judge  directed  the  jury  to  find  a  verdict  for  the  plaintiff 
for  £29,  and  gave  the  defendant  leave  to  move  to  enter  a  nonsuit. 

Joshua  Evans  accordingly  obtained  a  rule  to  enter  a  nonsuit. 

Wightman  showed  cause.5 

i  108  N.  Y.  222,  227.  2  98  N.  Y.  425.  3  56  Hun,  428. 

4  See  contra,  Rand  v.  Mather,  1 1  Cush.  1 ;  Noyes  v.  Humphreys,  1 1  Grat.  636.  —  Ed. 

5  The  arguments  of  counsel  are  omitted,  together  with  the  concurring  opinions  of 
Bayley,  Gakrow,  and  Holland,  BB.  —  Ed. 


SECT.  I.]  WOOD   V.   BENSON.  95 

Lord  Lyndhurst,  C.  B.  The  case  of  Thomas  v.  Williams1  may,  as 
it  appears  to  me,  be  supported.  Part  of  the  contract  in  that  case  was 
void  by  the  Statute  of  Frauds.  The  declaration  stated  the  entire  con- 
tract, including  that  part  of  it  which  was  void  ;  and  therefore  the 
contract,  as  stated  in  the  declaration,  was  not  proved.2 

The  same  observation  applies  to  Lexington  v.  Clarke  and  Chater  v. 
Beckett ;  and  I  have  no  disposition  to  complain  of  those  decisions, 
because  in  none  of  those  cases  does  there  appear  to  have  been  any 
count  upon  which  the  plaintiff  could  recover. 

But  the  question  in  the  present  case  is  widely  different.  The  con- 
tract resolves  itself  into  two  parts.  One  is,  "I  engage  to  pay  for  all 
the  gas  which  may  be  consumed,"  etc.  ;  that  is  a  distinct  engagement. 
The  other  part  is,  "and  I  do  also  engage  to  pay  all  arrears,"  etc. 
Now,  this  latter  part  cannot  be  sustained ;  for  if  it  be  a  distinct  en- 
gagement, there  is  no  consideration  to  support  it  expressed  on  the 
instrument.  «. 

The  question,  then,  is,  if  I  undertake  to  pay  for  goods  which  may 
be  supplied,  though  there  is  no  promise  to  supply  the  goods,  whether, 
when  the  goods  are  supplied,  a  right  of  action  does  not  accrue  to 
recover  the  amount.  It  is  quite  clear  that  it  does.  And  though  the 
latter  part  of  the  engagement  cannot  be  sustained,  under  the  first 
part  of  the  engagement  the  plaintiff  is  entitled  to  recover  for  the 
gas  subsequently  supplied ;  and  therefore  the  verdict  must  stand  for 
£15  4s.  6d.s 

Rule  discharged  as  to  entering  a  nonsuit,  the  verdict  to  be 
reduced  to  £15  4s.  6d. 

i  10  B.  &  C.  664. 

2  The  plaintiff  declared  specially  on  an  oral  promise  to  pay  rent  due  from  A  and 
rent  to  become  due  from  himself.  Not  being  able  to  prove  the  entire  promise,  he 
failed  altogether.  The  plaintiff  was  unsuccessful  for  the  same  reason  in  Lexington  v. 
Clarke,  2  Vent.  223;  Chater  v.  Beckett,  7  T.  R.  201 ;  Noyes  v.  Humphreys,  11  Grat. 
636.  — Ed. 

3  In  the  course  of  the  argument,  Thomas  v.  Williams  being  cited  in  support  of  the 
objection  of  variance,  Bayley,  B.,  said :  "  In  the  present  case  the  same  objection  would 
have  applied  on  the  first  count  of  the  declaration,  and  would  have  been  fatal  if  there 
had  not  been  a  good  count  on  which  the  subsequent  supply  could  be  recovered ;  but 
the  objection  would  have  been  on  the  ground  that  the  plaintiff  was  bound  to  prove  all 
the  promise  which  he  had  stated,  and  not  on  the  principle  that  if  a  promise  be  void  in 
part  it  must  necessarily  be  void  in  toto." 

In  accordance  with  the  principal  case,  see  Band  v.  Mather,  11  Cush.  1  (overruling 
Loomis  v.  Newhall,  15  Pick.  159). 

Requisites  of  Memorandum.  It  was  decided  in  Wain  v.  Warlters,  5  East,  10, 
that  the  memorandum  of  an  agreement  to  answer  for  the  debt,  default,  or  miscarriage 
of  another  was  insufficient,  if  it  did  not  disclose  the  consideration  for  the  promise  as 
well  as  the  promise  itself.  This  strict,  not  to  say  narrow,  interpretation  of  the  statute 
continued  to  be  followed,  as  in  the  principal  case,  until  the  passing  of  the  statute  19  & 
20  Vict.  c.  97,  by  which  the  memorandum  was  to  be  deemed  sufficient,  even  though 
the  consideration  for  the  promise  did  not  appear  in  writiDg  or  by  necessary  inference 
from  a  written  document.  In  this  country  the  decisions  are  hopelessly  irreconcilable, 
many  following  and  many  departing  from  the  doctrine  of  Wain  v.  Warlters.  The 
learned  reader  will  find  a  full  collection  of  the  authorities  in  Browne,  Statute  -of 
Frauds  (5th  ed.)  §§  390,  391.  — Ed. 


Ofi  RANDALL   V.    RIGBY.  [CHAP.  L 


RANDALL  v.    RIGBY. 

In  the  Exchequer,  Trinity  Term,   1838. 

[Reported  in  4  Meeson  $•  Welsby,  130.] 

The  declaration  stated  that  heretofore,  to  wit,  on  the  17th  of  October, 

1837,  in  and  by  a  certain  indenture  then  made  between  the  plaintiff 
of  the  first  part,  William  Brookes  of  the  second  part,  and  Richard 
Hollins  and  the  defendant  of  the  third  part,  the  counterpart  of  which, 
&c,  certain  land  and  premises  were  granted,  bargained,  sold,  aliened, 
enfeoffed,  and  confirmed  unto  the  said  Richard  Hollins  and  the  defend- 
ant, their  heirs  and  assigns,  to  hold  the  same  unto  the  said  Richard 
Hollins  and  the  defendant,  and  their  heirs,  to  the  use,  intent,  and  pur- 
pose that  the  plaintiff,  his  heirs  and  assigns  forever,  should  and  might, 
out  of  the  said  land  und  dwelling-houses,  and  other  buildings  erected 
thereupon,  with  the  appurtenances,  receive  and  take  one  clear  yearly 
rent  or  sum  of  £63  of  lawful  money  of  Great  Britain,  to  be  payable 
half-yearly,  free  from  all  deductions  whatsoever ;  and  to  the  further 
uses,  intents,  and  purposes  in  the  said  indenture  mentioned  ;  and  the 
said  defendant  did  by  the  said  indenture,  for  himself  and  his  heirs, 
executors,  administrators,  and  assigns,  covenant,  promise,  aud  agree 
with  and  to  the  plaintiff,  his  heirs  and  assigns,  that  they,  the  said 
Richard  Hollins  and  the  defendant,  their  heirs,  executors,  administra- 
tors, and  assigns,  or  some  or  one  of  them,  should  or  would  forever 
thereafter  well  and  truly  pay  or  cause  to  be  paid  unto  the  plaintiff,  his 
heirs  and  assigns,  the  said  yearly  rent  of  £63  by  the  said  indenture 
limited  in  use  to  him  or  them,  on  the  days  and  times  thereinbefore 
appointed  for  payment  thereof,  and  hereinbefore  mentioned,  without 
any  deduction  or  abatement  whatsoever ;  and  the  plaintiff  saith,  that 
after  the  making  of  the  said  indenture,  to  wit,  on  the  25th  of  March. 

1838,  which  day  elapsed  before  the  commencement  of  this  suit,  a  large 
sum  of  the  yearly  sum  or  rent  aforesaid,  to  wit,  £31  106*.  became  due 
to  the  plaintiff,  according  to  the  said  covenant  aforesaid,  for  one-half 
of  a  year  ending  on  the  day  and  year  last  aforesaid  and  then  last 
elapsed  ;  and  the  plaintiff  further  saith,  that  the  said  Richard  Hollins 
was  then  and  thence  to  the  commencement  of  this  suit  alive.  Breach, 
that  neither  Hollins  nor  the  defendant  paid,  but  therein  made  default, 
contrary  to  the  said  covenant  of  the  said  defendant,  whereby  an  action 
hath  accrued  to  demand  the  sum  of  £31  10s. 

General  demurrer,  and  joinder. 

The  cause  of  demurrer  stated  in  the  margin  by  the  defendant  was, 
that  according  to  the  authorities,  debt  will  not  lie  for  the  arrears  of  a 
rent  or  annuity  in  fee. 

Wightman,  in  support  of  the  demurrer.  Taking  the  whole  indenture 
together,  this  is  the  grant  of  an  annuity  payable  out  of  land ;  the 
covenant  is  a  mere  collateral  security ;  and  the  general  principle  estab- 


SECT.  I.]  RANDALL   V.    KIGBY.  97 

lished  by  Webb  v.  Jiggs1  was,  that  at  common  law  debt  does  not  lie 
for  the  arrears  of  an  annuity  payable  out  of  lands  for  life  or  a  greater 
estate,  while  the  estate  of  freehold  continues.  [Lord  Abinger,  C.  B. 
The  annuity  is  charged  on  land  in  the  hands  of  one  person,  and 
another  person  covenants  to  pay.  The  terre-tenant  ought  therefore  to 
pay  the  annuity  in  the  first  instance,  and  the  covenantor  is  not  liable 
unless  he  refuses ;  that  is  not  a  debt,  but  only  a  duty  on  failure  of 
payment  by  the  terre-tenant.]  Covenant  might  possibly  lie  against 
the  defendant,  but  not  debt ;  his  covenant  is  merely  collateral. 

Crompton,  contra.  This  is  a  collateral  covenant  in  gross,  on  which 
an  action  may  be  maintained  without  reference  to  privity  of  estate. 
[Parke,  B.  —  How  do  you  distinguish  this  from  the  case  of  a  lease, 
with  a  covenant  by  the  lessor,  his  executors,  administrators,  and 
assigns,  to  pay  the  rent,  and  the  lessee  assigning,  and  the  lessor 
accepting  the  assignee  as  his  tenant?  —  the  cases  are  clear  that  the 
lessor,  or  the  assignee  of  the  reversion,  may  bring  debt  against  the 
assignee  on  the  privity  of  estate,  but  can  only  bring  covenant  against 
the  lessee,  because  the  privity  of  estate  is  determined  as  to  him,  and 
the  covenant  becomes  collateral :  1  Siderf.  402 ;  Mills  v.  Auriol.2] 
Those  are  cases  where  the  question  arose  how  far  debt  will  lie  when 
the  previous  privity  of  estate  has  determined ;  this  is  a  mere  express 
covenant  between  strangers,  which  in  its  inception  was  collateral,  and 
never  had  anything  to  do  with  the  estate. 

Wightman,  in  reply.  Cooke  v.  Herle3  is  an  express  authority  that 
the  covenant  is  collateral.  The  effect  of  it  is,  "  I,  the  defendant,  will 
take  care  that  this  annuity,  which  issues  out  of  land,  shall  be  paid." 
If  it  had  been  merely  a  covenant  by  both  these  parties  to  pay  a  sum  in 
gross,  debt  might  have  lain,  although  it  was  intended  to  secure  the 
annuity ;  but  it  is  a  covenant  to  pay  the  annuity,  which  issues  out  of 
land.  The  primary  duty  is  not  that  the  defendant  shall  pay  in  the  first 
instance  ;  his  duty  is  to  take  care  that  it  is  paid  out  of  the  land.  But 
the  first  principle  in  an  action  of  debt  is,  that  there  must  be  a  direct 
duty  to  pay.4 

Lord  Abinger,  C.  B.  I  think  Mr.  Wightman  has  drawn  the  true 
distinction.  The  question  here  is  not  whether  the  defendant  is  liable, 
but  whether  he  is  liable  in  this  form  of  action.  If  it  had  appeared 
that  this  was  a  debt  of  his  own,  on  which  he  was  liable  to  the  plaintiff, 
debt  might  be  maintainable  as  well  as  covenant ;  but  it  is  an  action  on 
a'  mere  collateral  covenant,  by  which  the  defendant,  jointly  with 
another,  undertakes  to  secure  the  payment  of  an  annuity  which  is  issu- 
ing out  of  land.  The  case  of  a  lessee  who  has  assigned  his  lease  is 
strictly  analogous.  In  Mills  v.  Auriol,  Wilson,  J.,  sums  up  the  posi- 
tion of  a  lessee  under  such  circumstances  in  these  words  :  "  An  action 
of  covenant  remains  after  the  estate  is  gone  ;  but,  generally  speaking, 
when  the  land  is  gone,  the  action  of  debt  is  also  gone,  debt  being 

1  4  M.  &  Selw.  114.  2  2  H.  Bl.  433.  3  o  Mod.  138. 

4  The  arguments  of  counsel  are  somewhat  abridged.  —  Ed. 


98  RANDALL   V.    RIGBY.  .  [CHAP.  I. 

maintainable  because  the  land  is  debtor.  Covenant  is  founded  on  a 
privity  collateral  to  the  land."  The  same  point  had  been  decided  in 
Thursby  v.  Plant.1  The  defendant  here  stands  in  the  same  relation  to 
the  plaintiff  as  the  original  lessee  after  assignment  of  the  estate,  when 
he  is  only  suable  in  covenant,  not  in  debt. 

Parke,  B.  1  am  of  the  same  opinion.  No  doubt  this  covenant  is 
collateral  or  in  gross  in  one  sense,  that  it  does  not  run  with  the  land 
or  rent ;  for  that  Millies  v.  Branch 2  is  an  authority  ;  but  it  is  also  col- 
lateral in  the  sense  contended  for  by  Mr.  Wightman,  that  it  is  not  a 
covenant  to  perform  any  direct  duty,  but  only  a  collateral  one  to  secure 
payment  of  the  rent.  Upon  this  undertaking  an  action  of  covenant  is 
the  proper  remedy ;  in  which  the  plaintiff  will  recover,  by  way  of  dam- 
ages, the  amount  actually  in  arrear.  The  case  falls  therefore  within 
the  principle  of  the  authority  referred  to  in  Viner's  Abridgment,  and 
ranges  itself  also  with  that  of  the  lessor  and  lessee  after  assignment 
of  the  estate,  as  decided  in  Thursby  v.  Plant,  and  in  Mills  v.  Auriol. 
This  covenant  is  collateral  in  that  sense  also,  and  is  not  like  a  cove- 
nant to  pay  a  sum  of  money,  which  becomes  a  direct  duty  from  the 
defendant  to  the  plaintiff. 

Bolland  and  Anderson,  BB.,  concurred. 

Judgment  for  the  defendant. 

1  1  Siderf.  401 ;  s.  c.  1  Saund.  230;  and  see  p.  241,  n.  5. 

2  5  M.  &  Sel.  411. 


SECT.  II.]  SISON   V.    KIDMAN.  99 


SECTION  II. 

Suretyship  in  the  Form  of  an  Independent  or  Absolute 

Undertaking. 

SISON  v.   KIDMAN. 
In  the  Common  Pleas,  January  26,  1842. 

[Reported  in  11  Law  Journal  Reports,  Common  Pleas,  100.1] 

The  plaintiff  declared  in  debt  against  the  defendant,  as  maker  of 
a  promissory  note  for  £15,  payable  to  the  plaintiff  or  order,  value 
received. 

Plea :  that  the  defendant  was  charged  in  the  declaration  as  the  prin- 
cipal and  single  party  to  the  note,  but  that  the  note  was  the  joint  and 
several  note  of  the  defendant  and  one  Watts,  and  that  the  defendant 
signed  the  note  together  with  Watts,  to  secure  a  sum  of  money,  which 
was  and  still  is  the  proper  debt  of  Watts,  and  that  no  part  whatever 
of  the  said  debt  was  the  proper  debt  of  the  defendant,  and  that 
there  was  no  consideration  for  the  note  as  between  the  plaintiff  and 
defendant. 

Replication  :  that  there  was  a  sufficient  consideration  for  the  making 
of  the  said  note  by  the  defendant. 

Demurrer  and  joinder. 

This  case  was  argued  by  — 

Stephens,  Sergt. ,  in  support  of  the  demurrer.  The  question  as 
raised  in  the  pleadings  is  whether  debt  will  lie  in  this  case.  The  plea 
discloses  facts  which  show  that  there  was  no  consideration  between 
these  parties :  there  was,  therefore,  no  privity  between  them.  The 
contract  was  collateral. 

[Erskine,  J.  On  the  face  of  the  note,  one  maker  is  liable  as  much 
as  the  other.] 

That  may  be  so ;  but  the  plea  discloses  the  real  nature  of  the  trans- 
action. The  defendant  is  not  liable  till  Watts  has  first  made  default ; 
and  therefore,  though  assumpsit  might  be  maintained,  debt  will  not 
lie.  It  was  open  to  the  defendant  to  show  the  effect  and  nature  of  the 
consideration  in  the  plea.  Foster  v.  Jolly ; 2  Clarke  v.  Wilson ;  3  Abbott 
v.  Hendricks.4 

[Maule,  J.  How  can  you  call  the  liability  on  the  note  a  collateral 
liability?] 

Because  the  original  debt  was  due  from  another  party. 

1  3  M.  &  Gr.  810,  s.  c  — Ed.  2  1  Cr.  M.  &  E.  703. 

3  3  Mee.  &  Wels.  208.  *  1  Man.  &  Gr.  791. 


'.90  SISON   V.    KIDMAN.  [CHAP.  I. 

[Maule,  J.  Suppose  the  defendant  had  been  the  sole  maker  of  the 
lote,  could  you  go  into  the  nature  and  origin  of  the  consideration?] 

It  is  shown  that  another  party  was  primarily  liable  upon  it. 

[Tindal,  C.  J.  Suppose  the  action  had  been  assumpsit,  would  it 
have  been  any  defence  to  show  that  the  other  party  had  not  been  sued 
upon  it?     If  not,  it  cannot  be  considered  as  a  mere  guarantee.] 

In  Milton's  Case,1  which  was  cited  and  relied  on  in  the  judgment  in 
Priddy  v.  Henbrey,'2  it  was  decided  that  debt  did  not  lie  by  the  payee 
against  the  acceptor  of  a  bill  of  exchange,  drawn  by  a  third  person,  on 
the  ground  that  he  that  drew  the  bill  continued  the  debtor ;  and  that 
there  was,  therefore,  no  privity  between  the  payee  and  acceptor.  Here 
Watts  continued  the  debtor. 

[Erskine,  J.  But  here  you  have  a  direct  contract  between  the 
plaintiff  and  defendant,  on  the  face  of  the  note.] 

So  there  is  between  the  payee  and  acceptor  of  a  "bill  of  exchange. 

[Tindal,  C.  J.     Not  an  original  contract.] 

In  Randall  v.  Rigby,  lands  were  enfeoffed  to  A.  B.,  to  the  use  that 
the  plaintiff  and  his  heirs  should  receive  and  take  out  of  them  a  yearly 
rent  of  £63,  and  the  defendant  covenanted  with  the  plaintiff  that  A.  B. 
should  pay  the  said  yearly  rent  on  the  days  and  times  agreed  on  ;  and 
it  was  held  that  debt  would  not  lie  by  the  plaintiff  against  the  defend- 
ant for  the  arrears  of  the  rent. 

[Maule,  J.  In  that  case,  the  defendant  was  only  to  pay  in  default 
of  another  party.  I  think  this  case  is  more  like  that  of  Evans  v. 
Jones.3] 

The  case  in  Siderfin,  p.  402,  referred  to  by  Parke,  B.,  in  Randall  v. 
Rigby,  and  also  the  cases  of  Browne  v.  London,4  and  Bishop  v.  Young,5 
are  authorities  in  favor  of  the  objection. 

[Tindal,  C.  J.  When  the  defendant  became  a  party  as  maker  to 
a  promissory  note  in  favor  of  the  plaintiff,  he  entered  into  an  imme- 
diate contract,  which  raised  a  privity  between  the  plaintiff  and  himself, 
or,  in  other  words,  he  took  the  debt  on  himself.  I  see  no  ground 
whatever  for  holding  that  debt  will  not  lie  in  this  case;  and  I  think 
that  a  good  consideration  is  shown,  even  on  the  face  of  the  plea. 

The  rest  of  the  Court  concurring,  Judgment  for  the  plaintiff. 


i  Hard.  485.  2  1  B.  &  C.  675. 

8  5  Mee.  &  Wels.  295.  4  1  Vent.  152. 

*  2  B.  &  P.  78. 


SECT.  II.]  MACDOUGALL    V.    FOYER,  101 


CATHERINE   MACDOUGALL    v.  DAVID    FOYER. 

In  the  Court  of  Session,  Scotland,  February  13,  1810. 

[Reported  in  15  Faculty  Decisions,  57'.).] 

Malcolm  Macfarlane  being  indebted  to  Catherine  Macdougall,  his 
mother,  he  and  John  Mitchell  and  David  Foyer  subscribed  a  bill  in  the 
following  terms  :  — 

Garncaber,  3d  January,  1805. 
£.   1300  Principal. 

65  Interest. 


£.   1365. 


Jointly  and  severally  against  the  term  of  Martinmas  first  to  come, 
at  Messrs.  Carrick  and  Company's  banking-office  in  Glasgow,  pay  to 
me,  Catherine  Macdougall,  widow  of  the  deceased  Donald  Morison, 
or  order,  thirteen  hundred  and  sixty-five  pounds  Sterling,  value  of 

her 

Catherine  X  Macdougall. 

mark. 

To  Messrs.  Macfarlane  in  Carncaber,  and  John  Mitchell  in  Arrochy- 
more,  acceptants. 

(Sigued)  Malcolm  Macfarlane. 

John  Mitchell. 
(Signed)         David  Foyer  in  Blairvocke. 

David  Foyer  as  cautioner  for  them. 

Upon  the  death  of  Malcolm  Macfarlane,  the  pursuer  brought  an 
action  against  his  son  George  and  the  other  acceptors,  concluding  that 
they  should  be  ordained  jointly  and  severally  to  make  payment  of 
the  debt. 

Mitchell  and  Foyer  resisted  payment  of  the  bill.  Mitchell's  case 
was  very  untenable,  and  not  much  insisted  in.  For  Foyer  it  was 
pleaded  that  an  acceptance  of  a  bill  of  exchange  may  be  either  abso- 
lute or  conditional,  partial  or  entire.  Chitty  on  Bills,  pp.  135-139  ; 
Kidd  on  Bills,  pp.  74-78  ;  Douglas,  p.  286.  That  the  bill  was  not 
addressed  to  him  conjunctly  and  severally  with  the  others  :  that  he 
had  written  that  part  of  the  address  himself,  and  had  subscribed  his 
acceptance  expressly  as  cautioner :  that  the  bill  subscribed  with  that 
qualification  had  been  received  by  the  pursuer  without  any  hesitation 
or  difficulty,  though  she  was  quite  entitled  to  have  objected  :  that  she 
must  therefore  be  held  to  have  looked  on  him  as  subsidiarie  liable  : 
and  that  therefore  he  was  entitled  to  the  beneficium  ordinis,  and  had 
a  right  to  insist  on  George  Macfarlane  being  discussed  before  recourse 
could  be  had  upon  him. 

The  pursuer  founded  chiefly  on  the  case  of  Sharpe  against  Harvey, 
24th  June,  1808  ;  and  pleaded  that  the  decision  there  showed  that, 


102  CASEY  V.    BKABASON.  [CHAP.  I. 

quoad  the  creditor,  a  cautionary  obligation  could  not  be  constituted  at 
all  by  a  bill,  otherwise  it  must  have  been  subject  to  the  septennial  pre- 
scription. She  farther  argued  that  the  acceptance  in  this  case  was 
totally  different  from  a  conditional  one  ;  for  there  the  creditor's  right 
depended  upon  an  event  which  might  or  might  not  happen  ;  whereas 
here  there  was  no  doubt  about  the  matter.  It  was  not  conditional,  but 
merely  cautionary,  and  would  of  course  be  of  use  in  settling  questions 
of  relief  among  the  co-obligants,  but  could  have  no  effect  upon  the 
creditor. in  the  bill. 

The  Lord  Ordinary  (25th  November,  1808)  decerned  against  the 
whole  defenders  conjunctly  and  severally. 

After  some  farther  procedure,  the  case  came  before  the  Court  on 
petition  and  answers.  The  judges  were  clearly  of  opinion  that  cau- 
tionary obligations  in  bills  of  exchange  could  have  no  other  effect  than 
that  of  settling  the  question  of  relief,  and  on  that  ground  (23d  Janu- 
ary, 1810)  they  adhered. 

A  reclaiming  petition  was  (23d  February,  1810)  refused  without 
answers.1 


CASEY   v.    BRABASON. 
In  the  Supreme  Court,  New  York,  Special  Term,  April,  1860. 

[Reported  in  10  Abbott's  Practice  Reports,  368.] 

Motion  for  a  new  trial. 

This  action  was  brought  upon  a  promissory  note,  in  the  words  and 
figures  following,  to  wit :  — 

"$200. 

"  On  or  before  two  years,  we  jointly  and  severally  promise  to  pay  to 
Michael  Casey,  or  his  order,  the  sum  of  two  hundred  dollars.     Given 
under  our  hands, 
"  January  8,  1856. 

(Signed)         "Bernard  McCabe, 

' '  Catholic  .Pastor. 
"  Charles  J.  Brabason." 

The  defendant  alleged  in  his  answer  that  he  signed  the  note  as 
surety,  and  without  consideration. 

1  "  With  the  nature  of  a  bill,  a  cautionary  obligation  is  altogether  incompatible  ; 
and  in  a  question  with  the  drawer  or  creditor,  there  can  be  no  cautioner.  A  party- 
subscribing  incurs  a  joint  and  several  obligation,  and  is  not  entitled  to  the  benefit  of 
discussion.  The  law,  therefore,  by  which  cautionary  obligations  are  governed,  totally 
fails  in  its  application  to  such  a  case  ;  neither  is  any  injustice  committed  against  the 
acceptor,  because  every  one  voluntarily  subscribing  either  a  bill  or  any  other  obliga- 
tion, is  presumed  to  know  the  legal  consequences  of  the  obligation  which  he  ha& 
undertaken."  By  the  Court  in  Sharp  v.  Henry,  2  Mor.  Diet.  Dec.  Bill  of  Exchange, 
Appendix,  No.  22. — Ed. 


SECT.  II.]  CASEY  V.    BRABASON.  103 

The  proof  showed  that  the  note  was  given  for  a  debt  of  McCabe's, 
and  that  the  defendant  signed  it  as  his  surety,  without  receiving  any 
consideration  therefor. 

The  defendant  insisted  that  he  was  not  liable ;  but  the  judge  held 
otherwise,  and  directed  the  jury  to  find  for  the  plaintiff",  to  which 
decision  and  direction  the  defendant  excepted.  The  jury  rendered  a 
verdict  in  favor  of  the  plaintiff  for  $229.10. 

The  action  was  tried  at  the  Chenango  Circuit  in  February,  1860. 

Defendant  moved  for  a  new  trial  on  a  case  and  exceptions. 

The  other  points  in  the  case  need  not  be  stated,  as  they  were  not 
deemed  of  sufficient  importance  for  examination. 

William  H.  Hyde,  for  plaintiff. 

Horace  Packer,  for  defendant. 

Balcom,  J.  The  instrument  in  question  is  a  valid  promissory  note  ; 
although  it  does  not  contain  the  words  "for  value  received,"  or  any 
words  tantamount  to  them.  Edwards  on  Bills  and  Promissory  Notes, 
50,  78;   1  Cow.  2d  ed.  1G3. 

The  defendant's  counsel  does  not  deny  but  that  McCabe  was  liable 
on  the  note ;  but  he  contends  that  the  defendant  is  not  liable  on  it, 
because  he  signed  it  as  surety,  and  did  not  receive  any  consideration 
therefor.  He  insists  that  the  Statute  of  Frauds  applies  to  the  case, 
and  exempts  the  defendant  from  the  payment  of  the  note.  The  statute 
is  that  "  every  special  promise  to  answer  for  the  debt,  default,  or  mis- 
carriage of  another"  shall  be  void,  unless  the  agreement  containing 
such  promise,  or  some  note  or  memorandum  thereof  expressing  the 
consideration,  be  in  writing  and  subscribed  by  the  party  to  be  charged 
therewith.     2  Rev.  Stat.  135,  §  2. 

McCabe  owed  the  plaintiff  the  money  mentioned  in  the  note ;  and 
the  defendant,  though  in  fact  a  mere  surety,  signed  the  note  as  princi- 
pal, with  McCabe.  The  note,  therefore,  was  not  a  special  promise 
by  the  defendant  to  answer  for  the  debt,  default,  or  miscarriage  of 
McCabe. 

I  think  the  debt,  for  which  the  note  was  given,  a  sufficient  consid- 
eration to  uphold  the  note  against  the  defendant  as  well  as  McCabe. 
The  note,  on  its  face,  is  an  original  undertaking  of  both  of  them. 

If  the  defendant  had  indorsed  the  note  for  the  accommodation  of 
McCabe,  instead  of  signing  it  as  maker,  he  would  clearly  have  been 
liable  on  it,  if  it  had  been  duly  protested  for  non-payment ; 1  and  I  am 
unable  to  see  why  he  is  not  liable  on  it  as  maker. 

1  Steele  v.  McKinlay,  5  App  Cas.  754,  770  (semb/e)  ;  Macdonald  v.  Union  Bank, 
Court  Sess.  Cas.  3d  Series,  vol.  2,  p.  963 ;  Spann  v.  Baltzell,  1  Fla.  301  ;  Turnbull  v. 
Trout,  1  Hall,  336  ;  Zellweger  v.  Caffe,  5  Duer,  87  ;  Nelson  v.  Richardson,  4  Sneed, 
307,  Accord. 

Crooks  v.  Tully,  50  Cal.  264,  Contra. 

If  an  indorser,  knowing  that  he  is  discharged  by  the  holder's  failure  to  make  due 
presentment  or  give  due  notice  of  dishonor,  promises  orally  to  pay  the  bill  or  note,  his 
promise  is  not  within  the  Statute  of  Frauds,  being  regarded  not  as  a  contract,  but  as 
a  renunciation  of  a  defence.     See  Uhler  v.  Farmers'  Bank,  64  Pa.  406,  and  1  Ames, 


10-4  MANLEY   V.    GEAGAN.  [CHAP.  I. 

I  am  of  the  opinion  that  the  Statute  of  Frauds  does  not  apply  to  the 
case,  and  that  the  jury  were  properly  directed  to  find  a  verdict  in  favor 
of  the  plaintiff  for  the  amount  of  the  note. 

The  point  that  the  defendant  supposed  he  was  only  signing  his  name 
to  the  note  as  a  witness  when  he  wrote  it  is  untenable ;  for  his  answer 
concedes  he  signed  it  as  surety. 

I  think  there  was  no  question  for  the  jury  upon  the  evidence;  and 
that  the  defendant's  motion  for  a  new  trial  should  be  denied,  with 
costs. 1 


M.    R.    P.   MANLEY,   Administratrix,   v.    N.    T.    GEAGAN 

In  the  Supreme  Judicial  Court,  Massachusetts,  October 

Term,   1870. 

[Reported  in  105  Massachusetts  Reports,  445.] 

Contract  by  the  administratrix  of  Edwin  Manley  upon  an  oral 
promise  to  pay  the  following  order:  "Fall  River,  October  9,  1868. 
Nicholas  T.  Geagan,  Sir :  Please  pay  to  Edwin  Manley  thirteen 
hundred  and  fifty-four  dollars  for  work  on  your  house,  corner  of 
Bedford  and  Twelfth  Streets,   and   charge   the    same  to  account  of 

"H.  B.  Borden  &  Co." 

The  answer  denied  all  the  plaintiff's  allegations,  and  pleaded  want 
of  consideration,  and  the  Statute  of  Frauds. 

The  trial  was  in  the  Superior  Court,  without  a  jury,  before  Pitman,  J., 
who  made  the  following  report  of  the  case  for  the  determination  of 
this  Court :  — 

"The  plaintiff  proved  that  her  intestate,  in  whose  favor  the  ordei 
was  drawn,  did  work  as  a  stone-mason  on  a  block  of  buildings  belong- 
ing to  the  defendant,  and  which  he  was  then  erecting,  prior  to  the 
time  of  drawing  this  order.  It  appeared  that  the  whole  contract  was 
taken  by  H.  B.  Borden  &  Co.,  who  employed  the  plaintiff's  intestate  to 
do  the  mason-work,  and  that  there  was  no  contract  between  the  plaintiff's 
intestate  and  the  defendant,  and  no  employment  by  the  defendant ; 
that  after  the  work  was  done  the  defendant  sent  word  to  the  plaintiff's 
intestate  to  get  an  order  from  Borden  &  Co.  on  him  ;  adding,  '  I  am 
going  to  pay  all  off  on  the  10th,  and  am  not  going  to  trust  Borden  & 
Co.  to  pay  it ;  I  am  going  to  see  the  help  all  paid ; '  and  that  this  was 

Cases  on  Bills  and  Notes,  506.  But  see  contra,  Peabody  v.  Harvey,  4  Conn.  119,  and 
Huntington  v.  Harvey,  4  Conn.  724.  By  statute,  in  some  jurisdictions,  the  waiver 
must  be  in  writing.     Thomas  v.  Mayo,  56  Me.  40.  —  Ed. 

1  Davidson  v.  Rothschild,  49  Ala.  104;  Lehman  v.  Levy,  69  Ala.  48;  McGill  v. 
Dowdle,  33  Ark.  311  ;  Nichols  Co.  v.  Dedrick  (Minn.  1895),  63  N.  W.  R.  1110;  Freeh 
v.  Yauger,  47  N.  J.  157 ;  Paul  v.  Stackhouse,  38  Pa.  302,  Accord.  — Ed. 


SECT.  II.]  MANLEY    V.    GEAGAN.  105 

communicated  to  the  intestate ;  that  the  next  clay  he  procured  the 
order  in  suit  and  presented  it  to  the  defendant ;  that  the  defendant 
took  it,  read  it,  said  it  was  all  right,  and  that  he  would  accept  it,  and 
pay  it  on  Monday  ;  that  on  Monday  he  could  not  be  found,  was  gone 
out  of  town  for  a  week,  and  has  since  refused  to  pay  it.  The  defend- 
ant, who  was  called  as  a  witness  by  the  plaintiff,  testified  that  he  owed 
H.  B.  Borden  &  Co.  nothing  at  the  time  when  this  order  was  presented ; 
and  I  find  as  a  fact  that  it  is  not  proved  that  he  actually  did  owe  them 
anything.     The  defendant  offered  no  evidence. 

"  Upon  the  above,  the  Court  ruled  that  the  promise  of  the  defendant, 
being  an  oral  promise  to  pay  the  debt  of  another,  and  being  also  with- 
out any  consideration,  no  action  could  be  maintained  on  it,  and  there- 
upon found  for  the  defendant.  If  this  ruling  is  wrong,  a  new  trial  is 
to  be  had;  otherwise,  judgment  on  the  verdict." 

J.  C.  Blaisclell,  for  the  plaintiff. 

J.  M.  Morton.,  Jr.,  for  the  defendant.1 

Gray,  J.  The  promise  of  the  defendant  was  to  pay  for  work 
already  done  by  the  intestate  for  Borden  &  Company,  without  any 
previous  contract  with  or  employment  by  the  defendant.  The  defend- 
ant owed  Borden  &  Company  nothing,  and  received  no  consideration, 
either  from  Boi'den  &  Company  or  from  the  intestate  for  his  promise. 
The  intestate  neither  did  any  work  nor  paid  any  money  upon  the  faith 
of  this  promise,  nor  gave  up  any  right  or  security  against  Borden  & 
Company.  Their  original  liability  to  him  was  not  altered  or  affected 
by  the  defendant's  promise.  This  promise  was  therefore  clearly  a 
promise  to  answer  for  the  debt  of  another,  and,  not  being  in  writing, 
was  within  the  Statute  of  Frauds.  Gen.  Sts.  c.  105,  §  1,  el.  2  ;  Stone 
v.  Symmes;2  Curtis  v.  Brown;3  Furbish  v.  Goodnow  ;  Browne  on 
St.  of  Frauds,  §§  172-174. 

Judgment  on  the  verdict  for  the  defendant} 

1  The  arguments  of  counsel  are  omitted.  — Ed. 

2  18  Pick.  467.  3  5  Cush.  488. 

4  Morse  v.  Massachusetts  Bank,  Holmes  C.  C.  209,  214  (semble) ;  Walton  v.  Mande 
ville,  56  Iowa,  597,  Accord. 


106  JARVIS    V.    WILSON.  [CHAP.  1 


JOSEPH  JARVIS  v.  ALLYN  M.  WILSON. 
In  the  Supreme  Court  of  Errors,  Connecticut,  May,  1878. 

[Reported  in  46  Connecticut  Rejiorts,  90.] 

Loomis,  J.1  On  the  8th  of  July,  1874,  one  William  Murphy  owed 
the  plaintiff  $189.20,  and  drew  his  order  on  the  defendant  in  favor  of 
the  plaintiff  in  writing  as  follows  :  — 

"  Mr.  A.  M.  Wilson.  Please  pay  Joseph  Jarvis  one  hundred  and 
eighty-nine  dollars  and  twenty  cents,  and  charge  the  same  to  me. 

"William  Murphy." 

Murphy,  who  was  then  and  had  been  for  some  time  in  the  employ  of 
the  defendant,  had  been  authorized  by  the  latter  to  draw  orders  in 
favor  of  his  workmen,  of  whom  the  defendant  knew  the  plaintiff  to 
be  one. 

The  above  order  was  duly  presented  for  acceptance  to  the  defendant 
on  the  same  day  that  it  was  given,  and  the  defendant  said  it  was  good, 
and  verbally  promised  to  pay  it.  It  afterwards  appeared  that  there 
was  in  fact  due  from  the  defendant  to  the  drawer  only  $144.94,  and 
thereupon  the  defendant  refused  to  pay  the  plaintiff  as  he  had  before 
agreed.  The  Court  below  upon  these  facts  held  the  defendant  liable 
for  the  full  amount  of  the  order.  We  think  the  judgment  must  stand 
against  all  the  objections  urged  iu  behalf  of  the  defendant. 

The  Statute  of  Frauds  does  not  apply  to  such  an  undertaking.  One 
reason  may  be  that  the  acceptor  is  regarded  as  the  primary  debtor,  and 
his  acceptance  is  an  undertaking  not  merely  to  pay  a  debt  due  from 
the  drawer  to  the  payee,   but  to  pay  his  own  debt  to  the  drawer. 

But  in  this  case  the  defendant  relies  on  the  fact  that  when  he 
accepted  the  bill  he  had  not  in  his  hands  sufficient  funds  of  the  drawer 
to  pay  the  amount  required,  and  contends  that  the  acceptance  should 
therefore  either  be  considered  within  the  statute,  or  should  be  held  void 
for  want  of  consideration.  This  objection  ignores  the  fundamental  prin- 
ciple that  the  acceptance  admits  everything  essential  to  the  validity  of 
the  bill,  and  that  want  or  failure  of  consideration  cannot  be  shown  in  a 
suit  by  the  payee  against  the  acceptor.  The  presumption  is  that  every 
bill  of  exchange  is  drawn  on  account  of  some  indebtedness  from  the 
drawee  to  the  drawer,  and  that  the  acceptance  is  an  appropriation  of 
the  funds  of  the  latter  in  the  hands  of  the  former.  The  rule  of  law 
is  not  unjust  that  prevents  the  acceptor  from  showing  as  a  defence 
against  a  suit  by  the  payee  a  want  of  funds  of  the  drawer  in  his  hands, 
for  it  was  his  duty  to  ascertain  before  he  accepted  the  bill  whether  he 

1  Everything  is  omitted  except  the  opinion  of  the  Court  relating  to  the  Statute  of 
Frauds.  The  Court  decided  that  the  instrument  in  question  was  a  bill  of  exchange, 
and  that  an  oral  acceptance  was  valid.  —  Ed. 


SECT.  II.  S  JARVIS   V.    WILSON.  307 

owed  the  drawer  that  amount.  This  was  exclusively  within  his  knowl- 
edge ;  but  the  plaintiff  had  no  means  of  knowing  how  the  fact  was, 
and  he  had  a  right  to  assume  that  the  defendant  would  not  accept  the 
bill  unless  he  had  funds  of  the  drawer  sufficient  to  make  good  the 
acceptance.  Fisher  v.  Beckwith  ;  1  Arnold  v.  Sprague  ;  J  United  States 
v.  Bank  of  Metropolis ; 3  Grant  v.  Ellicott ; 4  Hoffman  v.  Bank  of  Mil- 
waukee ; 5  Parsons  on  Notes  and  Bills,  323 ;  1  Daniels  on  Negotiable 
Instruments,  135. 

There  is  no  error  in  the  judgment  complained  of. 

In  this  opinion  the  other  judges  concurred.6 

i   19  Vt.  31.  2  34  Id.  402.  3  15  Pet.  377. 

4  7  Wend.  227.  6  12  Wall.  181. 

6  Wynne  v.  Raikes,  5  East,  174;  Laflin  Co.  v.  Sinsheimer,  48  Md.  411  (in  which 
cases  the  accommodation  acceptance  was  in  writing,  but  in  an  extrinsic  document) ; 
Latlin  v.  Sinsheimer,  48  Md.  411  ;  O'Donuell  v.  Smith,  2  E.  D.  Smith,  124  (in  which 
?ases  the  accommodation  acceptance  was  written  on  the  bill),  Accord. 

But  see  contra  to  the  last  two  cases  cited,  Dunbar  v.  Smith,  66  Ala.  490. 

An  oral  acceptance  for  value,  it  is  everywhere  agreed,  is  not  affected  by  the  section 
of  the  Statute  of  Frauds  relating  to  guaranties.  Shields  v.  Middleton,  2  Cranch,  C.  C. 
205  ;  Espalla  v.  Wrilson,  86  Ala.  487  ;  Nelson  v.  First  Bank,  48  111.  36 ;  Louisville  Co. 
v.  Coldwell,  98  Ind.  245;  Spurgeon  v.  Swain  (Indiana,  C.  A.,  1895),  41  N.  E.  R.  397; 
McCutchen  v.  Rice,  56  Miss.  455;  Lavell  v.  Frost  (Montana,  1895),  40  Pac.  R.  146; 
Leonard  v.  Mason,  1  Wend.  522  ;  Spaulding  v.  Andrews,  48  Pa.  411  ;  Dull  v.  Bricker, 
76  Pa.  255;  Strohecker  v.  Cohen,  1  Speers,  349  (semble) ;  Neumann  v.  Shroeder,  71 
Tex.  81  ;  Fisher  v.  Beckwith,  19  Vt.  31  ;  In  re  Goddard,  66  Vt.  415. 

In  jurisdictions  where  by  statute  the  acceptance  of  a  bill  must  he  in  writing,  a 
drawer  who,  on  presentment,  promises  the  holder  to  pay  the  bill  incurs  no  liability 
whatever.  He  is  not  liable  as  acceptor  for  want  of  a  writing,  nor  as  a  simple  contract 
promisor  for  want  of  a  consideration  for  the  promise.  Anderson  v.  Jones,  102  Ala. 
437;  Pfaff  v.  Cummings,  67  Mich.  143;  Overman  v.  Hoboken  Bank,  30  N.J.  61; 
Weinhauer  c.  Morrison,  49  Hun,  498. 

A  recognizance  is  not  within  the  Statute  of  Frauds  relating  to  guaranties.  Gay  v. 
State,  7  Kas.  394. 

Aval  or  Anomalous  Indorsement.  If  one  who  is  not  the  holder  writes  his 
name  on  the  back  of  a  bill  or  note,  his  true  liability  by  the  custom  of  merchants  is  that 
of  an  aval,  and  should  not  be  affected  by  the  Statute  of  Frauds,  any  more  than  the 
signature  of  any  other  party  to  a  bill  or  note.  But,  unfortunately,  the  courts  have 
not  given  effect  to  this  custom,  some  treating  such  a  party  as  a  co-maker,  others  as  a 
second  indorser,  and  others  as  a  guarantor.  Where  he  is  regarded  as  a  co-maker  or 
iudorser,  the  Statute  of  Frauds  is  held  to  be  inapplicable.  Drake  v.  Markle,  21  Ind. 
433  ;  Kealing  v.  Van  Sickle,  74  Ind.  529  ;  Chaddock  v.  Vanness,  35  N.  J.  517.  Where 
he  is  regarded  as  a  guarantor,  the  authorities  are  divided.  The  guaranty  is  not  within 
the  Statute  of  Frauds  according  to  Beckwith  v.  Angell,  6  Conn.  315;  Stowell  v.  Ray- 
mond, 83  111.  120;  Peterson  ».  Russell  (Minn.,  1895),  64  N.  W.  R.  555.  A  contrary 
view  was  taken  in  Drake  v.  Markle,  21  Ind.  433  (semble) ;  Culbertson  v.  Smith,  52 
Md.  628;  Hayden  v.  Weldon,  43  N.  J.  128;  Shafer  v.  Farmers,  59  Pa.  144;  Hauber 
v.  Patterson,  84  Pa.  274;  Allwine  v.  Garberich,  2  Pears.  28;  Temple  v.  Baker,  125 
Pa.  634.  —  Ed. 


-V-^*   ?     ■•«<■*■    i    u> 


J 08  KIMBALL    y.    NEWELL.  [CHAP.  IL 


CHAPTER   II. 


SURETY'S  DEFENCES   AGAINST  THE  CREDITOR. 


i— »— r 


^t/ 


)   £_     •  SECTION   I.  £7 


Defences  based  on  the  Absence  of  any  Liability  of  the  Principal 

Debtor  to  the  Creditor. 

'C*  f  •  KIMBALL   v.    NEWELL. 

In  the  Supreme  Court,  New  York,  January,  1845. 

[Reported  in  7  Hill,  116.] 

On  error  from  the  Superior  Court  of  the  city  of  New  York.  Newell 
brought  an  action  of  covenant  against  Kimball  in  the  marine  court  of 
the  city  of  New  York,  claiming  to  recover  certain  rent  due  on  a  lease 
to  one  Theodosia  Knowlton,  for  whom  the  defendant  had  become  surety. 
On  the  trial,  the  plaintiff  gave  in  evidence  the  following  instruments  : 

"  This  is  to  certif}T  that  I  have  hired  and  taken  from  Daniel  Newell 
the  house  in  Nassau-street,  &c,  for  one  year,  to  commence  on  the  first 
day  of  Ma)-  next,  at  the  yearly  rent  of  four  hundred  and  fifty  dollars, 
payable  quarterly.  And  I  do  hereby  promise  to  make  punctual  pay- 
ment of  the  rent,  in  manner  aforesaid,  and  quit  and  surrender  the 
premises,  at  the  expiration  of  the  term,  in  as  good  state  and  condition 
as  reasonable  use  and  wear  thereof  will  permit,  damages  by  the  ele- 
ments excepted.  Given  under  my  hand  and  seal  the  3d  day  of 
March,  1840.  Mrs.  T.  Knowlton.  [l.  s.] 

"  In  consideration  of  the  letting  of  the  premises  above  described, 
and  for  the  sum  of  one  dollar,  I  hereb}'  become  surety  for  the  punctual 
payment  of  the  rent,  and  performance  of  the  covenants,  in  the  above 
written  agreement  mentioned,  to  be  paid  and  performed  by  Mrs. 
Theodosia  Knowlton,  and  if  an}*  default  should  be  made  therein,  I 
do  hereby  promise  and  agree  to  pay  unto  the  said  Daniel  Newell  such 
sum  or  sums  of  money  as  will  be  sufficient  to  make  up  such  deficiency, 
and  fully  satisfy  the  conditions  of  the  said  agreement,  without  requir- 
ing any  notice  of  non-payment,  or  proof  of  demand  being  made.  Given 
under  my  hand  and  seal  the  3d  day  of  March,  1840. 

"M.  T.  C.  Kimball,  [l.  s.J" 


SECT.  I.] 


KIMBALL    V.    NEWELL. 


109 


It  appeared  that  Mrs.  Knowlton  occupied  under  the  lease,  and  that 
a  balance  of  rent,  amounting  to  $31.94,  remained  due  the  plaintiff.  ^It. 
further  appeared  that  Mrs.  Knowlton  was  a  married  woman  at  the  time 
the  lease  was  executed  ;  and  the  defendant  contended  that,  inasnTuch 
as  her  covenant  was  void  D}'  reason  of  coverture,  his  was  also'void. 
The  Marine  Uourt  held  otherwise,  however,  and  rendered  judgment  in 
favor  of  the  plaintiff,  which  was  afterwards  affirmed  by  the  Superior 
Court  on  certiorari,  and  the  defendant  brought  error. 

II.  H.  Shannon,  for  the  plaintiff  in  error. 

Howard  &  Onderdonk,  for  the  defendant  in  error. 

Nelson,  C.  J.  The  defendant  having  consented  to  become  bound 
as  surety  for  the  rent  of  the  premises  leased  to  Mrs.  Knowlton,  it  is  but 
reasonable  to  presume  that,  if  he  was  not  well  acquainted  with  her 
situation  before,  he  then  made  some  inquiries  into  her  circumstances 
and  condition,  and  thus  became  fully  possessed  of  the  facts  which  he 
now  sets  up  as  a  ground  of  discharge. 

But  conceding  that  the  defendant  had  no  knowledge  of  the  social 
condition  of  Mrs.  Knowlton,  and  that  he  supposed  she  would  be  legally 
holden  for  the  rent  as  it  accrued,  I  am  still  of  the  opinion  that  he  is 
liable  on  his  contract.  The  doctrine  for  which  his  counsel  contends  is 
thus  stated  by  Theobald:  "  The  obligation  of  the  suret}-  being  acces- 
sory to  the  obligation  of  some  person  who  is  the  principal  debtor,  it  is 
of  its  essence  that  there  should  be  a  valid  obligation  of  a  principal 
debtor.  The  nullity  of  the  principal  obligation  necessarily  induces  the 
nullity  of  the  accessory."  Theob.  Prin.  &  Sur.  2.  This  is  undoubtedly 
correct  as  a  general  rule ;  but  it  has  its  exceptions,  and  the  case  before 
us  is  one  of  them. 

Mr.  Chitty  says  :  "  The  rule  that  a  party  cannot  be  liable  upon  a  con- 
tract of  guarant}T,  unless  the  principal  has  incurred  a  legal  responsibilitj', 
is  true,  in  some  instances,  in  form  or  words,  rather  than  in  substance.'* 
Chitty  on  C'ontr.  499.  He  adds:  "In  the  case  of  a  guaranty  to  an- 
swer for  the  price  of  goods  to  be  supplied  to  a  married  woman,  or 
goods  (not  necessaries)  to  be  sold  to  an  infant,  or  other  persons  in- 
competent to  contract,  no  doubt  the  party  guaranteeing,  though  profes- 
sedly contracting  only  in  the  character  of  surety,  would  be  responsible. 'T 
Id.  He  refers  to  the  case  of  Maggs  v.  Ames,1  which  was  an  action 
against  the  defendant  as  surety  for  a  married  woman.  There  the  ques- 
tion was  whether  the  undertaking  of  the  defendant  was  an  original 
one,  so  as  not  to  require  it  to  be  in  writing.  The  Court  held  that  it 
was  collateral,  and  therefore  should  have  been  in  writing.  But  neither 
the  counsel  nor  Court  supposed  that  the  defendant  would  not  have  been 
bound,  if  the  contract  had  been  in  writing.  On  the  contrary,  that  was 
assumed.  In  the  case  of  White  v.  Cuyler,'2  it  was  impliedly  at  least 
conceded  by  Lord  Kenyon,  that  a  guarantor  or  surety  for  a,  feme  covert 
would  be  liable  on  his  contract.     See  also  Chitty  on  Contr.  515  ;  Pit- 


1  4  Bing.  470. 


■'■  6  T.  R.  176. 


110  KIMBALL    V.    NEWELL.  [CHAP.  II. 

man  on  Prin.  &  Suret}',  13  ;    Buekrnyr  v.  Darnall ;    Harris  v.  Hunch- 
back ; J  Chapin  v.  Lapham.2 
<~s  The  doctrine  of  the  civil  law  is  very  clear  and  satisfactory  on  this 

brfjP  ^SLw^subject.     It  is  as  follows:   "  Although   the  obligation  of  a  surety  be 
only  an  accessory  to  that  of  the  principal  debtor,  yet  he  who  has  bound 
^/   *>*"^Jiiinself  suret}"  for  a  person  who    may  get  himself  relieved  from   his 
/y  obligation,  such  as  a   min\>r,  or  a   prodigal  who  is  interdicted,  is   not 

^t*^^—'  discharged  from  his  suretyship  by  the  restitution  of  the  principal 
debtor :  and  the  obligation  subsists  in  his  person  ;  unless  the  resti- 
tution were  grounded  upon  some  fraud,  or  other  vice  which  would  have 
the  effect  to  annul  the  right  of  the  creditor."  Dom.  B.  3,  tit.  4,  §  1, 
art.  10,  Strahan's  ed.  Again  :  "  If  the  principal  obligation  was  an- 
nulled only  because  of  some  personal  exception  which  the  principal 
debtor  had,  as  if  it  was  a  minor,  who,  in  consideration  of  his  being 
under  age,  got  himself  relieved  from  an  engagement  by  which  he  suf- 
fered some  prejudice,  and  that  there  had  been  no  fraud  on  the  creditor's 
part ;  the  restitution  of  the  minor  would  have  indeed  this  effect,  that 
it  would  annul  his  obligation  to  the  creditor,  and  his  engagement  to 
save  harmless  his  suret}',  if  he  desired  to  be  relieved  from  it.  But 
the  said  restitution  of  the  minor  would  not  in  the  least  invalidate  the 
surety's  obligation  to  the  creditor.  For  it  was  only  to  make  good  the 
obligation  of  the  minor,  in  case  he  should  be  relieved  from  it  on  ac- 
count of  his  age,  that  the  creditor  took  the  additional  security  of  a 
surety."  Id.,  B.  3,  tit.  4,  §  5,  art.  2  ;  and  see  1  Ev.  Poth.  On  Obi.  237. 
I  am  satisfied  that  the  decision  of  the  Court  below  was  right,  and 
that  the  judgment  should  be  affirmed. 

Beardsley,  J.  I  think  the  defendant  was  estopped  from  denying 
the  competency  of  Mrs.  Knowlton  to  bind  herself  by  the  covenant  she 
assumed  to  execute.  The  defendant  by  his  covenant  admits  she  was 
thus  bound,  and  he  shall  not  be  allowed  to  gainsa}-  it  by  alleging  her 
incapacit}'  to  make  a  legal  contract.  Had  she  been  induced  to  enter 
into  this  engagement  l\y  fraud  or  imposition,  or  upon  a  usurious  con- 
sideration, the  case  might  have  been  otherwise;  but  the  defendant, 
although  a  surety,  cannot  be  permitted,  on  the  ground  now  set  up,  to 
deny  the  legal  existence  of  a  covenant  which  is  explicitly  conceded  by 
his  own  deed.  Co.  Litt.  352  a,  note  306  ;  1  Stark.  Ev.  302,  Am.  ed. 
of  1830  ;    Greenl.  Ev.  §§  22  to  26,  and  the  notes. 

The  judgment  of  the  Court  below  is  right,  and  should  be  affirmed. 

J 1 1 dgn lent  affirm i ed. 3 

i    1  Burr.  373.  2  20  Pick.  467. 

3  Nabbr.  Kountz,  17  Md.  283  ;  Weare  v.  Sawyer,  44  N.  H.  198,  205  (semble),  Accord. 

If  a  joint  covenant,  or  promissory  note,  is  given  by  a  married  woman  as  principal 
and  anoTFTer  as  surety,  the  coverture  of  the  principal,  althougha  defence  to  her,  IS  no 
d*eieuce  t6  the  Surety.  'Stillwell  v.  B'ertrand,  22  Al-k.  375  ;  Davis  v.  Statts,  43lflU  103  ; 
Jones  v.  urostliwaiie,  17  Iowa,  393;  Allen  v.  Barryhill,  27  Iowa,  534,  539;  Adams  v 
Curry,  15  La.  An.  485  ;  Yale  v.  Wheelock,  109  Mass.  502  ;  Winn  v.  Sanford,  145  Mass. 
302,  148  Mass.  39  ;  Browning  r.  Carson,  163  Mass.  261  ;  Whitworth  v.  Carter,  43  Miss. 
61 :  Foxworth  v.  Bullock,  44  Miss.  457  ;   Wild  Co.  v.  Maxwell,  63  Mo.  486;  Lobaugh 


SECTULl     *\  BitKER  «L  KENNETT.  Ill  ^ 

L.  D.  BAKER,  Respondent,  v.  P.  G.  KENNETT,  Appelant.     &J} -^Z- 
In  the  Supreme  Court,  Missouri,  October  Term,  1873. 

[Reported  in  54  Missouri  Reports,  82.]  s^y*~^\H  ' s^^i 

Wagner,  Judge,  delivered  the  opinion  of  the  Court.1 

This  was  an  action  on  a  promissory  note  executed  by  the  defendant 
on  the  1st  day  of  May,  1872,  in  favor  of  the  plaintiff  for  the  sum  of 
eight  thousand  dollars. 

The  record  discloses  these  facts  :  That  at  the  time  the  note  was 
made  and  executed,  the  plaintiff  was  the  owner  of  a  tract  of  land  in 
Jefferson  County,  and  that  the  defendant,  Press.  G.  Kennett,  then  a 
minor  under  the  age  of  twenty-one,  was  desirous  of  purchasing  the 
same.  The  parties  finally  came  to  an  agreement,  and  the  price  was 
fixed  at  eight  thousand  dollars,  plaintiff  making  to  the  defendant, 
Kennett,  a  deed  for  premises,  and  he  executing  the  note  sued  on,  due 
and  payable  seven  months  after  date,  with  ten  per  cent  interest  fi*om'""'^L-25jk 
the  date  thereof,  with  his  mother  and  sister  signing  the  note  as  his 
sureties.     The  evidence  clearly  shows  that  the  land  was  not  worth  the       ^^      p 

sum  agreed  to  be  paid  for  it.     Kennett  took  possession  of  the  same,      "     

making  considerable  improvements  thereon,  and  on  the  15th  day  of  /  /  p~ 
Sept.  1872,  whilst  he  was  still  an  infant,  he  went  to  the  plaintiff  and 
demanded  back  his  note,  offering  to  re-convey  the  land,  and  pay  the 
interest  due  on  the  note.  Shortly  after  his  majority,  he  offered  to 
pay  two  thousand  dollars,  and  re-convey  the  property  to  plaintiff,  and 
give  him  the  improvements  that  he  had  put  upon  the  premises,  but  this 
offer  was  refused. 

On  Nov.  10th,  1872,  Kennett  attained  his  majority,  and  he  aban- 
doned the  premises,  leaving  a  man  there  to  take  care  of  them,  saying 
that  there  would  be  a  lawsuit  about  them,  and  that  the  tenant  should 
keep  them  for  whoever  became  ultimately  entitled  to  them.'2 

But  it  is  contended,  that  although  the  infant  may  not  be  bound,  tne 
sureties  are  nevertheless  liable. 

As  a  general  proposition  it  is  undoubtedly  correct,  that  infancy  does  I    , 

not  protect  the  inclorsers  or  sureties  of  an  infant,  or  those  who  have  ( 

v.  Thompson,  74  Mo.  600 ;  Weare  v.  Sawyer,  44  N.  H.  198,  205  ;  Wagoner  v.  Watts, 
44  N.  J.  126-  Erwin  v:  Down,  15  N.  Y.  576;  Davis  v.  Commissioners,  72  N.  Ca.  441, 
444,  74  N.  Ca.  374,  375  ;  Shallcross  v.  Smith,  81  Pa.  132  ;  Wiggin's  App.  100  Pa.  155; 
Smyley  v.  Head,  2  Rich.  590 ;  Hicks  v.  Randolph,  3  Baxt.  352 ;  St.  Albans  Bank  v. 
Dillon,  30  Vt.  122. 

In  a  few  of  the  cases  just  cited  the  coverture  was  known  to  the  surety  co-promisor,  I 
but  in  the  majority  of  them  the  report  discloses  nothing  as  to  the  surety's  knowledge.  / 
—  Ed. 

1  Everything  is  omitted  except  the  opinion  of  the  Court  relating  to  suretyship.  — 
Ed. 

-  The  Court  decided  that  Kennett,  having  effectually  disaffirmed  the  contract,  was 
Dot  liable.  —  Ed. 


112  LEE    V.    YANDELL.  [CHAF.  IL 

jointly  entered  into  his  voidable  undertakings.1  But  the  cases  in 
which  this  principle  has  been  decided  are  clearly  distinguishable  from 
the  present  one.  Here  the  undertaking  of  the  sureties  goes  to  the 
whole  consideration. 

Story  says,  "  that  a  subsequent  failure  of  consideration  is  equally 
fatal  with  an  original  want  of  consideration,  and  if  a  bill  is  given 
as  an  indemnity,  it  is  a  sufficient  answer  to  it  that  the  party  has  not 
been  damnified  at  all,  or  that  the  original  claim  has  been  extinguished." 
Story,  Bills,  §  184. 

By  the  disaffirmance  of  the  contract  the  plaintiff  gets  back  his  land, 
and  the  consideration  which  upheld  the  contract  is  extinguished. 

It  would  be  a  strange  doctrine  which  would  give  him  back  his  land, 
and  allow  him  to  recover  from  the  sureties  the  purchase-money  also. 

The  rule  quoted  does  not  apply  to  this  case.  The  plaintiff  con- 
tracted with  an  infant,  knowing  him  to  be  an  infant  at  the  time,  and 
after  a  rescission  of  the  contract  he  obtains  back  again  what  he  sold. 
This  the  law  gives  him,  but  it  does  not  give  him  the  property  and  the 
\  consideration  both.2 

My  opinion  is  that  the  judgment  should  be  reversed.  The  other 
judges  concur,  except  Judge  Napton,  who  did  not  sit. 

J~J2f.    Jrt)    77  **       D.   N.  LEE  v'.Z.  N.  YANDELL. 

(J    y  In  the  Supreme  Court,  November  1,   1887. 

fl£*JC^*1  [Reported  in  69  Texas  Reports,  34.] 

.  /?  t  This  suit  was  brought  by  appellant  against  Yandell,  appellee,  and 

«- —  W.  A.  Gray  and  A.  M.  Waldrup,  on  a  promissory  note,  joint  and  sev- 

eral upon  its  face,  but  which  it  was  alleged  in  the  answer  that  Gray  and 
Waldrup  signed  as  sureties.  The  answer  alleged  that  Yandell  was  non 
compos  mentis  when  the  note  was  made,  and  that  there  was  no  consid- 
eration therefor.3 

Maltbie,  J.  The  third  charge  is  as  follows  :  "If  you  find  from  the 
evidence  that  the  defendant  Yandell,  at  the  time  he  signed  the  note 
sued  on,  was  of  unsound  mind  to  such  an  extent  as  to  be  unable  to 
comprehend  the  nature,  meaning,  and  effect  of  his  act  in  signing  such 
note,  j-ou  will  return  a  verdict  for  defendants." 

This  was  also  assigned  as  error ;  and,  being  the  only  instruction 
given  in  reference  to  Yandell's  sanity,  it  should  be  considered  in  the 
light  of  all  the  facts  proven  on  the  trial  in  reference  to  that  subject. 

1  Dexter  v.  Blanchard,  supra,  26,  27,  n.  2;  Parker  v.  Baker,  Clarke,  ch.  136 ;  Kuns 
p.  Young,  34  Pa.  60,  Accord.  —  Ed. 

2  Patterson  v.  Cave,  61  Mo.  439,  Accord. 

See  also  Parker  v.  Baker,  Clarke,  ch.  136.  —  Ed. 

3  A  portion  of  the  case,  not  relating  to  suretyship,  is  omitted.  —  Ed. 


SECT.  I.J 


LEE    V.   YANDELL 


113 


While  it  must  be  regarded  as  an  imperfect  presentation  of  the  law  of 
the  case,  as  a  general  proposition  it  cannot  be  said  to  be  incorrect ; 
and  the  plaintiff  not  having  called  the  attention  of  the  Court  to  other 
phases  of  the  question  by  asking  appropriate  instructions,  ordinarily 
there  would  not  be  error  in  the  omission.  Farquhar  y.  Dallas;1  Gal- 
lagher v.  Bowie.2  In  this  case,  however,  two  other  persons  signed  said 
note  as  sureties  as  well  as  the  principal,  Yandell. 

As  a  general  proposition,  whenever  a  principal  on  a  note  is  dis- 
charged, his  sureties  will  be  also  ;  but  to  this  rule  there  are  certain 
well-established  exceptions.  For  instance,  the  note  of  a  married 
woman,  without  the  payee  having  been  guilty  of  fraud  or  deceit  in 
procuring  the  signature  of  such  married  woman,  the  sureties  would 
be  liable  though  the  principal  be  discharged.  2  Daniel  on  Neg. 
Inst.,  par.  1306  a/  Davis  v.  Staaps  ; 8  Allen  v.  Berry  hill ; 4  Hicks  v. 
Randolph.5 

The  same  principle  has  been  extended  to  sureties  on  notes  executed 
by  infants  ;  and  it  is  believed  that  no  valid  reason  can  be  given  why 
sureties  of  a  person  of  unsound  mind  should  not  be  held  liable  under 
like  circumstances,  though  the  principal  be  discharged,  especially  so, 
when  the  payee  of  the  note  is  ignorant  of  the  fact  that  the  principal  is 
a  lunatic  ;  as  in  such  case  a  recover}*  might  be  had  even  against  the  ^ 
lunatic,  if  the  payee  acted  in  good  faith.  Pomeroy's  Equity.6  The 
■contract  of  a  surety  is,  that  if  the  principal  does  not  pay,  he  will,  and 
sound  policy  as  well  as  the  plainest  principles  of  justice  demand,  that 
when  there  is  a  valid  consideration,  and  the  payee  has  done  nothing  to 
•deceive  or  mislead  either  principal  or  surety,  and  the  principal  is  held 
to  be  not  liable,  on  account  of  some  disability  existing  at  the  time  of 
the  making  of  the  contract,  whether  such  disability  be  coverture,  in- 
fancy,  or  unsoundness  of  mind,  the  suret}'  should  be  held  to  the  terms 
of  his  contract.  The  reason  given  in  some  of  the  cases  why  the  surety 
of  a  married  woman  is  held,  is  that  the  payee  and  the  surety  knew  at 
the  time  that  the  contract  was  made  that  the  married  woman  might 
refuse  to  pay,  or  that  the  contract  was  made  in  reference  thereto,  the 
surety  binding  himself  to  pay  in  case  she  should  avail  herself  of  her 
legal  rights.  In  case  of  a  lunatic  it  might  be  presumed  that  if  the 
payee  knew  of  the  disability,  the  sureties,  being  his  close  friends,  would 
also  know  of  it,  and  that  the  contract  was  made  in  reference  to  that 
state  of  facts.  There  was  no  evidence  that  Lee  had  in  any  manner 
deceived,  overreached,  or  defrauded  Yandell  in  procuring  him  to  sign 
the  note.  Hence  we  are  of  opinion  that  the  charge  of  the  Court  should 
have  been  limited  to  Yandell,  and  the  question  submitted  as  to  the  lia- 
bilities of  the  sureties  on  the  principles  herein  enunciated. 

Hi  versed  and  remanded? 


1  20  Texas,  200.  2  66  Texas,  265.  3  43  Ind.  103. 

4  27  Iowa,  531.  5  3  Baxter,  352.  6  Vol.  2,  p.  946. 

7  In  Grove  v.  Johnstone,  L.  R.  24  Ir.  352,  a  bond  was  given  by  a  principal  and  sure- 
ties conditioned  upon  the  due  collection  of  all  sums  of  money  which  the  principal,  as 

8 


114  RUSSELL   V.    ANNABLE.  [CHAP.  IL 


ARTHUR  W.  RUSSELL  v.  JOHN  F.  ANNABLE. 

tN  the  Supreme  Judicial  Court,  Massachusetts,  November,  1870. 

[Reported  in  109  Massachusetts  Reports,  72.] 

Contract,  brought  August  3,  1870,  against  one  of  the  sureties  in  a 
joint  and  several  bond  given  under  the  Gen.  Sts.  c.  123,  §  104,  to  dis- 
solve an  attachment. 

Ames,  J.1  It  is  well  settled  that  one  partner  cannot  bind  his  asso- 
ciates by  affixing  his  signature,  in  the  name  and  style  of  the  firm,  to 
an  instrument  under  seal.2  To  make  such  a  transaction  binding,  it 
must  appear  that  there  was  either  a  previous  authority,  or  a  subse- 
quent ratification  on  the  part  of  the  other  partners,  adopting  the  sig- 
nature as  binding  upon  them.  Cady  v.  Shepherd  ; 3  Van  Deusen  v. 
Blum; 4  Swan  v.  Stedman  ; 5  Dillon  v.  Brown.6  The  report  in  this  case 
presents  no  evidence  of  any  previous  authority  or  subsequent  ratifica- 
tion, and  it  follows  that  the  bond  is  not  so  executed  as  to  bind  the 
members  of  the  firm. 

The  bond  purports  to  be  the  joint  and  several  contract  of  certain 
persons  named  therein  as  principals,  and  the  defendant  and  George  M. 
Stevens  as  sureties.  The  defendant's  undertaking  is  only  that  the 
principal  obligors  shall  fulfil  the  obligation  which  by  the  terms  of  the 
bond  they  have  assumed.  But  if  the  bond  was  not  binding  upon  both 
Dennett  and  Pottle  (as  it  was  not,  for  want  of  due  and  proper  execu- 
tion of  the  instrument  on  their  part),  they  assumed  no  obligation,  and 
it  was  not  binding  upon  the  sureties.  It  was  essential  to  the  bond 
that  the  principals  should  be  parties  to  it ;  it  is  recited  that  they  are 
so,  and  the  instrument  is  incomplete  and  void  without  their  signature. 
The  remedy  of  sureties  against  their  principals  might  be  greatly  em- 
barrassed if  such  an  instrument  as  this  should  be  held  binding.  There 
is  nothing  to  estop  any  member  of  the  firm  who  did  not  sign  it,  from 
denying  that  he  was  a  party  to  it,  and  it  was  no  part  of  the  defendant's 
contract  that  he  should  be  surety  for  one  member  of  the  firm,  and  not 
for  both.  The  instrument  is  incomplete  without  the  signature  of  each 
partner,  or  proof  that  the  signature  affixed  had  the  assent  and  sanction 
of  each  of  them.     The  sureties  on  a  bond  are  not  holden  if  the  instru- 

collector,  should  be  required  to  collect  under  certain  warrants.  Soon  after  the  execu- 
tion of  the  bond  and  before  any  default  the  principal  became  and  continued  to  be  a 
lunatic.  His  lunacy,  it  was  held,  exonerated  him  and  also  the  sureties  from  all  lia- 
bility upon'the  bond.  —Ed.  ~  » 

1  Unly  tne  opimo'n  of  the  Court  and  a  part  of  the  dissenting  opinion  are  given.  —  Ed 

2  The  signatures  to  the  bond  were  in  the  following  form  :  — 

"  Signed,  sealed,  and  deliv-  Dennett  &  Pottle,      [seal] 

ered  in  presence  of  George  M.  Stevens, 

Edward  Raymond.  John  F.  Amiable."  —  Ed. 

8  11  Pick.  400.  *  18  Pick.  229. 

s  4  Met.  548.  6  ll  Gray,  179. 


SECT.  I.]  RUSSELL   V.    ANNABLE.  115 

ment  is  not  executed  by  the  person  whose  name  is  stated  as  the  prin- 
cipal therein.  It  should  be  executed  by  all  the  intended  parties.  Bean 
v.  Parker;1  Wood  v.  Washburn. - 

The  instrument,  being  found  incapable  of  taking  effect  as  a  specialty, 
cannot  operate  as  a  simple  contract.  Cases  have  indeed  arisen,  in 
which  a  bond,  duly  executed,  expressing  a  contract  which  the  parties 
had  a  right  to  make,  has  been  held  to  be  valid  at  common  law,  although 
not  made  with  the  formalities,  or  executed  in  the  mode,  provided  by  a 
statute  under  which  it  purports  to  have  been  given.  See  Svveetser  v. 
Hay  3  and  cases  there  cited.  But  we  find  no  case  in  which  it  has  been 
held  that  a  written  instrument,  purporting  to  be  a  specialty,  and  plainly 
intended  by  the  parties  to  have  all  the  incidents  and  characteristics  of 
a  bond  in  the  strict  and  technical  sense  of  that  word,  has  ever  been 
transmuted  by  the  Court  into  a  simple  contract,  for  the  reason  that  it 
has  not  been  properly  executed  to  take  effect  as  a  contract  under  seal. 

It  is  therefore  held,  by  a  majority  of  the  Court,  that  there  should  be 
judgment  for  the  defendant. 

Wells,  J.,  dissenting.  This  suit  is  against  the  surety  alone.  Exe- 
cution of  the  bond  by  him  is  admitted.  There  is  a  principal  obligor 
legally  bound  ;  because  upon  the  face  of  the  bond,  and  the  statements 
of  the  report,  the  partner  who  signed  the  bond  is  bound  thereby.  Van 
Deusen  v.  Blum  ; 4  Dillon  v.  Brown.5  It  does  not  appear,  and  is  not 
alleged  in  the  answer,  that  the  defendant  was  misled  in  regard  to  the 
execution  by  the  principal ;  or  that  he  had  any  reason  to  suppose  that 
the  instrument  was  to  be  executed  otherwise  than  as  stated  in  the 
report,  and  as  appears  on  its  face  ;  or  that  it  was  not  understood  and 
intended  by  the  defendant  that  it  should  be  delivered  in  the  form  in 
which  it  now  appears.  It  may  fairly  be  presumed  that  the  signatures 
were  attached  in  the  order  in  which  they  stand  upon  the  paper.  If  so, 
the  defendant  knew  that  the  signature  of  the  principals  was  written  by 
one  of  them  only.  If  he  signed  it,  or  consented  to  its  delivery,  with 
knowledge  of  the  mode  in  which  it  was  executed  in  behalf  of  the  prin- 
cipals, he  is  bound  by  it.  A  party  to  a  sealed  instrument  may  be  held 
bound  by  it,  notwithstanding  the  fact  that  some  of  the  persons  who 
are,  by  the  form  of  the  instrument,  parties  to  it,  have  not  executed  it. 
Cutter  v.  Whittemore; 6  Adams  v.  Bean  ; 7  Herrick  v.  Johnson  ; 8  Ken- 
dall v.  Karland.9     The  case  of  Adams  v.  Bean  is  especially  in  point. 

Even  if  it  should  be  held  that  the  burden  is  upon  the  plaintiff  to  show 
that  the  defendant  delivered  or  consented  to  the  delivery  of  the  bond 
under  such  circumstances  as  to  bind  him,  notwithstanding  its  invalidity 
to  bind  both  partners,  yet  this  aspect  of  the  case  does  not  appear  to 
have  been  presented  in  the  court  below,  or  to  have  been  considered  in 
drawing  up  the  report.  The  point  presented  arises  upon  the  objection 
"  that  there  was  no  legal  execution  of  it  by  the  principals,  and  there- 

1  17  Mass.  591.  2  2  Pick.  24.  3  2  Gray,  49. 

4  18  Pick.  229.  5  11  Gray,  179.  c  10  Mass.  442. 

7  12  Mass.  137.  8  11  Met".  26.  9  5  Cush.  74. 


116 


JONES    V.    THAYER. 


[CHAP,  II. 


fore  it  was  void  as  to  the  defendant."  This  objection  is  sustained  only 
by  the  fact  stated,  that  it  was  executed  in  the  partnership  name  by  one 
of  them  only.  As  the  legal  result  contended  for  does  not  follow  con- 
clusively from  the  facts  stated  in  the  report,  but  depends  upon  other 
facts  not  alleged  and  apparently  not  considered,  it  seems  to  me  that 
the  proper  order  in  the  case  would  be,  that  the  report  be  discharged, 
and  the  case  stand  for  trial  upon  the  facts.  The  plaintiff's  claim  is  a 
meritorious  one,  and  he  ought  not  to  be  defeated  of  his  remedy  upon 
any  mere  technicality.  If,  in  fact,  the  defendant  consented  to  the 
delivery  of  this  bond  knowing  that  it  was  signed  by  one  of  the  prin- 
cipals without  authority  from  the  other,  it  seems  to  me  that  it  would 
be  allowing  a  technicality  to  prevail  over  substantial  justice  to  permit 
this  defence  to  succeed  without  further  opportunity  to  prove  the  facts. 
I  do  not  think  the  report  requires  that  we  should  hold  the  plaintiff  thus 
strictly.  Judgment  for  the  defendant.1 


>\ 


^%,         ,~_3&-C-  J-0NES    ASIVASOTHE 


t7 


.  B.  W.  THAYER, 

J£n  the  SupRffffE  Judicial  Court.  Massachusetts,  March  Term, 

Action  of  contract  upon  this  guaranty,  signed  by  the  defendant : 
"  For  value  received  I  hereby  guarantee  to  Messrs.  Jones  &  Wheel- 
wright the  prompt  payment  of  W.  W.  Messer's  note  dated  March 
20th,  1852,  and  payable  in  eight  months  from  date  for  five  hundred  and 
seventy  and  T^j  dollars."  The  case  was  submitted  to  the  decision  of 
the  court  upon  the  following  facts  :  — 

The  plaintiffs  received  from  Messer,  in  payment  for  merchandise,  a 
promissory  note,  corresponding  to  the  description  in  the  guaranty,  pay- 
able to  his  own  order,  but  not  indorsed.  The  defendant,  at  the  time 
of  signing  the  guaranty,  was  shown  this  note,  and  was  paid  a  commis- 
sion for  his  guaranty.  Neither  party  then  knew  that  the  note  was  not 
indorsed.     In  Ma}-,   1852,  Messer  went  to  California,  and  has  never 

1  Stewart  v.  Behm,  2  Watts,  356,  would  seem  to  support  the  dissenting  opinion  of 
Wells,  J.  But  the  facts  are  meagrely  reported.  The  Court  say:  Where  the 
ohligee  has  acted  with  good  faith,  what  has  he  to  do  with  the  mistakes  or  misconcep- 
tions of  the  obligor?  Here  the  principal  obligor  signed  the  name  of  his  firm;  and 
the  point  of  defence  is  rested  on  an  assumption  of  the  fact  that  the  surety  supposed 
the  signature  would  bind  both  the  parties.  But  his  mistake  was  in  a  matter  of  law 
which  he  was  bound  to  know ;  and  even  had  it  been  in  a  matter  of  fact,  which  was 
the  basis  of  his  motive  for  becoming  bound,  it  would  not  avail  him,  unless  it  were 
\ndueed  by  the  misrepresentation  of  the  obligee.  Here  it  seems  the  obligee  was  not 
present  at  the  act  of  execution ;  and  as  there  is  no  pretence  of  misrepresentation  or 
concealment  by  him  at  any  time,  there  was  no  color  for  the  defence."  See  also  Weare 
v.  Sawyer,  44  N.  H.  198,  205;  Dickerman  v.  Bowman,  14  Wis.-388.  — Ed. 


SECT.  I.] 


JONES   V.   THAYER. 


117 


since  resided  in  Massachusetts.  His  note  was  left  at  a  bank  in  Boston 
for  collection,  and  the  usual  demand  and  protest  for  non-payment  were 
made,  and  notice  thereof  given  to  the  defendant,  who,  on  going  to  the 
bank,  -for  the  first  time  found  out  that  the  note  was  not  indorsed,  and 
refused  to  pay  it. 

J.  W.  May,  for  the  plaintiffs. 

C.  A.  Welch,  for  the  defendant. 

This  case  was  decided  in  February,  1860. 

Dewey,  J.  The  defendant  resists  the  claim  of  the  plaintiffs  upon 
this  guaranty,  on  the  ground  that  he  guaranteed  Messer's  note  for 
$570.65,  and  the  plaintiffs  held  no  note  against  Messer.  Upon  the 
production  of  the  instrument  signed  by  Messer,  it  appears  to  have 
been  in  form  a  promissory  writing  by  which  Messer  promised  to  pay  to 
his  own  order  the  sum  above  named,  and  the  paper  in  this  form  was 
delivered  to  the  plaintiffs  in  payment  of  certain  articles  of  merchandise, 
without  the  indorsement  of  Messer  on  the  back  thereof.  It  is  then 
said  that  such  a  promise  to  pay  to  one's  own  order  requires  an  indorse- 
ment by  the  maker  to  give  it  legal  effect  as  a  note  payable  to  a  third 
person.  This  is  so,  and  had  the  question  arisen  upon  a  promise  made 
prospectiveby  to  guarantee  a  note  of  Messer  made  payable  to  the  plain- 
tiffs, the  guarantor  might  well  object  that  the  note  produced  did  not 
correspond  with  the  instrument  that  he  stipulated  to  guarantee. 

But  the  case  before  us  is  presented  under  a  different  aspect.  The 
guaranty  was  not  in  reference  to  a  note  to  be  made,  or  a  note  executed 
by  Messer  not  seen  by  the  guarantor,  but  to  an  instrument  presented 
to  the  defendant  as  the  basis  of  the  negotiation,  and  as  the  particular 
paper  containing  the  promise  to  be  guaranteed,  and  for  which  guaranty 
a  valuable  consideration  was  paid  by  the  plaintiffs  to  the  defendant. 
Under  these  circumstances,  it  must  be  taken  to  be  a  guarant}'  of  the  J 
particular  instrument  which  the  plaintiffs  then  held,  and  which  was_ex-  | 
hibited  to  the  defendant.  Both  parties  were  equally  ignorant  of  the 
fact  that  the  name  of  Messer  was  not  indorsed  upon  the  note.  The 
paper  shown  to  the  defendant  is  now  in  the  same  state  in  which  it  then^ 
was,  and  all  the  rights  that  could  attach  from  the  relation  of  the  par- 
ties thereto  as  holder  or  as  guarantor  do  now  exist  as  they  were  then 
disclosed.  If  the  instrument  be  less  available  to  the  guarantor  in  case 
he  is  required  to  pay  the  same  than  he  supposed  it  to  be,  that  was  an 
error  of  his  own  for  which  he  must  be  responsible.  The  defendant, 
having,  upon  the  presentation  of  this  instrument  by  the  other  part}', 
treated  it  as  a  note,  and  having  taken  his  commission  for  guaranteeing 
it  as  such,  must  be  bound  by  it,  so  far  as  concerns  this  objection. 

The  case  of  Veazie  v.  Willis,1  was  in  many  of  its  features  like  this. 
There,  as  here,  the  real  state  of  the  note  was  misunderstood  b}-  both 
parties  to  the  guaranty.  The  names  of  the  maker  and  one  of  the 
indorsers  were  forgeries,   but  that  fact  was  unknown  to  the  parties 


i  6  Gray,  90. 


118  YORKSHIRE   RAILWAY    WAGON    CO.    V.   MACLURE.       [CHAP.  II. 

when  the  guaranty  was  procured.  In  that  case  the  defect  was  not  one 
apparent  upon  the  paper,  as  the  present  was,  and  to  that  extent  it  was 
a  stronger  case  for  the  defendant. 

Whether  the  putting  into  circulation  of  this  paper  by  the  maker, 
Messer,  by  delivery  to  a  third  party  in  payment  for  merchandise, 
although  without  his  indorsement,  would  give  it  the  effect  of  a  note 
payable  to  bearer,  and  which  as  such  might  be  enforced  b}'  a  holder  for 
value,  we  have  not  found  it  necessary  to  decide. 

There  is  nothing  in  the  case  to  sustain  an}'  valid  defence  by  reason 
of  a  want  of  demand  and  notice  of  non-payment  of  the  note  by 
Messer.  Judgment  for  the  plaintiffs. 

YORKSHIRE   RAILWAY  WAGON  CO.   v.  MACLURE. 

Chancery,  before  Kay,  J.,  December   7,  8,   15,  20,   1881. 

{Reported  in  Law  Reports,  19  Chancery  Division,  478.] 

The  Cornwall  Minerals  Railway  Company  were  in  want  of  money, 
and  their  borrowing  powers  under  their  act  were  nearly  exhausted. 
In  the  month  of  June,  1876,  negotiations  took  place  between  them  and 
the  Yorkshire  Railway  Wagon  Company  for  an  advance  of  £30,000  to 
the  Railway  Company.  The  Railway  Company  were  advised  that  they 
could  not  give  a  valid  security  for  the  proposed  advance  as  a  loan,  but 
that  the  agreements  next  mentioned  were  within  their  powers.  Accord- 
ingly an  agreement  under  seal  was  made  between  the  companies,  dated 
the  20th  of  June,  1876,  by  which  it  was  agreed  that  the  Wagon  Company 
should  let,  and  the  Railway  Company  should  hire,  for  the  term  of  five 
years,  fifteen  locomotive  engines  (therein  stated  to  belong  to  the  Wagon 
Company,  and  to  bear  their  name-plates),  at  the  37early  rent  of  £4,428. 
The  Railway  Company  was  bound  to  keep  the  engines  in  repair,  and  if 
default  was  made  in  any  of  the  payments  the  Wagon  Company  might 
seize  and  take  away  the  engines  :  on  the  due  completion  of  the  agree- 
ment the  Railway  Company  were  to  have  the  option  of  purchasing  the 
engines  at  £1  each.  On  the  same  20th  day  of  June,  1876,  three  of  the 
directors  of  the  Railway  Company  —  John  W.  Maclure,  J.  Nield,  and 
A.  O.  Sherriff  —  signed  a  guaranty  as  follows,  appended  to  the 
agreement :  — 

"  To  the  Yorkshire  Railway  Wagon  Company,  Limited.  —  In  consid- 
eration of  your  letting  the  above-mentioned  engines  to  the  Cornwall 
Minerals  Railway  Company,  on  the  terms  above-mentioned,  at  our 
request,  we,  the  undersigned,  hereby  jointly  and  severally  guarantee 
the  due  payment  to  you  by  the  said  Cornwall  Minerals  Railway  Com- 
pany of  all  rent  payable  by  them  in  pursuance  of  the  above-written 


SECT.  I.]        YORKSHIRE    RAILWAY    WAGON    CO.    V.    MACLURE.  119 

agreement  up  to  and  including  that  payable  on  the  1st  day  of  January, 
1879.  And  we  also  jointly  and  severally  guarantee  the  observance  and 
performance  by  the  said  Cornwall  Minerals  Railway  Company  up  to 
the  said  1st  day  of  January,  1879,  of  all  the  stipulations  on  their  part 
contained  in  the  above-written  agreement." 

A  similar  agreement  and  a  similar  guaranty  were  made  as  to  two 
hundred  railway  wagons,  the  rent  for  them  being  £2,952.  The  engines 
and  wagons  had  been  part  of  the  rolling  stock  of  the  Railway  Com- 
pany, and  it  was  alleged  and  not  denied  that  a  formal  delivery  of  them 
to  the  Wagon  Company  had  been  made,  but  no  bill  of  sale  had  been 
executed,  and  they  continued  to  be  used  by  the  Railway  Company. 
It  was  admitted  at  the  bar  that  the  £30,000  had  been  received,  and 
had  been  applied  by  the  Railway  Company  in  payment  of  debts  owing 
by  them. 

In  1879  the  Wagon  Company  brought  an  action  against  John  W. 
Maclure,  one  of  the  directors  who  signed  the  guaranty,  and  the  exec- 
utor of  A.  O.  Sherriff  (the  third,  J.  Nield,  being  dead  insolvent),  and 
by  amendment  against  the  Railway  Company  alleging,  as  appeared  to 
be  the  fact,  that  the  rents  for  the  engines  and  wagons  had  not  been 
paid  ;  and  that  the  Railway  Company  had  sold  them  to  the  Great 
AVestern  Railway  Company ;  and  claiming  damages  for  breach  of  the 
guaranties,  and  payment  of  the  rent  and  interest  thereon. 

Maclure,  by  his  statement  of  defence,  pleaded  that  the  sale  of  the 
enoines  and  wagons  was  nominal,  and  made  in  order  to  disguise  the 
fact  that  the  transaction  was  a  loan  ;  that  the  borrowing  the  money 
was  ultra  vires  and  illegal,  and  that  the  Wagon  Company  had  no  right 
of  action  ;  also  that  the  Wagon  Company  had  been  negligent  in  not 
pressing  for  payment  from  J.  Nield  and  from  the  Railway  Company. 

J.  Virtue,  the  executor  of  A.  O.  Sherriff,  made  a  similar  defence, 
except  as  to  giving  time. 

The  Railway  Company  (who  had  been  made  parties  by  amendment) 
made  a  similar  defence,  except  as  to  the  default  of  the  Wagon  Company 
in  not  pressing  the  Railway  Company  for  payment. 

Romer,  Q.  C,  and  Bunting,  for  the  Wagon  Company. 

Fischer,  Q.  C. ,  and  Cope,  for  the  Railway  Company. 

Higgins,  Q.  C. ,  and  Prior,  for  Maclure. 

Kay,  J.1  There  remains  the  case  against  the  chairman,  Mr.  Maclure, 
and  the  other  directors  who  signed  the  guaranties.  Mr.  Maclure 
pleads  that  the  agreements  were  made  under  the  following  circum- 
stances :  — 

The  fifteen  engines  and  two  hundred  wagons  were,  at  the  time  such 
agreements  were  made,  in  fact  the  property  of  the  Cornwall  Min- 
erals Railway  Company.     That  company,  being  desirous  of  borrowing 

1  The  arguments  are  omitted,  together  with  so  much  of  the  opinion  as  relates  to 
the  liability  of  the  Railway  Company.  The  learned  judge  decided  that  the  transaction 
was  a  mortgage  of  the  rolling  stock  to  secure  a  loan  of  £30,000,  and  was  invalid  because 
beyond  the  powers  of  the  company.  —  Ed 


120  YORKSHIRE    RAILWAY    WAGON   CO.    V.    MACLURE.       [CHAP.  II. 

a  sum  of  money,  and  having  no  available  borrowing  powers  under 
their  acts,  as  the  plaintiff  company  were  at  that  time  fully  aware, 
agreed  with  the  plaintiff  company  that  the  loan  should  be  made  to  the 
Railway  Company  by  the  plaintiff  company  of  the  sum  of  £30,000, 
and  that  by  way  of  repayment  by  instalments  of  the  principal  sum 
borrowed,  and  payment  of  interest  thereon,  the  Railway  Company 
should  pay  to  the  plaintiff  company  certain  fixed  quarterly  sums  for 
the  period  of  five  years ;  and  to  disguise  the  fact  that  such  transaction 
was  a  loan,  and  that  such  payments  were  for  such  principal  and  inter- 
est, and  to  give  a  color  to  the  transaction,  it  was  further  agreed  that 
there  should  be  a  nominal  sale  by  the  Railway  Company  to  the  plain- 
tiff company  of  the  engines  and  wagons  ;  and  that  formal  agreement 
should  be  made  as  if  there  were  a  loan  with  an  option  to  purchase  at  a 
nominal  sum.  Such  borrowing  was  ultra  vires  the  Railway  Company, 
and  illegal,  as  the  plaintiff  company  wTell  knew  at  the  time  of  their 
making  the  loan. 

Mr.  Maclure  was  chairman  of  the  company  throughout  this  trans- 
action, and  his  defence,  to  say  the  least  of  it,  is  startling.  It  is  not- 
less  so  because  the  solicitors  of  the  company,  who  seem  to  have  advised 
the  directors  that  the  transaction  was  legal  and  right,  as  appears  by 
the  minute  of  the  6th  of  April,  1876,  are  the  solicitors  on  the  record 
for  Mr.  Maclure  in  this  action.  It  was  argued  by  his  counsel  that, 
looking  to  the  effect  on  the  debenture  holders,  the  transaction  was 
malum  in  se,  and  language  was  used  which  seemed  to  me  at  the  time 
not  only  strange  on  his  behalf,  but  utterly  unwarranted  by  the  facts  of 
the  case.  I  see  no  reason  for  believing  that  the  directors  did  anything 
malum  in  se.  They  conceived  they  had  hit  upon  a  lawful  mode  of 
evading  the  Acts  of  Parliament,  and  seem  to  have  been  so  advised, 
but  the  real  question  is  whether  there  was  not  consideration  for  their 
guaranty.  In  the  German  Mining  Company's  case 1  the  money  was 
paid  by  the  guarantors  after  the  first  decision,  as  appears  at  p.  43  of 
the  report,  no  doubt  being  suggested  as  to  their  liability  to  pay  it.  In 
Chambers  v.  Manchester  and  Milford  Railway  Company  2  Lord  Black- 
burn says  this  :  "  The  plaintiff  had  become  security  for  a  loan  to  the 
company  by  signing  a  joint  promissory  note.  When  the  note  became 
due,  the  bank  had  a  right  to  come  upon  him  and  the  co-surety,  but  he 
could  not  have  sued  the  company  for  money  paid  to  their  use ;  he 
paid  it  to  discharge  a  loan  which  was  not  contracted  by  the  company 
in  compliance  with  the  restrictions  imposed  by  their  act."  Lord 
Blackburn  there  does  not  doubt  the  right  of  the  lender  to  recover 
against  the  sureties,  although  the  loan  was  to  a  railway  com p an y 
wincii  could  not  borrow.  Probably  the  very  reason  in  this  case  for 
requiring  the  guaranty  was  the  doubt  that  existed  whether  the  com- 
pany could  be  compelled  to  repay  the  money.  I  asked  for  authority 
upou  this  point,  but  none  was  cited.  I  therefore  must  decide  that  the 
directors  are  liable  upon  their  guaranties. 

UD.M.&G.19.  2  5  B.  &S.  588,  612- 


SECT.  I.]  SWIFT   V.   BEERS.  121 

Upon  the  whole  case,  I  hold  that  the  transaction  was  a  borrowing 
by  the  railway  company,  and  an  attempt  to  give  a  security  for  the  loan 
on  the  rolling'  stock,  and  that  this,  so  far  as  the  company  was  con- 
cerned, was  ultra  vires  and  void.  I  must  therefore  dismiss  the  action 
against  the  company.  1  must  declare  that  the  sureties  are  liable  for 
the  unpaid  instalments  of  the  loan  which  are  covered  by  their  guaran- 
ties ;  1  must  order  payment  by  Maclure,  and,  if  required,  there  must 
be  an  administration  order  against  the  estate  of  Sherriff.  The  plaintiffs 
must  pay  the  Railway  Company's  costs,  and  Maclure,  and  Sherriff's 
executors  must  pay  the  plaintiffs'  costs  against  them.1 


•=^1^7.    <c  <^£  J*~&r  *-  -~^i  2^)  "l^.y— 


0 


I 


lN_rH£  Supreme,  Court,  Ne^Yokk,  May,  18467* 


Subreme  Court,  NewYork, 

f Reported" in  3  Denio,  70.1 


"^r*"7    "  '  '  [Reported in  3  Denio,  70.] 

Assumpsit  tried  at  the  New  York  Circuit  in  February,  1844,  before 
Kent,  late  C.  Judge.  The  plaintiffs  gave  in  evidence  a  promissory 
note  with  a  guaranty  written  under  it,  signed  by  the  defendant,  in  the 

following  words :  — 

"  New  York,  30th  June,  1841. 

"  Sixty  days  after  date  the  North  American  Trust  and  Banking  Co. 
promise  to  pay  to  the  order  of  Messrs.  Swift  &  Co.  thirty-seven  hun- 
dred dollars,  for  value  received,  with  interest,  having  deposited  with 
them  as  collateral  security  seven  bonds  of  this  company,  secured 
under  the  Yates  trust  —  three  for  one  thousand  dollars  [giving  the 
amounts  and  numbers  of  the  bonds]. 

"  Thomas  G.  Talmage,  Pres't. 

"  For  value  received,  I  guarantee  the  payment  of  the  above  note  at 
the  time  mentioned.  J.  D.   Beers." 

It  was  admitted  that  the  North  American  Trust  and  Banking  Com- 
pany was  a  banking  association,  organized  under  the  general  banking 
law. 

The  defendant's  counsel  moved  for  a  nonsuit,  insisting  that  the  note 
and  guaranty  were  illegal  and  void  :  and  the  circuit  judge,  being  of  that 
opinion,  directed  a  nonsuit  to  be  entered. 

D.  Graham,  Jr.,  for  the  plaintiffs,  now  moved  to  set  aside  the  non- 
suit, and  for  a  new  trial.  He  denied  that  by  the  true  construction  of 
the  4th  section  of  the  Act  of  May  14,  1840,  amendatory  of  the  general 
banking  law  (Stat.    1840,  p.  306),  all  notes  on  time  or  on  interest, 

1  Chambers  v.  Manchester  Co.,  5  B.  &  S.  588,  612;  Weare.w.  Sawyer,  44  N.  II 
198 ;  Davis  v.  Commissioners,  72  N.  Ca.  44,  74  N.  Ca.  374 ;  Mason  v.  Nichols,  22  Wis 
376,  Accord.  —  F.n. 


/3A. 


122  PUTNAM  V.    SCHUYLER.  [CHAP.  IL 

were  forbidden  to  be  issued  by  the  banking  associations  —  but  only 
such  as  were  intended  to  be  issued  or  put  into  circulation  as  money. 
He  referred  to  Stat.  1838,  p.  246,  §  3;  Safford  v.  Wyckoff;  J  Smith  v. 
Strong ; 2  and  Safford  v.  Wyckoff.3  He  also  insisted  that  if  the  note 
were  void,  the  guaranty  was  valid  ;  and  that  a  recovery  could  be  had 
against  the  defendant  either  as  a  sole  or  a  joint  maker;  and  cited  17 
Wend.  40;  19  John.  60;  1  Hill,  256;  4  Id.  420 ;  19  Wend.  202;  17 
Id.  214. 

S.  Sherwood,  for  the  defendant. 

Bij  the  Court,  Bronson,  C.  J.  We  have  no  doubt  about  this  case. 
The  note  is  directly  within  the  terms  of  the  prohibition  of  the  Act  of 
1840  ;  and  we  do  not  doubt  but  that  it  was  equally  within  the  inten- 
tion of  the  legislature.  That  act  has  no  reference  to  the  circulation  of 
such  notes  as  money,  but  was  designed  to  prohibit  them  altogether  for 
any  purpose. 

The  guaranty  partakes  of  the  character  of  the  principal  contract.  It 
was  intended  to  reinforce  and  secure  it  —  and  is  equally  illegal.  The 
circuit  judge  was  right  in  nonsuiting  the  plaintiffs. 

al  denied* 


/ 


PUTNAM,  Executor,  Respondent,  v.  suiiuil,ii£  ,  ai  pell 
^r       ^**v  lN  the  SupremeTSou^jt,  Iff  ew_  York,  April  Term,  1875. 

/  Learned,  P.  J.5     Mrs.  Henriques,  inner  lifetime,  made  two  notes 

to  Dr.  Allen,  the  plaintiff's  testator.     After  her  death  the  defendant 
guaranteed  them,  b}7  writing  under  each,  as  follows  :  — 

"  For  value  received  I  hereby  guarantee  the  payment  of  the  above 
note.  L.  W.  Schuyler." 

On  the  trial  the  defendant  offered  to  prove  that  Dr.  Allen  was  the 
medical  attendant  of  Mrs.  Henriques  ;  was  in  the  habit  of  advising 
her  as  to  financial  and  other  matters  ;  that  she  reposed  confidence  in 
him  in  relation  to  her  affairs  ;  together  with  certain  other  matters  tend- 
ing to  show  that  the  notes  were  obtained  b}T  fraud,  and  that  they  were 

1   1  Hill,  11.  2  2  Id.  241.  3  4  Id.  442. 

4  Miller  v.  Gaskins,  Sm.  &  M.  Ch.  524  (semble) ;  Russell  v.  Failer,  1  Oh.  St.  32? 
(usury) ;  Morse  v.  Hovey,  9  Paige,  197  ;  Parshall  v.  Lamoreaux,  37  Barb.  189,  Accord. 

If  a  statutory  bond  is  taken  under  such  circumstances  or  in  such  a  form  as  not_to 
be  binding  upon  the  principal  obligor,  the  illegality  will  be  a  defence  to  any  action 
against  the  surety  obligor.  L'!"S.  v.  Tingay,  5  Pet.  115;  Hawes  v.  Marchaut,  1  Curt. 
136  ;  State  v.  Brantly,  27  Ala.  44  ;  Ferry  v.  Burchard,  21  Conn.  597;  Jones  v.  Turner, 
5  Litt.  147  ;  Thompson  v.  Buckhaunon,  2  J.  J.  Marsh.  416,  419  ;  Fisher  v.  Shattuck, 
17  Pick.  252;  Crum  v.  Wilson,  61  Miss.  233;  Thompson  v.  Lockwood,  15  Johns.  256 
-  Ed. 

5  Only  the  opinion  of  the  Court  is  given. 


SECT.  I.]  PUTNAM    V.    SCHUYLER.  123 

without  consideration.  The  evidence  was  objected  to  on  the  ground 
that,  by  executing  the  guaranty,  tlie  aetenciant  nail  admitted  the  notes, 
and  was  estopped  ;  that  the  defence  of  fraud  was  personal  to  Mrs. 
Henriques  and  her  representatives  ;  that  the  defendant  could  not  im- 
peach the  settlement  between  maker  and  payee.  The  evidence  was 
excluded,  and  the  defendant  excepted. 

I  assume,  from  the  manner  in  which  the  case  is  presented,  that  it 
was  not  really  claimed  on  the  trial  that  these  matters  would  not  have 
been  competent  in  behalf  of  the  representatives  of  Mrs.  Henriques. 
Their  exclusion  was  on  the  ground  that  they  were  not  competent  in 
behalf  of  the  guarantor.  On  this  subject,  of  the  right  of  a  guarantor 
to  set  up  defences  which  would  undoubtedly  be  valid  in  favor  of  the 
principal,  there  is  an  apparent  conflict.  But  a  little  discrimination 
will  show  that  the  conflict  is  only  apparent. 

First.  There  is  a  class  of  cases  in  which  the  owner  of  a  note  or  £&  r  -,  , 
bond  has  assigned  it,  with  a  guaranty.  In  these,  it  has  been  held  that 
the  guarantor  could  not  show  that  the  instrument  was  invalid.  It 
would  be  unjust  to  permit  him  to  assign  an  invalid  instrument ;  to 
guarantee  its  payment  or  collection  ;  to  receive  the  value,  and  then, 
when  sued  on  his  guaranty,  to  assert  that  the  original  instrument  was 
invalid.  He  is  estopped.1  The  case  of  Mann  v.  Eckford's  Executors3 
is  of  this  character.  The  Life  and  Fire  Company  of  which  Eckford 
was  president,  assigned  to  the  Western  Insurance  Company  a  bond 
and  mortgage.  Eckford  guaranteed  the  bond  and  mortgage,  and  the 
money  paid  for  it,  expressing  the  amount.  The  defendants,  his  execu- 
tors, were  not  allowed  to  set  up  usury  in  the  bond  and  mortgage, 
against  the  plaintiff,  the  receiver  of  the  Insurance  Company. 

Second.  The  guarantor  is  held  liable  in  those  cases  in  which  the  >?/'___ 
debt  is  justly  owing,  although,  from  some  defect  or  incapacity,  the  pnn-  ^ 
cipal  is  not  liable  in  an  action.  Thus,  where  the  makers  of  a  nofe 
were  married  women,  incapable  (then)  of  making  a  note,  the  accom- 
modation indorser  was  still  held  liable.3  The  guarantor  of  a  lease  is 
liable,  although  only  one  of  the  two  lessees  executed  the  lease.4  In 
that  case  Judge  Bacon  speaks  of  this  class  of  cases,  mentioning, 
among  others,  the  guaranty  of  goods  sold  to  an  infant.  So  the  guar- 
antor of  a  note  purporting  to  be  made  by  two,  where  the  signature  of 
one  is  unauthorized,  is  liable.5  In  all  these  cases  the  debt  is  justly 
owing  to  the  plaintiff ;  and  through  no  fault  of  his,  he  is  unable  to 
recover  against  the  principal,  or  one  of  the  principals. 

Third.    A  guarantor  cannot  set  up,  by  way  of  set-off,  a  claim  distinct  rsu** 

from  that  on  wnicn  lie  is  suecT!     The  right  of  set-off  (that  is,  as  distin- 

1  Remsen  v.  Graves,  41   N.  Y.  475  ;  Zabriskie  v.  C.  C.  and  C.  R.  R.  Co.,  23  How 
|U.  S.)  399. 

2  15  Wend.  502. 

3  Erwin  v.  Downs,  15  N.  Y.  576 ;  see  Kimball  v.  Newell,  7  Hill,  116. 

4  McLaughlin  v.  McGovern,  34  Barb.  208. 
"  Sterns  v.  Marks,  35  Barb.  565. 


124  PUTNAM  V.    SCHUYLER.  [CHAP.  II. 

guished  from  a  defence  arising  upon  the  claim  itself)  belongs  only  to 
the  principal  debtor,  and  can  be  used  only  at  his  option.  Such  is  the 
doctrine  of  Gillespie  v.  Torrance,1  and  this  is  all  which  that  case 
decides  on  this  point.  By  indirection,  however,  it  implies  that  a 
defence  to  the  claim  (as  distinguished  from  a  set-off),  is  available  to 
the  guarantor.     To  the  same  effect  is  Lewis  v.  McMillen.2 

Fourth.  But  there  are  still  other  cases  which  are  not  embraced 
within  either  of  these  three  preceding  classes  :  cases  where  the  plain- 
tiff is  the  original  party  to  the  contract,  and  therefore  has  not  received 
it  by  assignment  from  the  guarantor ;  where  the  proposedjile  fence  is 
not  the  incompetency  of  the  principal  to  contract":  and"  where  it  arises 
out  of  the  contract  itself,  and  not  by  way  of  set-off.  In  these  the 
guarantor  has  been  permitted  to  make  the  defence. 

He  has  thus,  as  to  the  original  contract,  been  allowed  to  set  up 
usury,3  duress  of  his  principal,4  partial  failure  of  consideration.5  3.nd 
I  find  no  case  which  intimates  that  when  a  person  has  obtained  an  obliga- 
%^~"7  tioii  from  a  principal  by  fraud,  he  can  wipe  out  the  fraud  by  obtaining 
s*7  a  surety  to  the  obligation.  Assuming  that,  in  justice  and  equity,  the 
obligee,  by  reason  of  fraudulent  acts  on  his  part,  has  either  no  claim, 
or  a  less  claim,  against  the  principal,  I  see  no  reason  why  he  should 
stand  in  a  better  position  against  the  guarantor. 

The  distinction  which  has  been  pointed  out,  viz.,  that  inability  on 
the  part  of  the  principal  to  contract  is  no  defence  to  the  guarantor, 
while  fraud  in  the  contract  is,  may  be  found  in  the  civil  law.  This 
says  that  personal  defences  do  not  pass  to  others,  but  that  defences 
inherent  in  the  thing,  such  as,  among  others,  fraud  and  duress,  are 
available  to  sureties.6  "  If,  in  the  principal  obligation,  there  is  any 
essential  vice  which  may  annul  it,  as  if  it  has  been  contracted  by  force, 
if  it  is  contrary  to  law,  or  to  good  manners,  if  it  be  founded  only  on 
a  fraud,  or  on  some  error  which  may  suffice  to  annul  it;  in  all  these 
cases  the  obligation  of  the  surety  is  likewise  annulled."  7 

The  defendant  offered  to  prove  acts  of  the  plaintiff's  testator  tending 
to  show  that  he  obtained  the  notes  improperly  from  the  maker ;  that  he 
took  advantage  of  her  confidence  in  him,  and  that  she  did  not  owe 
him.  If  these  facts  be  true,  he  ought  neither  to  recover  of  her  repre- 
sentatives on  the  notes,  nor  of  the  defendant  on  her  guaranties. 

The  judgment  should  be  reversed,  and  a  new  trial  ordered,  costs  to 
abide  the  event. 

Present  —  Learned,  P.  J.,  Boardman  and  James,  JJ. 

Judgment  reversed,  and  new  trial  ordered,  costs  to  abide  event? 

1  25  N.  Y.  30f>.  '2  41  Barb.  420. 

8  Morse  v.  Hovey,  9  Paige,  197  ;  Parshall  v.  Lamoureaux,  37  Barb.  189. 

4  Osborn  v.  Bobbins,  36  N.  Y.  365 ;  Strong  v.  Granuis,  26  Barb.  122. 

5  Sawyer  v.  Cbambers,  43  Barb.  622. 

6  Dig.  44,  1,  de  exceptionibus,  c.  7,  §  1  ;  Cod.  2,  24  (23)  de  fidejuss.  2. 

7  Strahan's  Domat,  bk.  3,  tit.  4,  §  5,  art.  2  ;  id.,  bk.  3,  tit.  4,  §  1,  art.  10. 

8  Hagar  v.  Mounts,  3  Blackf .  57  ;  Bryant  v.  Crosby,  36  Me.  562,  Accord.  —  Ed. 


f. 


If 


y^^c,    ^^    ^  <* 


S^0T.  I.]  HAZARD   V.   GRISWOLD. 

HAZARD  a^d  Others  v.  GRISWOLD 

In  the  United  States  Circuit  Court,  District  ok  Rhode   Island. 
-JJ ,  August  4,  1884. 

[Reported  in  21  Federal  Reporter,  178.] 

Action  of  Debt  on  Bond. 

Edwin  Metealf,  for  plaintiffs. 

Saml.  R.  Honey  and  Arnold  Greene,  for  defendant. 

Before  Gray  and  Colt,  JJ. 

Gray,  Justice.  This  is  an  action  of  debt,  commenced  in  the  Supreme 
Court  in  the  State  of  Rhode  Island,  on  March  3,  1883,  by  four  citizens 
of  Rhode  Island  against  a  citizen  of  New  York,  on  a  bond  dated 
August  24,  1868,  and  executed  by  Thomas  C.  Duraut  as  principal, 
and  the  defendant  and  S.  Dexter  Bradford  as  sureties,  binding  them 
jointly  and  severally  to  the  plaintiffs  in  the  sum  of  $53,735. 

The  fifth  plea1  alleges  that  Durant,  at  the  time  and  place  of  the 
making  of  the  supposed  writing  obligatory,  "  was  unlawfully  impris- 
oned "by  the  said  plaintiffs  and  others  in  collusion  with  them,  and 
then  and  there  detained  in  prison,  until,  by  the  force  and  duress  of 
imprisonment  of  him,  the  said  Thomas  C.  Durant,  he,  with  the  said 
defendant  as  surety,  made  the  said  writing,  signed  and  sealed  and 
delivered  the  same  to  the  said  plaintiffs  as  their  deed."  To  this  plea 
the  plaintiffs  have  demurred,  because  it  does  not  allege  that  the  writing 
was  executed  by  the  defendant  under  force  and  duress  of  imprisonment 
of  himself,  nor  that  he  did  not  voluntarily  execute  it  as  surety  with 
knowledge  that  it  was  executed  by  Durant  as  principal  under  force  and 
duress  of  imprisonment,  as  alleged  in  the  plea.  This  plea  does  not  set 
forth  facts  enough  to  make  out  a  defence.  Duress  at  common  law, 
where  no  statute  is  violated,  is  a  personal  defence,  which  can  only  be  ^     . 

set  up  by  the  person  subjected  to  the  duress ;  and  duress  to  the  princi-      yyt£»*&" 
pal  will  not  avoid  the  obligation  of  a  surety  ;  at  least,  unless  the  surety,  r 

at  the  time  of  executing  tne  obligation,  is  ignorant  of 'tne  circumstances 
which  render  it  voidable  by  the  principal"  Thompson  v.  Lockwood  ; 2 
Fisher  r.  fShattuck  ;3  Robinson  y.  Gould  ;4  Bowman  y.  Hiller ; 5  Harris 
v.  Carmody  ; 6  Griffith  v.  Sitgreaves.7  The  case  of  Hawes  v.  Mar- 
chant,8  in  this  court,  was  not  a  case  of  duress  at  common  law,  but  of 
oppression  by  the  illegal  exercise  of  official  power  in  excess  of  statute 
authority,  and  was  decided  upon  that  ground. 

Demurrers  sustained.9 


4  1 1  Cush.  55. 
7  90  Pa.  St.  161. 


1  Only  what  relates  to  this  plea  is  here  given.  —  Ed. 

2  15  Johns.  256.  3  17   Pick.  252. 
5  130  Mass.  153.  6  131  Mass.  51. 

8  1  Curtis,  136. 

9  Huscombe  v.  Standing,  Cro.  Jac.  187  ;  Wayne  v.  Sands,  Freem.  351,  3  Keb.  238, 
B.C.;  Mantel  v.  Gibbs,  Browul.  64;  McCliutick  v.  Cummins,  3  McL.  158  (semble); 
Plummer  v.  People,  16  111.  358  ;  Tucker  v.  State,  72  Ind.  242  (semble) ;  Jones  v.  Turner, 


£> 


's1*+si*-»-?    S*\J 


-^ 


/ 


*^~?     **<_   *t^^- —  "^^^7  ~* 

126  GRIFFITH    V.^ITGREAXES. 

GRIFFITH  and  Others'i;.  SITGREAVES. 
In  the  Supreme  Court,  Pennsylvania,  April  4,  1879. 

[Reported  in  90  Pennsylvania  Reports,  161.] 

April  4th,  1879.     Before  Sharswood,  C.  J.,  Mercur,  Gordon,  Pax*    , 
son,  Woodward,  Trunkey,  and  Sterrett,  JJ. 

Error  to  the  Court  of  Common  Pleas  of  Northampton  County  :  Of 
January  Term,  1879.     No.  232. 

Assumpsit  by  Matthew  H.  Griffith,  James  Roberts,  and  J.  Milton 
Butler,  partners,  trading  as  Griffith,  Roberts,  &  Butler,  against  Theo- 
dore R.  Sitgreaves,  to  recover  $2,90o.G8,  the  amount  of  seven  promis- 
sory notes,  of  which  defendant  was  the  accommodation  indorser  for 
Robert  C.  Pyle,  the  maker.  The  defendant  pleaded  non  assumpsit. 
A  jury  trial  was  dispensed  with. 

The  Court  having  found  the  fact  that  the  notes  were  signed  and  de- 
livered b}*  Pyle  to  the  plaintiffs  under  and  by  reason  of  duress  of  im- 
prisonment and  duress  per  minus,  held,  that  the  same  were  absolutely 
void  as  against  Pyle  as  maker  and  Sitgreaves  as  indorser  in  the  hands 
of  a  person    who   was  a  party  to  said  duress,  or  of  a  holder  who  had 
'&&*+'$  notice  thereof  before  he  received  said  notes.     And  that  in  an  action  on 
^<^j2_sa^   notes  by  the  plaintiffs   against  Sitgreaves,  it   was   competent  for 
""the  latter  to  set  up  as  a  defence  the  duress  of  Pyle,  and  especially  so 
where  the  fact  was  found  as  in  this  case,  that  the  duress  was  effected 
through  the  agency  of  one  of  the  plaintiffs  in  this  action. 

Exceptions  were  filed  to  this  decision  which  the  Court  overruled.1 

IT7.  IK  Schuyler,  for  plaintiffs  in  error. 

IT.  Green,  for  defendant  in  error. 

Mr.  Justice  Paxson  delivered  the  opinion  of  the  Court  May  7th,  1879. 

We  are  next  to  consider  the  question  whether  the  defendant,  who  is 
sued  as  indorser  of  the  notes,  can  take  advantage  of  the  duress  prac- 
tised upon  the  maker.  In  Huscombe  v.  Standing,2  the  defendant  hav- 
ing been  sued  on  a  bond,  on  which  he  was  surety  for  one  Street, 
entered  a  plea  that  the  bond  was  obtained  by  duress  of  his  principal. 
The  plaintiff  demurred  to  this  plea,  and,  without  argument,  it  was  held 
that  "it  was  not  any  plea  for  the  surety,  although  it  had  been  a  good 

5  Litt.  147  (semble) ;  Thompson  ;-.  Buckhannon,  2  J.  J.  Marsh.  416  (semble)  ;  Oak  v. 
Dustin,  79  Me.  2.3  ;  Robinson  v.  Gould,  1 1  Cush.  55  ;  Bowman  v.  Hiller,  1.30  Mass.  15.3  : 
Harris  v  Carmody,  131  Mass.  51,53  ;  Thompson  v.  Lockwood,  15  Johns.  256  (semble), 
Record. 

In  Strong  v.  Grannis,  26  Barb.  122.  a  defendant,  who  signed  a  note  as  surety  with 
knowledge  of  the  duress  practised  upon  the  principal  maker,  successfully  resisted  an 
action  brought  by  the  holder  of  the  note.  But  in  this  case  the  arrest  was  procured 
by  the  perjury  of  the  payee.  —  Ed. 

1  The  statement  of  facts  is  abridged,  the  arguments  are  omitted,  together  with  a 
part  of  the  opinion  not  relating  to  suretyship.  —  Ed. 

2  Cro.  Jac.  187 


JL^<<—) 


SECT.  I.]  GRIFFITH   V.    SITGREAVES.  127 

plea  for  the  said  Street ;  for  none  shall  avoid  his  own  bond  for  the 
imprisonment  or  duress  of  any  other  than  himself.  The  same  doctrine 
is  recognized  in  Bacon's  Abridg.,  title  Duress  A.,  and  2  Rolle's 
Abridg.  124.  The  later  authorities  are  conflicting,  with  no  adjudicated 
case  in  Pennsylvania.  Mantel  v.  Gibbs,1  Robinson  v.  Gould,2  Plum- 
mer  v.  The  People,3  McClintick  v.  Cummins,4  and  Thompson  o.  Lock- 
wood,5  were  cited  by  plaintiff's  as  sustaining  the  doctrine  that  the 
duress  which  will  avoid  a  contract  must  be  offered  to  the  party  who 
seeks  to  take  advantage  of  it.  On  the  other  hand,  Strong  v.  Grannis,6 
Osborn  v.  Robbius,7  and  Fisher  v.  Shattuck  8  were  cited  on  behalf  of 
the  defendant  as  sustaining  the  opposite  view.  I  have  examined  these 
cases  with  some  care,  and  do  not  regard  them  as  controlling  authority 
on  either  side.  They  depend  very  much  upon  the  pleadings  or  their 
special  circumstances.  I  have  no  doubt  of  the  correctness  of  the 
general  principle  laid  down  in  the  older  cases  that  duress,  to  be  a  good 
plea,  must  be  offered  to  the  person  who  seeks  to  take  advantage  of  it. 
As  in  the  case  of  two  joint  and  several  obligors  in  a  bond,  a  plea  by 
one  defendant  of  duress  practised  upon  the  other  would  be  a  bad  plea, 
for  the  reason  that  if  his  signature  was  obtained  without  duress,  of 
what  consequence  is  it  to  him  that  his  co-obligor  signed  under  duress? 
In  all  the  cases  cited,  the  duress  was  either  upon  the  party  seeking  to 
avoid  the  instrument  sued  upon,  or  it  was  known  to  him.  Thus,  in 
Robinson  v.  Gould,2  the  action  was  on  a  note  made  by  A  to  B,  to 
procure  the  release  of  C  from  an  unlawful  arrest,  brought  about  by 
B.  Here  A  entered  into  an  independent  contract,  not  as  surety,  but 
as  principal,  with  a  full  knowledge  of  all  the  facts,  and  as  the  Court 
said,  upon  a  sufficient  consideration:  "The  case,  therefore,"  in  the 
language  of  the  Court,  "  is  exactly  this:  a  promise  by  the  defendant, 
upon  a  valid  consideration,  fully  assented  to  b}-  him  without  coercion 
or  restraint  of  any  kind."  McClintick  v.  Cummins4  decides  nothing 
that  affects  the  case  in  hand.  The  Court  said  :  "  It  is  not  necessary  to 
decide  this  question  (the  duress),  as,  from  the  facts,  it  does  not  appear. 


that  the   imprisonment  of  Johnson  was  unlawful,  or  that  he  was  de-    ^   ^ 

tained  until  he  executed  the  notes."      Plummer  v.   The  People,3  was       ' 

a   suit   upon    a  recognizance  against   the  principal  and   the    sureties. 
The  principal  was  committed  by  a  magistrate  in  the  State  of  Illinois 
for  a  larceny  committed  in  another  State.     Afterwards,  the  magistrate, 
in  the  absence  of  the  accused,  and  without  proof,  made  out  a  second 
ktimus  for  an  offence  committed  within  the  State.     The  accused,  to 
relieve  himself  from  confinement,  gave  the  recognizance  in  question. 
The  defendants  pleaded  duress,  and  the  Court  below  gave  judgment  in 
their  favor  upon  the  plea.     The  Court  above  affirmed  the  judgment  as 
yi-to  the  principal,  and  reversed  it  as  to  his  sureties,  saying:   "  I  do  not 
*"    -~z~fl  hold  that  the  same  facts  might  not  also  have  been  made  available  by 

1*****^^.       i  i  Brownlow,  62.  2  u  Cush.  155.  3  16  111.  358. 

£"  Jr*/"/*      *  3  McLeau,  158-  5  15  Johns.  259.  6  26  Barb.  122. 

//  7  36  N.  Y.  365.  8  17  Pick.  252. 


'£>r>- 


128  GKIFFITH    V.    SITGKEAVES.  [CHAP.  II. 

the  sureties,  at  the  proper  time,  and  in  a  proper  form  of  plea,  but  they 
cannot  avail  themselves  of  them  by  a  plea  of  duress  of  their  principal." 
This  case  recognizes  the  doctrine  I  have  already  suggested,  that  duress, 
as  a  plea,  is  bad  if  the  duress  set  up  was  upon  some  person  other  than 
the  party  pleading  it.  It  also  appeared  that  the  sureties  had  knowl- 
edge of  the  duress  when  they  signed  the  recognizance.  This  was 
also  the  case  in  Strong  v.  Grannis,  cited  by  the  defendant.  Here 
the  action  was  against  two  persons  as  makers  of  a  promissory  note  ; 
the  defence  set  up  was  that  the  note  was  executed  under  duress  of  im- 
prisonment of  one  of  the  makers,  and  to  procure  his  release  therefrom, 
and  was  signed  by  the  other  as  his  surety.  The  Court  held  that  the 
surety  might  avail  himself  of  the  duress.  This  was  a  case  in  the 
Supreme  Court.  Osborn  v.  Robbins  was  in  the  Court  of  Errors  and 
Appeals.  The  note  was  given  by  a  son,  with  his  father  as  surety,  in 
settlement  of  an  arrest  upon  the  charge  of  rape,  under  circumstances 
that  indicated  an  abuse  of  legal  process,  for  the  purpose  of  oppression. 
The  Court  held  that  the  surety  could  avail  himself  of  the  duress.  This 
case  is  not  authority  to  the  extent  claimed  for  it  by  the  defendant,  for 
the  reason  that  the  surety  was  the  father  of  the  defendant.  This  is 
one  of  the  exceptions  recognized  in  Huscombe  v.  Standing,  and  most 
of  the  old  authorities.1 

It  bv  no  means  follows  that  because  duress  of  another  is  not  a  2,ood 
plea,  and  that  in  some  instances  it  may  not  even  avail  as  a  defence, 
that  it  cannot  be  set  up  successfully  in  any  case.  Had  the  defendant, 
after  indorsing  these  notes,  passed  them  to  the  plaintiffs  and  received 
the  money  therefor,  it  is  very  clear  he  could  not  set  up  the  defence  of 
duress  of  the  maker ;  so  if  he  had  indorsed  them  with  notice  of  the 
duress,  or  if  the  notes  were  in  the  hands  of  an  innocent  third  party  for 
value.  In  these  and  main*  other  instances  that  might  be  named,  the 
defence  referred  to  would,  for  obvious  reasons,  be  unavailing.  The 
case  in  hand,  however,  differs  materially  from  them  and  from  all  the 
cases  cited.  Here  the  defendant  was  the  surety  of  the  maker,  nothing 
more,  and  defends  under  the  broad  plea  of  non  assumpsit.  The  form 
of  the  transaction  is  not  material,  so  long  as  the  contention  is  between 
the  original  parties.  The  defendant's  contract  is  to  pa}' the  notes,  if  his 
principal  fails  to  do  so  ;  and  he  may  be  proceeded  against  immediately 
upon  such  failure.  But  upon  payment  of  the  money  he  has  his  remedy 
over  against  his  principal.  It  is  a  recognized  doctrine  in  the  law  of 
surety,  that  whatever  discharges  the  principal  debtor,  also  discharges 
the  surety.  There  are  exceptions  to  the  rule,  as  where  one  had  signed 
a  joint  and  several  note  with  a  married  woman  as  surety.  1  Pars,  on 
Bills  and  Notes,  244.  Nor  will  this  rule  apply  to  cases  in  which  a 
surety  is  required,  for  the  very  reason  that  the  principal  may  have  a 
defence  that  will  defeat  the  claim  against  him. 


"o- 


1  For  additional  illustrations  of  this  exception,  see  McClintick  v.  Cummins,  1  Mc- 
Lean, 158, 159  ;  Plummer  v.  People,  16  111.  358,  360  ;  Harris  v.  Carmody,  131  Mass.  51 ; 
Owens  v.  Mynatt,  1  Heisk.  675.  — Ed. 


SECT.   I.] 


SAWYER    V.    CHAMI5ERS. 


129 


In  these  and  the  like  cases,  the  surety  knows  when  he  binds  himself 
that  he  has  no  remedy  over,  lie  is  not,  therefore,  misled.  The  de- 
fendant indorsed  the  notes  without  any  knowledge,  or  anything  to  put 
him  upon  inquiry,  of  the  duress  practised  upon  his  principal.  The 
result  will  be,  if  a  recovery  is  had  against  the  defendant,  he  will  have 
no  redress  against  the  maker,  and  this  by  reason  of  the  duress  upon 
the  maker,  the  act  of  the  plaintiffs.  He  is  therefore  directly  injured  by 
it,  and  has  a  right  to  defend  upon  that  ground.  Had  he  signed  the 
notes  with  knowledge  of  the  duress,  it  would  have  been  his  own  folly, 
and  the  consideration  being  good,  the  plaintiffs  would  have  been  en- 
titled to  recover.  But  the}'  made  the  mistake  of  keeping  the  maker  a 
quasi  prisoner  in  New  York  by  threats  of  an  arrest,  whilst  the  notes 
were  sent  to  the  indorser  for  his  signature,  thus  depriving  him  of  his 
remedy  over  against  his  principal.  In  doing  this,  the  plaintiffs  over- 
reached themselves.  The  judgment  is  affirmed.1 


V^ 


SAWYER  and  Others  v.  CHAMBERS  and  Others. 
In  the  Supreme  Court,  New  York,  November,  1864. 

[Reported  in  43  Barbour,  622.] 

Action  upon  a  promissory  note,  against  the  indorsers.2 

Bij  the  Court,  Ingraham,  J.  The  defence  set  up  in  this  case  must 
be  considered  as  sufficiently  alleged  in  the  answer,  as  the  answer  was 
amended  by  the  Court  to  embrace  the  facts  so  stated. 

Whether  this  is  to  be  considered  an  offer  to  show  a  total  or  partial 
failure  of  consideration  between  the  plaintiffs  and  the  makers,  is  imma- 
terial. Between  the  original  parties  such  a  defence  is  admissible.  The 
offer  was  to  show  that  the  whole  consideration  of  the  note,  or  the 
greater  part  of  it,  had  failed  ;  that  the  note  was  given  on  account  of  the 
goods,  which  the  plaintiffs  had  agreed  to  sell  to  the  company  ;  that 
only  a  small  portion  of  such  goods  had  been  delivered,  and  that  the 
amounts  so  delivered  had  been  actually  paid  for.  I  am  at  a  loss  to  see 
an}'  ground  on  which  this  evidence  could  be  excluded. 

Surely  an  accommodation  indorser  is  in  no  worse  condition  than  the 
maker.  He  has  a  right  to  any  defence  which  the  maker  could  avail 
himself  of.  If  the  makers  had  been  sued  upon  the  note,  the}' could 
have  shown  that  the  note  was  given  on  account  of  goods  to  be  deliv- 
ered, and  that  such  goods  had  never  been  received.  The  plaintiffs, 
under  such  proof,  would   have  no  claim  against  the  defendants,  as  the 


1  Patterson  v.  Gibson,  81  Ga.  802,  Accord. 

See  Hawes  r.  Marchant,  1  Curt.  136,  142. —  Ed. 

2  Only  the  opinion  of  the  Court  upon  the  point  of  suretyship  is  given. 


Ed. 


130  SAWYER   V.    CHAMBERS.  [dlAP.  II. 

note  would  be  without  consideration.  So  long  as  the  courts  permit  the 
consideration  of  a  note  to  be  inquired  into  under  any  circumstances, 
the  facts  presented  in  the  defendants'  offer  must  come  within  such  a 
rule.  The  plaintiffs  have  no  right  to  recover  on  this  note,  from  any  of 
the  parties,  anything  more  than  enough  to  indemnify  them  for  the  duck 
sold  or  thereafter  delivered  to  the  company,  and  the  defence  that  no 
such  amount  of  duck  had  ever  been  delivered  should  not  have  been 
excluded.1 

1  Gunnis  v.  Weigley,  114  Pa.  191,  Accord.  —  Ed. 


PAUL   V.   CIIKISTIE, 


SECT.  II. J 

-  \  SECTION  II. 


/ii 


(fences  based  upon  the  Extinguishment  or  Suspension  of  the 
Liability  of  the  Principal  Debtor  to  the  Creditor. 

PAUL  and  Wife,  Executrix  of  DEAN,  v.  CHRISTIE. 
In  the  Court  of  Appeals,  Maryland,  May  Term,  1798. 

[Reported  in  4  Harris  and  Mc Henry,  161.] 

This  was  an  action  of  debt  upon  a  joint  and  several  bond,  executed 
by  James  Christie,  and  Robert  Christie,  the  defendant,  to  the  plaintiff's 
testator,  on  the  30th  of  August,  1775.  The  following  case  was  stated 
for  the  opinion  of  the  Court,  viz.  That  the  bond,  upon  which  this  suit 
is  brought,  was  duly  executed  on  the  30th  of  August,  1775,  by  James 
Christie  and  Robert  Christie,  to  Hugh  Dean,  in  his  lifetime,  in  which 
bond  the  said  James  was  the  principal  debtor,  and  the  said  Robert 
bound  as  his  security,  jointly  and  severally.  That  the  said  James  is 
and  always  has  been  a  British  subject,  and  the  said  Robert  is  a  citizen 
of  this  State ;  and  that  before  the  impetration  of  the  writ  in  this  case, 
the  whole  of  the  principal  (excepting  £5),  and  all  the  interest  due  on 
the  said  bond  (except  the  interest  accrued  from  the  4th  of  July,  1776, 
to  the  3d  of  September,  1783),  were  paid  by  the  said  James  to  the 
plaintiff. 

The  question  was,  whether  or  not  the  plaintiff  ought  to  recover  inter- 
est from  the  4th  of  July,  1776,  to  the  3d  of  September,  1783  (during 
the  war  between  this  country  and  Great  Britain),  from  the  defendant. 

Hollingsworth,  for  the  plaintiffs. 

Cooke  and  Milligan,  for  the  defendant. 

The  General  Court  were  of  opinion,  that  the  plaintiffs  ought  to 
recover  of  the  defendant  the  interest  on  the  bond  upon  which  this  suit 
is  brought,  which  accrued  during  the  war  between  the  United  States 
and  Great  Britain. 

Judgment  for  the  plaintiffs  on  the  case  stated.1 

1  Bean  v.  Chapman,  62  Ala.  58,  Accord.  In  this  case  Stone,  J.,  delivering  the  opinion 
of  the  Court,  said :  "  It  is  contended  for  appellees  that  being  only  sureties  their  liability  is 
accessorial,  and  that  they  cannot  be  held  for  a  greater  sum  than  their  principal,  Lakin, 
is  liable  to  pay.  The  foregoing  is  certainly  the  rule  in  a  proper  case.  Whenever  the 
inquiry  is  one  of  original  liability  the  surety  cannot  be  held  to  a  greater  extent  than 
the  principal  is  bound  for.  The  principal's  obligation  defines  the  boundary  upward, 
beyond  which  the  surety's  obligation  cannot  be  carried.  So,  the  creditor  can  do  no  act 
by  which  he  reduces  the  principal's  liability  without  at  the  same  time  reducing  the 
surety's  liability,  at  least  to  the  same  extent.  But  the  rule  is  very  different  where  the 
law  reduces  or  absolves  the  principal's  liability,  without  the  tault  or  procurement  of 
the  creiiu^or.  in  sucli  case  the  principal's  defence  is  personal,  and  does  not  affect  or 
impair  the  surety's  liability,  uniess  ne  aiso  nave  a  personal  defence.     Uiseharge  of  tha 


132  GUILD    V.    BUTLER.  [CHAP.  II. 


WILLIAM   H.  GUILD   v.   ALFORD   BUTLER. 
In  the  Supreme  Judicial  Court,  Massachusetts,  May  3,  1877. 

[Reported  in  122  Massachusetts  Reports,  498.] 

Contract  upon  a  promissory  note  made  by  the  defendant  payable 
to  Robert  W.  Dresser  &  Co.  or  order,  and  b}-  them  indorsed  to  the 
plaintiff. 

At  the  trial  in  the  Superior  Court,  befoi'e  Pitman,  J.,  it  appeared  that 
the  note  was  made  by  the  defendant  for  the  accommodation  of  Dresser 
&  Co.,  who  at  the  same  time  gave  him  an  agreement  in  writing  that 
they  would  themselves  pay  the  note  at  maturity  ;  that  the  plaintiff  did 
not  know  this  when  he  took  the  note,  but,  after  learning  it,  and  after 
the  commencement  of  this  action,  united  with  other  creditors  of  Dresser 
&  Co.  in  a  petition  in  bankruptcy  against  Herman  D.  Bradt,  the  sur- 
viving partner  of  that  firm  (Dresser,  the  other  partner,  having  died), 
and  afterwards  voted  for  and  signed  a  resolution  of  composition  under 
the  provisions  of  the  Act  of  Congress  of  June  22,  1874,  §  17,  by  which 
the  plaintiff,  with  the  other  creditors  of  Dresser  &  Co.,  agreed  to  take, 
in  full  settlement,  twenty  per  cent  of  their  claims,  to  be  paid  in  three 
equal  instalments,  in  ten  days,  three  months,  and  six  months  from  the 
acceptance  of  that  resolution,  which'  was  approved  by  the  Court  in 
bankruptc}'  and  recorded. 

The  judge  instructed  the  jury  that,  if  the  note  sued  on  was  an  accom- 
modation note,  and  the  defendant,  as  between  him  and  Dresser  &  Co., 
tvas  but  a  surety,  and  the  plaintiff  knew  that  it  was  an  accommodation 
note  when  he  entered  into  the  resolution  of  composition,  the  fact  of  his 
entering  into  that  resolution  would  constitute  a  defence  to  this  action. 
The  jury  returned  a  verdict  for  the  defendant ;  and  the  plaintiff  alleged 
exceptions. 

P.  H.  Hutchinson.,  for  the  plaintiff. 

M.  Stone,  Jr.,  for  the  defendant. 

Gray,  C.  J.  By  the  existing  acts  of  Congress  upon  the  subject  of 
bankruptcy,  a  bankrupt's  estate  may  be  settled,  and  the  bankrupt 
discharged,  in  either  of  three  ways  :  — 

First.  The  estate  ma}r  be  administered  in  the  ordinaiy  manner  by 
assignees  appointed  for  the  purpose,  and  a  certificate  of  discharge  be 

principal  iu  bankruptcy,  statute  of  limitations,  or,  if  he  be  dead,  failure  to  preseut  or 
file  the  claim  against  his  estate  within  the  time  required  by  law,  are  of  this  class. 
Minter  v.  Br.  Bank,  23  Ala.  762  ;  Hooks  v.  Br.  Bank,  8  Ala.  580  ;  Cawthorne  v.  Weiss- 
inger,  6  Ala.  714;  Woodward  v.  Cligge,  8  Ala.  317.  In  such  cases  the  surety  can  pay 
the  debt  at  any  time  after  it  matures,  and  then  proceed  against  the  principal  for  money 
paid  for  his  use,  and  at  his  request.  Whether  if  tlie  present  defendants  pay  this  debt, 
they  cannot  recover  of  Lakin,  their  principal,  the  whole  sum  they  have  to  pay,  includ- 
ing interest,  is  a  question  we  need  not  here  discuss." 


SECT.  II.]  GUILD    V.    BUTLER.  133 

granted  by  the  Court,  with  the  assent,  in  some  cases,  of  a  certain  pro- 
portion of  the  creditors  who  have  proved  their  claims.  Any  person 
liable  as  surety  for  the  bankrupt  may,  upon  paying  the  debt,  even  after 
the  commencement  of  proceedings  in  bankruptcy,  prove  the  debt,  or 
stand  in  the  place  of  the  creditor  if  he  has  proved  it ;  or,  the  debt  not 
having  been  paid  by  him  nor  proved  by  the  creditor,  ma}7  prove  it  in 
the  name  of  the  creditor  or  otherwise.  U.  S.  Rev.  Sts.  §  5070;  Mace 
v.  Wells  ; *  Hunt  v.  Taylor.2  But  the  surety's  liability  to  the  creditor  is 
not  affected  by  any  certificate  of  discharge  granted  to  the  principal.3 
U.  S.  Rev.  Sts.  §  5118;  Flagg  v.  Tyler.4 

Second.  The  estate  may  be  wound  up  and  settled  by  trustees  nomi- 
nated by  the  creditors,  upon  a  resolution  passed  at  a  meeting  for  the 
purpose  by  three-fourths  in  value  of  the  creditors  whose  claims  have 
been  proved,  and  confirmed  by  the  Court,  and  upon  the  signing  and 
filing,  by  such  proportion  of  the  creditors,  of  a  consent  in  writing  that 
the  estate  shall  be  so  settled  ;  in  which  case  such  consent  and  the  pro- 
ceedings under  it  bind  all  creditors  whose  debts  are  provable,  even  if 
they  have  not  signed  the  consent  nor  proved  their  debts ;  the  trustees 
have  the  rights  and  powers  of  assignees  ;  the  winding  up  and  settle- 
ment are  deemed  proceedings  in  bankruptcy  ;  the  Court  ma\'  summon 
and  examine  on  oath  the  bankrupt  and  other  persons,  and  compel  the 
production  of  books  and  papers  ;  and  the  bankrupt  may  obtain  a  certifi- 
cate of  discharge  in  the  usual  manner.     U.  S.  Rev.  Sts.  §  5103. 

Third.  The  creditors,  at  a  meeting  ordered  by  the  Court,  either  before 
or  after  an  adjudication  of  bankruptcy,  may  resolve  that  a  composition 
proposed  by  the  debtor  shall  be  accepted  in  satisfaction  of  the  debts 
due  them  from  him.  Such  resolution,  to  be  operative,  must  be  passed 
by  a  majority  in  number  of  the  creditors  whose  debts  exceed  fifty  dol- 
lars in  value,  and  by  a  majority  in  value  of  all  the  creditors,  and  must 
be  confirmed  by  the  signatures  of  the  debtor,  and  of  two-thirds  in  num- 
ber and  one-half  in  value  of  all  his  creditors.  The  debtor  is  required 
to  attend  at  the  meeting  to  answer  inquiries,  and  to  produce  a  state- 
ment of  his  assets  and  debts  and  of  the  names  and  addresses  of  his 

1  7  How.  272.  2  108  Mag.,  508- 

3  Ex  parte  Williamson,  1  Atk.  82  ;  Brown  v.  Carr,  7  Bing.  508  ;  Moody  v.  King, 
2  B.  &  C.  558  ;  Ingles  v.  Macdougal,  1  Moore,  196  ;  London  Co.  v.  Buckle,  4  Moore, 
153;  Wolf  v.  Stix,  99  U.  S.  1  ;  Knapp  v.  Anderson,  15  N.  B.  R.  .316;  Garnett  v. 
Roper,  10  Ala.  8+2  ;  Phillips  v.  Wade,  66  Ala.  53  (overruling  Lunsford  v.  Baskins, 
6  Ala.  512) ;  King  v.  Central  Bank,  6  Ga.  258  :  Phillips  v.  Solomon,  42  Ga.  192  ;  Jones 
v.  Hawkins,  60  Ga  52  ;  Lackey  v.  Steeve,  121  111.  598  ;  Gregg  v.  Wilson.  50  Ind.  490  ; 
Post  v.  Losey,  111  Ind.  74;  Ray  v.  Brenner,  12  Kas.  105;  Burtis  v.  Wait,  33  Kas. 
478;  Moon  v.  Waller,  1  A.  K.  Marsh.  488  ;  Serra  v.  Hoffman,  30  La.  An.  67  ;  Coch- 
rane v.  dishing,  124  Mass.  219;  Robinson  ?•.  Soule,  56  Miss.  549;  Claflin  v.  Cogan, 
48  N.  H.  411  ;  Linn  v.  Hamilton,  34  N.  J.  305  ;  Hall  v.  Fowler,  6  Hill,  630 ;  McCombs 
v.  Allen,  18  Hun,  190  ;  Wilson  v.  Ffeld,  27  Hun,  46  ;  Jones  v.  Hagler,  6  Jones  (N.  Ca.), 
542  ;  Bank  v.  Simpson,  90  N.  Ca.  467  ;  Noble  v.  Scofield,  44  Vt.  281,  Accord. 

But  see  contra,  because  of  the  creditor's  consent  to  the  discharge  of  the  principal 
debtor,  In  re  Macdonald,  14  N.  B.  R.  477  ;  Calloway  v.  Snapp,  78  Ky.  561.  — Ed. 

*  6  Mass.  33. 


134  GUILD    V.    BUTLER.  [CHAP.  II 

creditors.  The  resolution,  with  this  statement,  is  to  be  presented  to 
the  Court ;  and  if  the  Court,  after  notice  and  hearing,  is  satisfied  that 
the  resolution  has  been  duly  passed  and  is  for  the  best  interest  of  all 
concerned,  the  resolution  is  to  be  recorded  and  the  statement  filed,  and 
the  provisions  of  the  composition  shall  be  binding  on  all  the  creditors 
whose  debts,  names,  and  addresses  are  shown  on  the  statement,  and 
may  be  enforced  by  the  Court  on  motion  and  reasonable  notice,  and 
regulated  by  rule  of  court,  or  may  be  set  aside  bj'  the  Court  for  any 
sufficient  cause,  and  proceedings  in  bankruptcy  had  according  to  law. 
U.  S.  St.  June  22,  1874,  §  17.  This  section,  providing  for  a  composi- 
tion under  the  supervision  of  the  Court,  is  taken  from  and  substantially 
follows  §  126  of  the  English  Bankrupt  Act  of  1869,  St.  32  &  33  Vict. 
c.  71.     See  Ex  parte  Jewett; 1  Re  Whipple.2 

It  has  been  determined  in  England,  by  decisions  of  high  authority 
and  upon  most  satisfactory  reasons,  that  a  creditor,  by  participating  in 
either  of  the  three  forms  of  proceeding,  whether  by  assenting  to  a  cer- 
tificate of  discharge,  or  b}"  consenting  to  a  resolution,  either  for  a  wind- 
ing up  through  trustees,  or  for  the  acceptance  of  a  composition  proposed 
by  the  debtor,  does  not  release  or  affect  the  liability  of  a  surety. 
Browne  v.  Carr;3  Megrath  v.  Gray;4  Ellis  v.  Wilmot ; 5  Simpson  ?>. 
Henning  ; 6  Ex  parte  Jacobs,7  overruling  Wilson  v.  Llo3'd.8 

The  proceedings  for  a  composition  under  the  statute,  depending  for 
their  validit}'  and  operation,  not  upon  the  act  of  the  particular  creditor, 
but  upon  the  resolution  passed  by  the  requisite  majority  of  all  the 
creditors,  binding  alike  on  those  who  do  and  on  those  who  do  not  con- 
cur therein  (if  their  debts  are  included  in  the  statement  filed  by  the 
debtor),  and  finally  confirmed  and  established  bj-  the  Court  upon  a  con- 
sideration of  the  general  benefit  of  all  concerned,  differs  wholly  in  nature 
and  effect  from  a  voluntaiy  composition  deed,  which  binds  only  those 
who  execute  it.  Oakeley  v.  Pasheller  ;9  Bailey  v.  Edwards  ; 10  Bateson 
v.  Gosling ;  u  Oriental  Financial  Corporation  v.  Overend  ;  12  Cragoe  v. 
Jones ;  Gifford  v.  Allen  ; 13  Phoenix  Cotton  Manuf .  Co.  v.  Fuller.14 

Assuming,  therefore,  that  this  defendant,  having  signed  the  note  for 
the  accommodation  of  the  indorsers,  was  to  be  considered  as  a  surety 
for  them,  and  that  the  plaintiff,  after  acquiring  knowdedge  of  that  fact, 
stood  as  if  he  had  known  it  when  he  took  the  note,  yet  no  defence  is 
shown  to  this  action.  Exceptions  sustained.16 

1  2  Lowell,  393.  2  Ibid.  404. 

3  2  Russ.  600 ;  5  Mo.  &  P.  497 ;  and  7  Bing.  508. 

4  L,  R.  9  C.  P.  216.  5  L.  R.  10  Ex.  10.  6  L.  R.  10  Q.  B.  406. 
7  L.  R.  10  Ch.  211.                     8  L.  R.  16  Eq.  60. 

9  4  CI.  &  Fin.  207  ;  s.  c.  10  Bligh,  N.  R.  548. 

10  4  B.  &  S.  761.  "  L.  R.  7  C.  P.  9.  ia  L.  R.  7  Ch.  142. 

13  3  Met.  255.  14  3  Allen,  441. 

15  Megrath  v.  Gray,  L.  R.  9  C.  P.  216;  Ellis  r.  Wilmot,  L.  R.  10  Ex.  10;  Simpson 
*.  Henning,  L.  R.  10  Q.  B.  406;  Ex  parte  Jacobs,  L.  R.  10  Ch.  211  (overruling  Wil- 
*on  v.  Lloyd,  L.  R.  16  Eq.  60) ;  Fisse  v.  Einstein,  5  Mo.  Ap.  78  ;  Mason  Co.  v.  Ban- 
croft (N.  Y.  Supreme  Ct.,  1876),  4  Cent.  L.  J.  294,  Accord:  —  Ed. 


■^-^-1 


*-■*«*<. 


SECT.  II.]  *      VILLARS   V.   PALMER.  /T 

W.    VlLLARS   v.   K   T.  f^ALMTCR,    Administrator,    and 

Another. 

In  the  Supreme  Court,  Illinois,  January  Term,   1873. 

[Reported  in  67  Illinois  Reports,  204.] 

Appeal  from  the  Circuit  Court  of  Vermilion  County;  the  Hon.  James 
Steele,  Judge,  presiding. 

This  was  a  bill  in  Chancery,  by  William  Villars,  against  Levin  T. 
Palmer,  administrator  of  the  estate  of  Guy  Merrill,  deceased,  and  John 
G.  Leverich,  to  enjoin  proceedings  at  law  by  Palmer  as  administrator 
of  the  estate  of  Merrill,  for  the  use  of  Leverich,  upon  a  promissory 
note,  given  by  one  George  W.  Taylor  as  principal,  and  signed  by  the 
complainant  as  surety,  and  payable  to  said  Guy  Merrill  as  master  in 
Chancery.  The  bill  showed  that  the  estate  of  Taylor  was  solvent,  and 
that  the  debt  could  have  been  made  if  the  claim  had  been  presented 
before  it  was  barred  by  the  two  years'  limitation.  The  Court  below 
dismissed  the  bill,  and  the  complainant  appealed. 

Toicnsend  &  Young  and  E.  S.   Terry,  for  the  appellant. 

0.  L.  Davis  and  J.  B.  Mann,  for  the  appellees. 

Mr.  Justice  Sheldon  delivered  the  opinion  of  the  Court:  — 

The  claim  on  the  part  of  the  surety  in  this  case  is,  that,  as  bjT  the 
neglect  of  the  creditor  to  present  his  claim  against  the  estate  of  Taylor, 
the  principal,  all  remedy  in  respect  to  the  debt  has  been  lost  against 
the  estate  of  the  principal,  that  should  operate  to  discharge  the 
surety. 

The  complaint  is  of  mere  dela}',  not  of  any  affirmative  act  on  the  part 
of  the  creditor,  whereby  the  surety  has  been  affected.     But  it  is  the 
well-established  principle,  that  mere  dela}-  on  the  part  of  the  creditor 
to  proceed  against  the  principal  does  not  discharge  the  responsibility  j 
of  the  surety. 

In  cases  of  this  sort,  there  is  not  any  duty  of  active  diligence  incum- 
bent on  the  creditor.  All  that  the  surety  has  the  right  to  require  of 
the  creditor,  in  the  absence  of  any  statute  provision,  is,  that  no  affirma- 
tive act  shall  be  done  that  will  operate  to  his  prejudice.  It  is  his 
business  to  see  that  the  principal  pays. 

The  law  furnished  the  surety  here  with  ample  remedies  for  his  pro- 
tection. He  might  have  paid  the  debt  according  to  his  undertaking, 
and  have  sued  the  principal  himself;  or  he  might  have  gone  into  a 
court  of  equity  after  the  debt  became  due,  and  obtained  a  decree  that 
the  principal  should  pay  it ;  or  he  might,  under  the  statute,  have  given 
to  the  creditor  written  notice  to  put  the  note  in  suit,  and  thus  have 
compelled  him  to  sue  the  principal. 

If  he  has  seen  fit  to  lie  by,  and  the  neglect  to  proceed  against  the 
principal  in  his  lifetime,  01   against  his  estate  after  his  decease,  has 


^v 


JUSBbjf/*. 


f 


136  AUCHAMPAUGH   V.   SCHMIDT.  [CHAP.  II. 

been  the  means  of  depriving  the  surety  of  his  indemnity,  he  must  abide 
by  the  loss,  and  cannot  throw  it  upon  the  creditor. 

Without  more,  we  need  but  to  refer  to  the  cases  of  the  People  v.  White 
ct  <il.,  11  111.  342,  and  Taylor  v.  Beck,  13  Id.  376,  where  the  subject  is 
full}'  considered  and  authorities  cited.  In  the  former  case,  the  very 
point  made  by  the  surety  here  is  decided  adversely  to  him. 

Under  the  statute  of  March  4,  1869,  Sess.  Laws,  1869,  p.  305,  where 
the  principal  maker  of  a  joint  note  has  departed  this  life,  it  is  made  the 
duty  of  the  holder  of  the  note  to  present  the  same  against  the  estate  of 
the  decedent  for  allowance  to  the  proper  court,  within  two  }'ears  after 
the  granting  of  the  letters  of  administration.  But  that  statute  is  too 
late  to  affect  the  present  case. 

The  decree  of  the  Court  below  dismissing  the  bill  is  affirmed. 

Decree  affirmed.1 


'& 


,  AUCHAMPAUGHL  Administrator,    v.  SCHMIDT. 

f  In  the  Supreme  Court,  Iowa,  April  22,  1886. 

[Reported  in  70  Iowa  Reports,  642.] 

Adams,  J.2  We  come,  then,  to  the  question  raised  by  the  answer  and 
the  admitted  evidence  of  suretyship,  and  that  is  as  to  whether  a  claim 
which  is  barred  by  the  Statute  of  Limitations,  as  against  the  principal 
debtor,  is  by  reason  thereof  barred  also  as  against  a  surety.  In  answer 
to  this  question,  we  have  to  say  that  we  think  that  it  is.  No  authority 
has  been  cited  upon  either  side  which  is  directly  in  point.  Ordinarily, 
we  may  presume  that,  where  the  statute  has  fully  run  as  against  3he 
principal,  it  would  happen  that  it  had  fully  run  as  against  the  surety. 
But  the  case  before  us  has  this  peculiarity :  The  defendant,  when  the 
note  was  executed,  resided  in  Illinois.  Before  the  note  was  barred  by 
the  statute  of  that  State  he  removed  to  Iowa,  and  before  the  statute  of 
this  State  had  fully  run,  the  action  was  commenced.  If,  then,  the  de- 
fendant were  a  principal  debtor,  the  note  would  not  be  barred  as  against 
him,  however  it  might  be  as  against  Leipold.     He  must  therefore  rely 

1  Carter  v.  White,  25  Ch.  Div.  G6G.  672,  per  Lindley,  L.  J.;  McBoon  v.  Governor. 
6  Port.  (Ala.)  32  ;  Hooks  v.  Branch  Bank,  8  Ala.  580 ;  Sichel  v.  Carrillo,  42  Cal.  500  ; 
Bull  v.  Coe,  77  Cal.  54  ;  Minter  v.  Branch  Bank,  23  Ala.  762  ;  Smith  v.  Gillam,  80  Ala. 
296,  301;  People  v.  White,  11  111.  342;  Bank  v.  State,  62  Md.  88;  Kerr  v.  Brandon, 
3  Miss.  910;  Johnson  v.  Planters'  Bank,  12  Miss.  165;  Cohea  v.  Commissioners,  15 
Miss.  437;  Sibley  v.  McAllaster,  8  N.  H.  389;  Moore  v.  Gray,  26  Oh.  St.  525;  Nash- 
ville Bank  v.  Campbell,  7  Yerg.  353;  Marshall   v.  Hudson,  9  Yerg.  57,  Accord. 

Stull  v.  Davidson,  12  Bush,  167;   Bridges  v.  Blake,  106  Ind.  332,  Contra. 
Compare  Ohio  v.  Blake,  2  Oh.  St.  147.  —  Ed. 

2  Everything  is  omitted  except  the  opinion  of  the  Court  relating  to  the  surety's 
liability.  —  Ed. 


(T~     — 


SECT.  II.] 


EIC1LVKDS0N    V.    HORTON. 


137 


solely  upon  the  fact  that  he  is  surety  upon  the  note,  and  upon  the  bar 
as  against  Leipold.  Such  being  the  case,  it  is  perhaps  not  surprising 
that  no  authority  should  be  cited  that  is  precisely  in  point.  It  becomes 
our  duty,  therefore,  to  attempt  to  determine  the  case  on  principle.  It 
would  not  be  denied  that  a  surety  upon  a  note  may  set  up  any  meri- 
torious defence  which  the  principal,  if  sued,  might  set  up  in  his  own 
behalf.  Now,  when  the  Statute  of  Limitations  has  run  as  against  the 
principal,  the  law  excuses  him  from  setting  up  any  meritorious  defence 
which  he  ma}'  have,  and  allows  him  to  rely  upon  the  technical  defence 
of  the  statute  alone.  The  theory  is  that  he  was  not  under  obligations 
to  preserve  any  longer  the  evidence  of  his  meritorious  defence  if  he 
had  an}',  and  so  the  uourt  will  not  inquire  whether  he  had  such  deienc 
or  not.  The  Statute  has  been  very  properly  denominated  the  statute  of 
repose.-  As  the  surety  is  allowed  to  set  up  any  meritorious  defence 
which  the  principal  might  have  set  up,  we  are  not  able  to  see  why  he 
should  be  required  to  preserve  the  evidence  of  such  defence  after  the 
principal  was  not  bound  to  do  so.  Again,  when  a  surety  pays  a  debt, 
it  is  his  right  to  look  to  the  principal  for  reimbursement.  But  a  surety 
paying  a  debt,  after  it  had  become  barred  as  against  the  principal,  would 
be  remedUess.1  Now,  we  do  not  think  that  a  creditor,  by  his  own  dila- 
toriness,  should  be  allowed  to  put  the  surety  in  such  position.  It  is 
not  a  full  answer  to  say  that  a  surety  might  have  protected  himself. 
It  ma}'  be  conceded  that  he  might.  But,  practically,  sureties  often  over- 
look their  obligations  if  their  attention  is  not  called  to  them,  and  we 
do  not  think  that  the  just  protection  of  the  rights  of  the  creditor  re- 
quires that  we  should  hold  so  strict  a  rule  against  them  as  that  for 
which  the  plaintiff  contends.  Reversed. 

In  Chancery,  before  Lord  Lai^stoale,  M.  R.,  March  17,  1843. 

[Reported  in  6  Beavan,  185.] 

The  Master  of  the  Rolls.2  It  is  objected  to  the  Master's  finding.8 
that  where  two  are  jointly  bound  and  one  dies,  the  obligation  survives 
to  the  surviving  obligor ;  that  no  action  can  be  maintained  against  the 
executor  of  the  obligor  who  died  first ;  and  that,  as  an  action  cannot 

1  But  see  contra,  McBoon  v.  Governor,  6  Port.  (Ala.)  32;  Cawthorne  v.  Weissinger, 
6  Ala.  714,  716  ;  Hooks  v.  Branch  Bank,  8  Ala.  580;  Camp  v.  Bostwick,  20  Oh.  St. 
337;  Marshall  v.  Hudson,  9  Yerg.  57.  See  also  Cohea  v.  Commissioners,  15  Miss. 
137.  — Ed. 

2  Only  the  opinion  of  the  Court  is  given.  —  Ed. 

3  Under  a  decree  directing  the  Master  to  take  an  account  of  the  debts  of  Sir  Watts 
Horton,  the  Master  found  that  £3.513  were  due  to  the  obligees  on  the  joint  bond  exe- 
cuted bv  Sir  Watts  and  Thomas  Horton.  —  Ed. 


/ 


138 


RICHARDSON    V.    HORTON. 


[CHAP.  II. 


be  maintained  against  the  executors  upon  the  bond,  the  bond  cannot 
be  the  foundation  of  a  claim  to  a  specialty  debt  in  equity. 

In  answer  to  this  argument,  it  is  not  alleged  that  there  was  any 
antecedent  joint  liability  of  Sir  Watts  Morton  and  Thomas  Horton,  or 
that  there  was  any  agreement  for  a  joint  and  several  bond,  or  any  mis- 
take in  preparing  the  bond  ;  but  it  is  said,  that  it  could  not  have  been 
intended  to  release  Sir  Watts,  who  was  the  principal  debtor,  or  his 
estate,  if  he  happened  to  die  first,  and  that  therefore  the  bond  ought 
to  be  considered  as  joint  and  several. 

I  do  not  think  that  this  argument  can  prevail.  If  the  bond  had  been 
made  joint  and  several,  Thomas  Horton  might  have  been  sued  upon  it 
alone  in  the  lifetime  of  Sir  Watts  ;  and  there  seems  to  be  no  reason 
even  for  conjecturing  that  he  would  have  consented  to  this,  or  to  do 
more  than  make  himself  jointly  liable  ;  and  if  joint  liability  was  the 
intention  of  the  parties,  nothing  is  now  to  be  rectified  or  altered,  and 
the  legal  consequences  must  follow.  The  obligation,  b}-  virtue  of  the 
joint  bondj  survived  to  the  surviving  obligor,  aTTd  there  was  no'legal 
remedy  upon  the  assets  of  the  deceased  obligor.1    There  may  be  a  legal 


debt  arising  out  of  the  contract  against  the  assets  of  Sir  Watts  Horton  ; 
butifspj.it  will  not  be  a  debt  upon  the  bond,  and  must  beestablislTed 
by  means  other  than  the  mere  production  of  the  bond. 

1  Other  v.  Iveson,  3  Drew.  177,  182  (semble) ;  Johnson  v.  Planters'  Bank,  12  Miss. 
165,  172  semble,  Accord. 

A  fortiori,  where  all  the  joint  obligors  are  principals,  and  one  dies,  the  creditor  can- 
not, unless  the  joint  obligation  is  a  partnership  obligation,  charge  the  estate  of  th*e 
deceased,  cPen  in  equity,  but  must  pursue  the  survivors.  Sunnier  r.  Powell,  2  Mer. 
3"0,~T."&  K~?23,  s.  c. ;  Clarke  c.  Bickers,  14  Sim.  639*;  Wilmer  v.  Currey,  2  De  G.  & 
Sm.  347 ;  Crossley  v.  Dobson,  2  De  G.  &  Sm.  486 ;  Beresford  v.  Browning,  20  Eq. 
564,  569.  A  dictum  contra  in  Thorp  v.  Jackson,  2  Y.  &  C.  Ex.  553,  was  discredited  in 
Jones  v.  Beach,  2  D.  M.  &  G.  886,  889,  and  in  Other  v.  Iveson,  3  Drew.  177,  182. 

But  this  doctrine  of  the  English  courts  does  not  obtain  in  this  country,  the  creditor, 
though  remediless  at  law,  being  allowed  to  come  upon  the  estate  of  the  deceased 
obligor  in  equity.  Pickersgill  v.  Lahens,  15  Wall.  140,  144  (semble) ;  Cox  v.  Maddux, 
72  Ind.  206;  Waters  v.  Riley,  2  Har.  &  G.  305  (semble) ;  Marshall  v.  De  Groot,  1  Cai. 
Cas.  122;  Smith  v.  Ballentine,  10  Paige,  101;  Bradwell  v.  Burwell,  3  Den.  61  (semble); 
Barnes  v.  Brown,  130  N.  Y.  372  (semble)  ;  Kennedy  v.  Carpenter,  2  Whart.  344,  361- 
362  ;  Hengst's  Ap.  24  Pa.  413. 

Appointment  of  Principal  Debtor  as  Executor  of  the  Creditor.  Such  appointment 
operating  as  an  extinguishment  of  the  contract  of  the  principal  would  probably  be 
held  to  discharge  the  surety.     See  Cheetham  v.  Ward,  1  B.  &  P.  630. 

Marriage  of  Creditor  icith  Principal  Debtor.  The  surety  has  been  held  to  be  dis- 
charged by  the  marriage  of  the  creditor  and  principal.  Govan  v.  Moore,  30  Ark, 
667.  —Ed. 


0  X         6 


^    yC~ -£/  ^    *~<~> 


5  - 


SECT.  II.]  <£MES   V.    MACLAY.  ^         ^139 

AMP^S   v.   MACLAY  and  OtherC      ^ 
In  the  Supreme  Court,  Iowa,  December  15,    1862. 


•^y* 


[Reported  in  14  /oit>a  Reports,  281.] 

Complainant  and  others  were  the  sureties  upon  the  bond  of  one 
McDonald,  who  was  elected  sheriff  of  Clinton  Count}'  in  1851.  Foi 
an  alleged  nonfeasance,  Maclay  sued  on  this  bond  in  1854.  The  prin- 
cipal and  his  sureties  severed  in  their  defences.  A  demurrer  of  the 
sureties  in  that  action  to  the  reply  of  the  plaintiff  was  overruled,  and 
judgment  was  rendered  against  them.  On  the  trial  of  the  issues 
between  Maclay  and  the  sheriff,  the  latter  succeeded.  A  motion  was 
made  by  the  sureties  to  set  aside  the  judgment  against  them,  which,  as 
far  as  shown  by  the  record,  was  not  determined.  Complainant  now 
brings  this  bill  to  set  aside  said  judgment.  The  cause  was  referred  to 
a  Master,  who  recommended  that  the  bill  should  be  dismissed.  This 
report  was  confirmed,  and  complainant  appeals. 

A.  R.  Cotton,  for  the  appellant. 

Grant  &  Smith,  for  the  appellee.1 

Wright,  J.  The  judgment  upon  demurrer  against  the  sureties  was 
rendered  on  the  4th  of  March,  1848.  The  verdict  and  judgment  in 
favor  of  McDonald,  the  principal,  was  on  the  5th  of  the  month. 

Respondents  resist  the  relief  asked,  upon  the  ground  that  there  was 
neither  accident,  mistake,  misrepresentation,  nor  fraud,  and  that  Chan- 
cery has  no  jurisdiction,  although  the  party  has  lost  his  remedy  at  law 
through  ignorance  of  a  fact  which  he  might  have  learned  with  due  dili- 
gence and  inquiry,  or  by  bill  of  discovery.  Penny  v.  Martin.2  Or, 
the  same  principle  may  be  stated  as  in  Ballance  v.  Loomis,8  that  if  a 
party  seeks  to  set  aside  a  judgment  bv  proceeding  in  Chancer}',  he 
musfsliow  himself  clear  of  all  laches,  and   also  that  everv  effort  was 

—  -■■■■■■■■     »^  ■  —  •.. ■ ^ -____— ^_^  " 

made  to  prevent  a  judgment  against  him.  Or,  still  again,  as  in  Kreich- 
baum  v.  Bridges  &  Powers,4  following  Story's  Eq.  Jur.  §  887,  that  to 
authorize  relief  against  a  judgment,  it  must  appear  that  it  is  against 
conscience  to  execute  it,  and  also  that  the  injured  party  could  not  have 
availed  himself  of  the  main  facts,  at  or  before  the  trial,  and  that  there 
was  no  fault  or  negligence  on  his  part.  And  see  Houston  v.  Wolcott.5 
Complainant  does  not  controvert  these  principles,  but  places  his  case 
upon  the  ground  that  as  the  principal,  McDonakyby  the  verdict  and 
judgment  was,  discharged  from  his  liability,  the  sureties  are,  in  equity, 
discharged.  And  this  proposition  he  bases  upon  the  doctrine  that  the 
rights  of  the  surety,  and  his  relation  to  his  principal  are  the  same  after 
as  before  judgment,  and  that  when  from  any  cause  the  principal  ceases 
to  be  bound,  the  liability  of  the  surety  should  likewise  cease.     Or,  follow- 

1  The  citations  of  counsel  are  omitted.  —  Ed. 

-  4  John.  Ch.  566.  3  22  His.  82. 

4  1  Iowa,  14.  5  7  Iowa,  173. 


S*-*^ 

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p~**r  ~~&~^jZ)  s^. 


C/  (/       0 


^  ^A^Uu 


140  AMES    V.    MACLAY. 


LCHAP.  IL 


ing  Jackson  y.  Griswold,1  the  argument  is  this  :  that  a  decision  against 
the  debt  discharges  the  suret}'.  And  this,  not  upon  the  ground  that  he 
is  a  party  to  such  decision,  but  because  the  judgment  extinguishes  the 
debt;  and  the  principal  thing  being  thus  destroyed,  the  incident  (the 
obligation  of  the  surety)  is  destroyed  with  it.  The  effect  is  the  same 
as  a  release  by  the  creditor,  or  a  payment  by  the  debtor,  who  may  do 
any  act  in  discharge  of  his  surety,  but  nothing  by  which  he  shall  be 
concluded  beyond  his  original  objection. 

As  favoring  these  views,  complainant  cites  a  number  of  cases,  to  the 
effect  that  if  the  creditor  after  judgment  shall  disable  himself  from 
collecting  his  debt  from  his  principal  debtor,  he  is  held  to  have  exon- 
erated the  surety  also.  Of  this  class  is  Hubbell  v.  Carpenter,2  where 
the  creditor  after  judgment  gave  the  maker  of  the  note  an  obligation 
not  to  collect  the  same  against  him,  but  reserved  the  right  to  enforce 
it  against  the  indorser.  So,  in  the  Manufacturers'  and  Mechanics' 
Bank  v.  The  Bank  of  Pennsylvania,3  where  the  creditor  after  judgment 
entered  into  an  agreement  with  the  maker  of  the  note  to  stay  proceed- 
ings against  him.  And  substantially  to  the  same  effect  is  Storms  v. 
Thorn,4  and  the  other  authorities  cited.5  We  are  not  inclined,  how- 
ever, to  give  these  cases  weight,  as  applied  to  this  case.  To  make 
them  applicable  we  must  first  assume  that  the  judgment  in  favor  of  the 
sheriff  was  the  act  of  the  creditor,  after  judgment  against  the  sureties, 
in  the  same  sense  and  to  the  same  effect  as  the  stipulation  to  give  time 
to  the  principal  debtor,  or  an  agreement  to  release  him.  The  reason- 
ing which  upholds  this  proposition  is  not  tenable.  If  the  judgmentjn 
favor  of  McDonald  in  equitv  discharges  the  sureties  fro  in"  their  lia- 
bilit}*,  it  must  7je  not  because  it  was  the  agreement  or  act  of  Maclay, 

*-  -i  — ■  '■•■"  -  *"         '     '  " 

1  4  Hill,  529.  2  5  Barb.  520. 

3  9  Watts  &  Serg.  335.  4  3  Bail..  314. 

6  If  the  creditor  has  obtained  a  judgment  against  a  surety,  a  subsequent  release  or 
suspension  by  him  of  his  remedy  against  the  principal  debtor  has  been  properly  held 
to  give  the  surety  no  common  law  defence  to  the  enforcement  of  the  judgment  against 
him.  Pole  v.  Ford,  2  Chitty,  125  ;  Bray  v.  Manson,  8  M.  &  W.  668 ;  La  Farge  v.  Ilerter, 
3  Den.  157. 

In  Jenkius  v.  Robertson,  2  Drew.  351,  and  Findley  v.  U.  S.  Bank,  2  McL.  44,  the 
surety  was  held  to  be  defenceless  even  in  equity.  But  these  cases  must  be  deemed 
erroneous.  Relief  in  equitv  is  given  to  the  surety  almost  everywhere  in  this  country. 
hi  re  McDonald,  14  N.  15.  K.  477  ;  Carpenter  v.  Devon,  6  Ala.  718;  Morley  v.  Dickin- 
son, 12  Cal.  561 ;  Curan  v.  Colbert,  3  Ga.  239  ;  Trotter  v.  Strong,  63  111.  272  ;  Gipson 
v.  Ogden,  100  Ind.  20;  Chambers  v.  Cochran,  18  Iowa,  159;  Sherraden  v.  Parker,  24 
Iowa,  28  ;  Gustine  v.  Union  Bank,  10  Rob.  (La.)  412;  Carpenter  v.  King,  9  Met.  511  ; 
Moss  v.  Pettingill,  3  Minn.  217  ;  Anthony  v.  Capel,  53  Miss.  350 ;  Rice  v.  Morton,  19 
Mo.  263  ;  Smith  v.  Rice,  27  Mo.  505;  Wcstervelt  v.  Freeh,  33  N.J.  Eq.  451  ;  Boughtou 
v.  Orleans  Bank,  2  Barb.  Ch.  458 ;  Storms  v.  Thorn,  3  Barb.  314 ;  Hubbell  v.  Car- 
penter, 5  Barb.  520  (reversing  s.  c.  2  Barb.  484,  and  explaining  Ray  v.  Tallmadge,  5 
Johns.  Ch.  305  ;  La  Farge  v.  Herter,  3  Den.  157  ;  and  Lehox  v.  Prout,  3  Wheat.  520) ; 
Bangs  v.  Strong,  4  N.  Y.  315,  7  Hill,  250,  10  Paige,  11 ;  Cooper  v.  Wilcox,  2  Dev.  & 
B.  Eq.  90;  Dixon  v.  Ewiug,  3  Oh.  280;  Comm.  Bank  v.  Western  Bank,  11  Oh.  444; 
Blazer  v.  Bundy,  15  Oh.  St.  57  ;  Manufacturers'  Bank  v.  Pa.  Bank,  7  W.  &  S.  335  (see 
Hagey  v.  Hill,  75  Pa.  108,  111)  ;  Shelton  v.  Hurd,  7  R.  I.  403  ;  Parker  v.  Nations,  33 
Tex.  210  (statutory)  ;  Baird  v.  Rice,  1  Call,  18  ;  Shields  v.  Reynolds,  9  W.  Va.  48S. 


BECT.  II.] 


AMES   V.   MACLAY. 


141 


but  because  it  being  determined   that  the  principal  is  not  liabhvthe 
incidentalliability,  that  of  the  suretiesTlikewise  ceases. 

Chitty,  in  his  work  on  Contracts,  400,  quoting  from  Pothier,  says 
that :  tl  It  results  from  the  definition  of  a  surety's  engagement  as  being 
accessory  to  a  principal  obligation,  that  the  extinction  of  the  principal 
obligation  necessarily  induces  that  of  the  surety  ;  it  being  of  the  nature 
of  an  accessory  obligation  that  it  cannot  exist  without  its  principal ; 
therefore,  whenever  the  principal  is  discharged,  in  whatever  manner  it 
may  be,  not  only  by  actual  payment  or  a  compensation,  but  also  by  a 
release,  the  surety  is  discharged  likewise  ;  for  the  essence  of  the  obli- 
gation being  that  the  surety  is  only  obliged  on  behalf  of  a  principal 
debtor,  he  therefore  is  no  longer  obliged  when  there  is  no  longer  any 
principal  for  whom  he  is  obliged"  This  rule  comports  with  the  duties 
and  relations  of  the  surety  to  the  principal,  accords  with  reason  and 
good  conscience,  and  is  fully  recognized  by  the  authorities.  Is  there, 
then,  in  this  case,  any  technical  or  stern  rule  of  the  law  to  prevent  its 
application?  We  conclude  not,  and  that  we  can  do  what  right  reason 
and  good  conscience  dictate,  without  running  counter  to  the  rule  which 
requires  diligence  from  suitors  in  all  courts,  or  the  equivalent  principle 
that  a  party  who  applies  for  relief  against  a  judgment  at  law  must 
show  injustice,  and  that  he  has  been  without  fault  or  negligence. 

What  are  the  facts  of  this  case?  McDonald,  the  sheriff,  was  the 
principal,  and  of  course  primarily  and  principally  liable  for  the  alleged 
nonfeasance.  He,  after  a  full  and  fair  trial,  has  been  entirely  and 
absolutely  released  from  his  liability.  In  other  words,  it  has  been 
authoritatively  determined  by  the  judgment  of  a  competent  tribunal 
that  the  alleged  nonfeasance  was  not  established,  and  that  plaintiff 
(one  of  the  present  respondents)  had  no  cause  of  action.  By  this 
adjudication  the  principal  >l  is  no  longer  obliged,"  or  obligated,  so  far 
as  the  claim  of  Maelay  is  concerned.  Now,  does  it  accord  with  the 
alphabet  principles  governing  the  relation  of  principal  and  surety  that 
the  latter  shall  be  obliged  to  [jay  that  for  which  the  former  is  no  longer 
liable?  Or  rather,  is  it  not  consistent  with  every  rule  governing  the 
relation  that  as  the  condition  of  the  surety  is  to  be  favored,  he  should 
not  be  required  to  pay  a  debt  which  he  can  never  recover  from  his 
principal,  the  principal  obligation  having  been  extinguished'? 

But  it  is  suggested  that  this  view  loses  sight  of  the  fact  that  the 
sureties  severed  in  their  pleas,  and  that  the^v  were  guilty  of  negligence 
in  not  relying  upon  the  same  defence  as  that  made  by  their  principal. 
We  are  not  unmindful  of  the,  at  least,  apparent  strength  of  the  argu- 
ment. It  is  to  be  remembered,  however,  that  judgment  was  rendered 
against  the  sureties  before  the  issues  were  tried  between  their  principal 
and  the  creditor.  It  was,  therefore,  practically  impossible  for  them  to 
rely  upon  such  subsequent  adjudication  as  a  protection  to  themselves. 
And  then  suppose  they  had  pleaded  the  same  defence,  and  the  result 
bad  been  the  same  as  it  was.  Would  this  have  been  such  diligence  aa 
to  obviate  the  effect  of  the  rule  for  which  respondents  insist  ?     If  it 


142  AMES    V.    MACLAY.  [CHAP.  II 

would,  we  confess  that  we  cannot  see  how  the}-  should  be  placed  in 
an}-  worse  position  by  having  mistaken  their  proper  legal  defence. 

But  the  argument  that  the  sureties  are  concluded  and  forever 
estopped  from  resisting  the  judgment  against  them*  by  their  failure 
to  presenTtheir  proper  defence  is  radically  defective  in  that  it  ignores 
the  great  general  principles  at  the  foundation  of  their  liability,  and 
contmuesTIie  accessory  obligation  after  that  which  induced  it  has  been 
completely  extinguished.  We  would  not  say  that  if  the  principal  "had 
been  discharged  before,  and  the  sureties  had  failed  to  rely  upon  that 
fact  as  a  legal  defence,  they  could  be  afterwards  heard  in  equit}\  That 
case  is  not  before  us.  They  could  not  avail  themselves  of  a  defence 
which  did  not  exist.  Their  failure  to  make  the  same  defence  as  their 
principal  should  not,  in  equity,  conclude  them  to  the  extent  of  com- 
pelling the  payment  of  money  for  their  principal,  for  which  it  is  con- 
clusively and  finally  settled  he  was  never  liable.  Indeed,  under  such 
circumstances,  we  do  not  believe  that  a  case  can  be  found  sustaining 
such  liability. 

We  give  no  weight  to  the  fact  that  a  motion  was  made  to  set  aside 
the  judgment.  No  action  was  ever  taken  upon  it.  Complainant  might, 
therefore,  resort  to  his  concurrent  equitable  remedj'.  This  he  has  done. 
The  decree  is  Reversed.* 

1  Norris  v.  Pollard,  75  Ga.  358 ;  Dickason  v.  Bell,  13  La.  An.  249;  Miller  v.  Gas- 
kins,  Sm.  &  M.  Ch.  524,  Accord. 

In  accordance  with  the  doctrine  of  the  principal  case,  a  surety  may  defeat  the 
creditor  in  an  action  against  himself  by  setting  up  a  judgment  against  the  creditor  in  a 
>^rior  proceeding  against  the  principal  debtor.  Urummond  v.  ir'restman,  12  Wheat.  5T5 
f  (semble)  ;  State  v.  Parker,  72  Ala.  181  ;  Brown  v.  Bradford,  30  Ga.  927  ;  Baker  v. 
Merriam,  97  Ind.  539  ;  Cram  v.  Wilson,  61  Miss.  233  ;  State  v.  Coote,  36  Mo.  437 : 
Stoops  v.  Wittier,  1  Mo.  Ap.  420,  422;  Gill  v.  Norris,  11  Heisk.  614.  The  case  of 
State  Bank  v.  Robinson,  13  Ark.  214,  contra,  is  likely  to  be  overruled. 

Effect  of  Judgment  agahist  Principal  in  a  Subsequent  Proceeding  against  Sweti/.  — 
It  would  seem  to  be  clear,  upon  principle,  that  the  surety,  when  sued  by  the  creditor. 
should  not  be  prejudiced  by^a,  prior  judgment  against  the  principal  debtor.  Accord- 
ingly, such  a  mdgment  was  not  admitted  as  evidence  in  the  following  cases  :  Ex  parte 
Young,  17  Ch.  Piv.  668  ;  Lucas  v.  Bond,  6  Ala.  826  ;  Fireman's  Co.  v.  McMillan,  29 
Ala.  147  ;  Arrington  v.  Porter,  47  Ala.  714  ;  Pico  v.  Webster,  14  Cal.  202;  Governor 
v.  Shelby,  2  Blackf.  26;  Lastigue  v.  Baldwin,  5  Martin  (La.),  193;  De  Greiff  v.  Wil- 
son, 30  N.  J.  Eq.  435  ;  Douglass  v.  Howland,  24  Wend.  35 ;  Jackson  v.  Griswold, 
4  Hill,  522;  Moss  v.  MeCullough,  5  Hill,  131  ;  People  v.  Russell,  25  Hun,  524; 
McKellar  v.  Bowell,  4  Hawks,  34;  Giltinan  v.  Strong,  64  Pa.  242;  State  v.  Cason,  11 
S.  Ca.  392. 

But  in  the  following  cases  the  judgment  against  the  principal  was  held  to  be 
admissible  as  prima  facie  evidence  of  the  validity  of  the  creditor's  claim  against  the 
surety:  Drummond  v.  Prestman,  12  Wheat.  515  (semble)  ;  State  v.  Martin,  20  Ark. 
629 ;  Taylor  v.  Johnson,  17  Ga.  521:  Weaver  v.  Thornton,  63  Ga.  655;  Graves  v. 
Bulkley,25  Kas.  249  ;  Fay  v.  Edmiston,  25  Kas.  439;  Whitehead  v.  Woolfolk,  3  La. 
An.  42;  Macready  v.  Schenck,  41  La.  An.  456;  Iglehart  v.  Mackubin,  2  Gill  &  J.  235 
(overruling  Beall  u.  Beach,  3  Har.  McH.  242) ;  Parr  ?\  State,  71  Md.  220 ;  Lowell  v. 
Parker,  10  Met.  309  ;  Lafayette  Association  v.  Kleinhoffer,  40  Mo  Ap.  388;  Commis- 
sioners v.  Butt,  2  Oh.  348  ;  State  v.  Colerick,  3  ( >h.  487  ;  State  v.  Roswell,  14  Oh.  Sfc. 
73  ;  Atkins  v.  Baily,  9  Yerg.  Ill  ;  Barksdale  v.  Butler,  6  Lea,  450;  Munford  v.  Over- 
jeers,  2  Rand.  313  ;  Jacobs  u.   Hill,  2  Leigh,  393 ;  Stephens  v.  Shafer,  48  Wis.   54 


SECT,  12.  |  PETTY  V.   COOKE.  J43 


PETTY   v.    COOKE. 
In  tiik  Queen's  Bench,  June  22,  1871. 

[Reported  in  Law  Reports,  6  Qieen's  Bench,  794.| 

Declaration  by  payee  against  maker  of  a  promissory  note  for  £100 
with  interest,  payable  on  demand. 

Fifth  plea,  on  equitable  grounds,  that  the  defendant  made  the  note 
jointly  with  S.  D.  Steele,  for  the  accommodation  of  S.  D.  Steele,  and 
as  his  surety,  of  which  the  plaintiff  at  the  time  of  making  of  the  note 
had  notice.  And  that  after  the  note  became  due  S.  1).  Steele  paid  the 
full  amount  due  to  the  plaintiff  in  satisfaction  of  the  note. 

Replication,  on  equitable  grounds,  that  the  payment  of  the  note  was 
a  fraudulent  preference,  being  made  voluntarily  by  Steele  in  contem- 
plation  of  bankruptcy  ;  that  plaintiff  was  wholly  ignorant  that  the  pay- 
ment was  a  fraudulent  preference  ;  and  that  the  payment  was  afterwards 
avoided  by  the  trustees  of  Steele  in  bankruptcy,  and  the  plaintiff  repaid, 
as  he  lawfully  must,  the  amount  of  the  note  to  the  trustees. 

Demurrer  and  joinder  in  demurrer.1 

Herschell,  in  support  of  the  demurrer.  The  replication  is  no  answer 
to  the  pleas.  The  creditor,  by  accepting  payment  of  his  debt  from  the 
principal  debtor,  has  discharged  the  surety.  Payment  under  a  fraudu- 
lent preference  is  not  void  but  voidable  ;  when  the  payment  was  made 
it  was  not  a  void  payment,  and  there  was  a  time  when  the  surety  could 
have  pleaded  it  as  a  discharge.  There  was  also  an  interval  of  time 
during  which  the  surety  had  lost  the  right  to  step  in  and  become  the 
creditor  of  the  principal  debtor ;  the  surety  is  prejudiced  in  having  lost 
that  right ;  the  payment  by  the  principal  debtor  is  therefore  a  good 
payment  so  as  to  discharge  the  surety.  Any  contract  between  the 
creditor  and  the  principal  debtor  prejudicial  to  the  rights  of  a  surety 
discharges  the  surety. 

[Blackburn,  J.  Is  there  any  case  which  says  that  an  innocent  act 
unconsciously  done  discharges  the  surety?  In  Hulme  v.  Coles,  the 
Vice-Chancellor  says:  "  The  principle  of  discharging  a  surety  by  the 
giving  of  time  by  the  creditor  is  a  refinement  of  a  court  of  equity,  and 
I  will  not  refine  upon  it."  I  also  think  we  ought  not  to  refine  upon 
that  doctrine.] 

See  also  Stoops  v.  Wittier,  1  Mo.  Ap.  420  ;  Cormack  v.  Commonwealth,  5  Binn.  184, 
where  the  surety  had  been  given  an  opportunity  to  defend  the  suit  against  the 
principal. 

In  Massachusetts,  the  Court  has  gone  so  far  as  to  make  the  judgment  against  the 
principal  conclusive  evidence  of  the  creditor's  right  against  the  surety.  Tracy  v. 
Goodwin,  5  All.  409  ;  Dennie  v.  Smith,  129  Mass.  143.  —Ed. 

1  The  statement  of  the  pleadings  is  abridged  ;  the  concurring  opinions  of  Lush  and 
Hannen,  J.J.,  and  portions  of  the  arguments  are  omitted.  —  Ed. 


M4  PETTY    V.   COOKE.  ICHAP.  II. 

Blackburn,  J.  It  seems  to  me  clear,  both  in  equity  as  well  as  law, 
that  the  plaintiff  is  entitled  to  sue  the  surety,  and  that  there  is  nothing 
stated  in  the  pleadings  which  has  discharged  the  latter  from  liability. 
As  early  as  Rees  v.  Berrington,1  a  case  decided  in  1795  by  Lord  Lough- 
borough, it  was  held,  on  what  certainly  seems  artificial  reasoning,  that 
where  time  is  given  by  a  creditor  to  a  principal  debtor  without  the  con- 
sent of  the  surety,  the  surety  is  in  equity  discharged,  however  short 
the  time  may  be,  on  the  ground  that  he  is  thereby  deprived  of  his  right 
on  paying  off  the  creditor  to  sue  the  principal  debtor.  Lord  Eldon, 
also,  in  Samuell  v.  Howarth,  cited  in  the  notes  to  Rees  v.  Berrington,2 
says :  "  The  rule  is  that  if  a  creditor  without  the  consent  of  the  surety 
gives  time  to  the  principal  debtor,  bj'  so  doing  he  discharges  the  surety, 
that  is,  if  time  is  given  by  virtue  of  positive  contract,  between  the 
creditor  and  the  principal  —  not  where  the  creditor  is  merely  inactive. 
And  in  the  case  put,  the  surety  is  held  to  be  discharged,  for  this  reason, 
because  the  creditor  by  so  giving  time  to  the  principal  has  put  it  out  of 
the  power  of  the  surety  to  consider  whether  he  will  have  recourse  to 
his  remedy  against  the  principal  or  not,  and  because  he,  in  fact,  can- 
not have  the  same  remedy  against  the  principal  as  he  would  have  had 
under  the  original  contract.  ...  It  has  been  truly  stated  that  the 
renewal  of  these  bills  might  have  been  for  the  benefit  of  the  surety,  but 
the  law  has  said  that  the  surety  shall  be  the  judge  of  that,  and  that  he 
alone  has  the  right  to  determine  whether  it  is  or  is  not  for  his  benefit. 
The  creditor  has  no  right,  it  is  against  the  faith  of  his  contract  to  give 
time  to  the  principal,  even  though  manifestly  for  the  benefit  of  the 
surety,  without  the  consent  of  the  surety."  I  think  it  impossible  to 
read  the  principle  laid  down  by  Lord  Eldon  without  thinking  that  it  is 
based  upon  highly  technical  reasoning,  however  accurate  it  may  be. 
It  is  clear  that  a  creditor  who  gives  time  to  the  principal  debtor  with- 
out reserving  his  right  against  the  surety,  and  alters  the  rights  of  the 
surety,  discharges  him  ;  but  that  time  given  by  a  creditor,  which  in 
numberless  cases  does  not  injure  the  surety,  should  discharge  him,  is 
to  my  mind  not  justice,  although  established  b}'  courts  of  equity.  The 
ground,  however,  on  which  this  doctrine  is  based,  is  that  by  giving 
time  to  the  principal  debtor  the  creditor  does  an  act  which  is  against 
good  faith,  and  injurious  to  the  surety ;  that  doctrine  cannot  apply  to 
the  present  case,  for  the  creditor  accepted  money  which  he  had  no 
right  to  refuse,  and  the  acceptance  of  which  he  had  no  means  of  know- 
ing would  injure  the  surety.  He  therefore  did  no  act  injurious  to  the 
suret}',  and  the  surety  is  not  discharged.  I  think  Pritchard  v.  Hitch- 
cock 3  is  in  point.  Judgment  for  the  plaintiff.* 

i  2  Ves.  540;  2  Wh.  &  T.  L.  C.  (Eq.)  3d  ed.  887. 

2  2  Wh.  &  T.  L.  C.  (Eq.)  3d  ed.  895. 

3  6  M.  &G.  151. 

4  In  Watson  v.  Pogue,  42  Iowa,  582  ;  Harner  v.  Batdorf,  35  Oh.  St.  113,  the  cred- 
itor was  allowed  to  charge  the  surety,  although  he  received  payment  from  the  principal 
with  knowledge  that  it  was  a  fraudulent  preference.    But  in  Northern  Bank  v.  Cooke, 


NUAUl 


22,  1873. 

5 .     Z 

her/ iter,  8  Li   *C    ^  jf- 

f  opfnion  that  the  defenthrnt  is  entitled  t5  the 


THE   EXCHEQUEE- 

Reported  in  Ijx>c  Report. 


Kelly/C.  B.1  I  am 
judgment  of  the  Court.  This  is  a  case  of  creditor,  debtor,  and  surety  AJJJg 
One  Jones  was  indebted  to  the  plaintiff  in  the  sura  of  £100,  and  the 
defendant  was  his  surety.  The  plaintiff  now  sues  the  defendant  for 
the  debt,  and  he  pleads  that  the  plaintiff  has  released  the  debtor  with- 
out his  consent,  and  he  is  therefore  discharged.  Now  the  law  upon 
this  subject  is  clear  and  well  settled.  If  the  creditor,  without  the  con- 
sent  of  the  surety,  by  his  own  act  destroy  the  debt,  or  derogate  from 
the  power  which  the  law  confers  upon  the  surety  to  recover  it  against 
2^J^2  the  debtor  in  case  he  shall  have  paid  it  to  the  creditor!  the  surety 
""""""//  is  discharged.2  But  the  plaintiff  contends  that  in  this  case  he  has  ,- 
reserved  tc  himself  the  right  to  recover  against  the  surety  by  the  deed 
in  which  the  debtor  is  released.  The  plea  of  the  defendant  sets  forth 
the  deed  in  hmc  verba  ;  by  which  it  appears  that  Jones,  the  debtor, 
having  assigned  all  his  estate  and  effects  to  the  plaintiff  and  another  as 
trustees  for  the  benefit  of  his  creditors,  the  plaintiff  and  the  other  cred- 
itors, in  consideration  of  the  premises,  did  release  the  said  Thomas 
Jones  from  his  (and  their)  respective  debts,  "in  like  manner  as  if  the 
said  Thomas  Jones  had  obtained  a  discharge  in  bankruptcy."  Now 
the  question  is  this,  what  is  the  effect  of  a  release  in  these  terms  upon 

13  Bush,  340,  the  Court  declined  to  follow  these  cases.  See  also  Newman  i\  Hazle- 
rigg,  1  Bush,  412. 

The  surety  will  not  be  exonerated  if  the  principal  gives  to  the  creditor  in  payment 
of  the  debt  a  note  or  other  obligation  which  is  void,  e.  g.,  for  usury,  Mitchell  v.  Cot- 
teu,  2  Fla.  136  ;  or  as  being  ultra  vires,  Williams  v.  Gilchrist,  11  N.  H.  535. 

But  a  valid  payment  by  the  principal  to  the  creditor  destroys  the  latter's  right 
against  the  surety.  Kinnaird  v.  Webster,  10  Ch.  D.  139  ;  Lackey  v.  Steere,  121  111. 
598  (satisfaction  by  execution  of  judgment) ;  Petefish  v.  Watkins,  124  111.  384  ;  Rubli 
v.  Norman,  7  Bush,  582 ;  Stewart  v.  Levis,  42  La.  An.  37  ;  Burnet  v.  Courts,  5  Har. 
&  J.  78;  Baugher  v.  Duphorn,  9  Gill,  314  ;  Merrimack  Bank  v.  Parker,  7  Pick.  88; 
Chapman  v.  Collins,  12  Cush.  163;  Coots  v.  Farns worth,  61  Mich.  497;  Foster  v. 
Walker,  34  Miss.  365  ;  Manufacturers'  Co.  v.  Todd,  4  Mo.  Ap.  591 ;  Eastman  v. 
Plumer,  32  N.  H.  239;  Lancey  v.  Clark,  64  N.  Y.  209;  Woodman  v.  Mooring,  3  Dev. 
237 ;  Gibson  v.  Rix,  32  Vt.  824  ;  Felch  v.  Lee,  15  Wis.  265;  Greening  v.  Patten,  51 
Wis.  146.  — Ed. 

1  Only  the  opinion  of  the  Chief  Baron  is  given.  Bramwell,  B.,  concurred. 
Pigott,  B.,  dissented.  —  Ed. 

2  Release  of  Principal  Debtor.  —  Ex  parte  Smith,  3  Bro.  C.  C.  1  ;  Ex  parte  Wilson, 
11  Ves.  410;  Ex  parte  Glendinning,  Buck,  517;  Lewis  v.  Jones,  4  B.  &  C.  506; 
Grundy  v.  Meighan,  7  Ir.  L.  R.  519;  Bull  v.  Coe,  77  Cal.  54;  U.  S.  v.  Mattoon, 
5  Mack.  565;  Brown  v.  Aver,  24  Ga.  288;  Lockwood  i<.  Penn,  22  La.  An.  29; 
Anthony  v.  Capel,  53  Miss.  350;  Hempsted  v.  Hempsted,  27  Mo.  187  ;  Prior  v.  Kiso, 
81  Mo.  241  ;  Broadway  Bank  v.  Schmucker,  7  Mo.  Ap.  171  ;  Kirby  v.  Taylor,  6 
Johns.  Ch.  242-  Bridges  v.  Phillips,  17  Tex.  128 ;  Paddleford  v.  Thacher,  48  Vt.  574, 
Accord.  —  Ed. 

10 


146 


CRAGOE    V.    JONES. 


[CHAP.  II. 


d 


the  rights  and  the  condition  of  these  three  parties?  It  appears  to  me 
that  the  meaning  of  these  words  is  clear  and  unambiguous.  If  Jones, 
the  debtor,  had  obtained  a  discharge  in  bankruptcy,  he  would  have_been 
discharged  not  onlyjis  against  the  plainiirt,  the  "Creditor,  but  also  as 
against  the  defendant,  the  surety.  It  seems  to  me,  therefore,  free  from""" 
doubt  that  the  plaintiff  by  this"" release,  having  discharged  his  debtor  as 
against  the  surety  as  well  as  himself,  and  without  the  consent  of  the 
surety,  the  surety  is  himself  discharged. 

It  is  contended  that  this  is  a  qualified  or  conditional  release  ;  but  I 
look  in  vain  throughout  the  deed  for  any  words  of  qualification  or 
reservation,  or  imposing  or  creating  a  condition.  It  is  true  that  if  a 
debtor  has  obtained  his  discharge  in  bankruptcy  the  creditor  may  still 
recover  against  the  surety,  and  he  or  the  surety,  if  he  pay  the  debt, 
may  prove  against  the  debtor's  estate  under  the  bankruptcy.  If, 
therefore,  the  debtor  had  reall}T  become  bankrupt  and  obtained  his 
discharge,  although  the  creditor  might  have  recovered  against  the 
surety,  notwithstanding  the  discharge  of  the  debtor,  his  right  or  power 
to  do  so  would  have  been  the  act  or  consequence  of  the  law  or  the 
statutes  of  bankruptcy,  whereas  here  the  discharge  of  the  surety  is  his 
own  act;  and  he  cannot  by  his  own  act  reserve  to  himself  the  right  to 
sue  the  surety,  notwithstanding  tne  discharge  of  the  debtor  except  by 
the  agreement  of  the  debtor  that,  notwithstanding" his  discharge,  incase 
the  creditor  shall  recover  agains't  the  surety,  he  will  remain  liable  to  the 
\  surety  for  the  debL  The  whole  case  upon  this  deed,  simply  stated,  is 
that  the  plaintiff  has  released  his  debtor  in  like  manner  as  if  he  had  ob- 
tained a  discharge  in  bankruptcy,  and  inasmuch  as,  if  he  had  obtained  a 
discharge  in  bankruptcy,  he  would  have  been  absolutely  released,  and 
neither  the  plaintiff  nor  the  defendant  could  have  afterwards  sued  him 
for  the  debt,  he  is  absolutely  released  now,  and  as  such  absolute  release 
was  without  the  consent  of  the  surety,  the  suret}-  is  bj-  law  discharged. 
It  is  argued  that  a  creditor  may  release  his  debtor  and  reserve  to  him- 
self the  right  to  sue  the  surety,  and  that  no  doubt  may  be  done,  but 
only  where  the  language  of  the  release,  or  of  the  deed  in  which  it  is 
contained,  is  such  that  the  debtor  accepts  the  release  subject  to  the 
conditions  that  he  shall  remain  liable  to  pay  the  debt  to  the  surety  in 
case  he  shall  have  paid  it,  whether  voluntarily  or  under  process,  to  the 
creditor.  Such  was  the  case  in  Bateson  v.  Gosling,1  where  the  release 
was  contained  in  a  trust  deed  under  the  Bankruptcy  Act  of  1861,  but 
which  was  followed  by  a  proviso  that  if  the  creditors,  including  the 
plaintiff,  had  any  security  for  their  demands,  "  or  any  demands  against 
the  debtor  to  the  payment  whereof  an}'  person  or  persons  is  or  are 
liable  as  a  surety  or  sureties  ;  the  debtor  ma}*  execute  these  presents 
without  prejudice  to  the  same  security,  or  to  the  claim  against  an}' 
surety  or  sureties."  And  this  proviso  was  held  to  convert  the  release 
into  a  mere  covenant  not  to  sue,  and  to  preserve  the  right  of  the  cred- 
itor to  sue  the  surety,  and  of  the  surety  to  sue  the  debtor ;  and  Willes, 

1  Law  Rep.  7  C.  P.  9. 


-->. 


SECT.  II.] 


PRICE    V.    BARKKK. 


147 


s 


J.,  in  his  judgment  expressly  states:  "When  the  release  in  the  deed 
is  looked  at,  it  is  in  terms  a  release  subject  to  a  proviso,  and  although 
but  for  such  proviso  it  would  be  an  absolute  release,  so  that  there  could 
be  no  proceeding  afterwards  against  a  surety,  yet  the  proviso  expressly 
reserves  the  creditors'  remedy  against  a  surety,  and  stipulates  that  any 
creditor  may  execute  the  deed  without  prejudice  to  his  claim  against 
any  surety."  And  again,  "But  if  the  principal  debtor  consented  to 
the  creditor  having  recourse  to  the  surety  the  latter  would  not  be  dis- 
charged, and  would  have  his  remedy  against  the  principal  debtor."  So 
that  the  release  in  that  ease  was  no  discharge  of  the  debtor  as  against 
the  surety  by  reason  of  the  proviso.  Here  there  is  no  such  proviso, 
nor  is  a  single  word  to  be  found  throughout  the  deed  pointing  to  any 
qualification  or  any  reservation  whatsoever.  The  release  is  in  its  terms 
a  simple  and  absolute  release  by  the  creditor  of  his  debtor  in  like  man- 
ner as  if  the  debtor  h,ad  obtained  a  discharge  in  bankruptcy.  If  the 
debtor  had  obtained  a  discharge  in  bankruptcy  the  surety  would  have 
had  no  right  of  suit  against  him,  and  as  the  plaintiff,  the  creditor,  has 
put  his  debtor  in  a  condition  in  which  the  surety  has  lost  his  right  to 
proceed  against  him,  and  this  act  has  been  done  b}-  the  plaintiff,  the 
creditor,  without  the  consent  of  the  surety,  I  hold  that  he  has  thereby 
discharged  the  surety,  and  this  action  is  therefore  not  maintainable. 

Judgment  for  the  defendant, 

7^.    T&- 


PRICE  v.  BARKER. 
In  the  Queen's  Bench,  February  22,  1855. 

[Reported  in  4  Ellis  $•  Blackburn,  760.  | 

Coleridge,  J.,  now  delivered  the  judgment  of  the  Court.1 
This  was  an  action  by  the  public  officer  of  a  banking  company  against 
the  Elxecutors  of  George  Hopps.  The  declaration  was  on  a  bond  con- 
ditioned for  the  security  to  the  bank  of  a  banking  account  of  one 
William  Brown.  The  plea  set  out  the  bond,  which  was  the  joint  and 
several  writing  obligatory  of  the  said  George  Hopps  and  William 
Brown,  and  then  set  out  a  general  release,  made  after  the  accruing 
of  the  causes  of  action,  and  averred  that  the  release  was  made  in  the 
lifetime  of  the  said  George  Hopps  without  the  privity,  knowledge, 
authority,  or  consent  of  the  said  George  Hopps.  The  replication  set 
out  the  release,  which,  after  general  words  of  release,  contained  the 
following  proviso.  "  Provided  always,  that  nothing  herein  contained 
shall  extend,  or  be  deemed  or  construed  to  extend,  to  prevent  the  said 
banking  company,  their  successors  or  assigns,  or  the  partners  for  the 


1  Only  the  opinion  of  the  Court  is  given. 


148  PRICE    V.    BARKER.  [CHAP.  IL 

time  being  constituting  the  said  company,"  "  from  suing  or  prose- 
cuting any  person  or  persons,  other  than  the  said  William  Brown,  his 
executors,  administrators,  or  assigns,  who  is,  are,  shall,  or  may  be  liable 
or  accountable  to  pay  or  make  good  to  the  said  banking  company  all 
or  any  part  of  any  debt  or  debts,  sum  or  sums  of  money,  now  due  from 
the  said  William  Brown  to  the  said  company,  either  as  drawer,  in- 
dorser,  or  acceptor  of  any  bill  or  bills  of  exchange  or  promissory  note 
or  notes,  or  as  being  jointly  or  severally  bound  with  the  said  William 
Brown  in  any  bond  or  bonds,  obligation  or  obligations,  or  other  instru- 
ment whatsoever,  or  otherwise  howsoever,  as  if  these  presents  had  not 
been  executed  ;  it  being  understood  and  agreed  that,  as  regards  any 
such  suits  or  prosecutions,  these  presents  shall  not  operate  or  be  pleaded 
in  bar,  or  as  a  release." 

To  this  replication  the  plaintiff  demurred  :  and  the  demurrer  was 
argued  before  us  in  the  course  of  the  last  term. 

On  the  argument  two  questions  arose  :  — 

1st,  Whether  the  general  words  of  the  release  were  restrained  by  the 
proviso,  so  that,  in  order  to  give  effect  to  the  whole  instrument,  we 
must  construe  it  as  a  covenant  not  to  sue,  instead  of  a  release. 

And,  2dly,  Assuming  the  deed  to  operate  merely  as  a  covenant  not 
to  sue,  whether  the  reservation  of  rights  against  other  parties  than  the 
principal  debtor  contained  in  the  proviso  would  prevent  the  surety 
from  being  discharged  by  a  binding  covenant  to  give  time  to,  or  not  to 
sue,  the  principal  debtor. 

To  entitle  the  plaintiff  to  our  judgment,  it  must  appear  that  the  deed 
operated  only  as  a  covenant  not  to  sue,  and  that  the  rights  of  the  plain- 
tiff as  against  the  surety  were  preserved  by  the  particular  reservation 
in  question,  notwithstanding  such  covenant  not  to  sue. 

With  regard  to  the  first  question,  two  modes  of  construction  are  for 
consideration.  One,  that,  according  to  the  earlier  authorities,  the 
primary  intention  of  releasing  the  debt  is  to  be  carried  out,  and  the 
subsequent  provision  for  reserving  remedies  against  co-obligors  and 
co-contractors  should  be  rejected  as  inconsistent  with  the  intention  to 
release  and  destroy  the  debt  evinced  by  the  general  words  of  the  release, 
and  as  something  which  the  law  will  not  allow,  as  being  repugnant  to 
such  release  and  extinguishment  of  the  debt.  The  other,  that,  accord- 
ing; to  the  modern  authorities,  we  are  to  mould  and  limit  the  general 
words  oflhe  release  by  construing  it  to  be  a  covenant  not  to  sue,  aud^ 
thereby  allow  the  parties  to  carry  out  the  whole  of  their  mTentions  by 
preserving  the  rights  against  parties  jointly  liable!  We  quite  agree 
with  the  doctrine  laid  down  by  Lord  Denman,  in  Nicholson  v.  Revill,1 
as  explained  by  Baron  Parke  in  Kearsley  v.  Cole,2  that,  if  the  deed  is 
taken  to  operate  as  a  release,  the  right  against  a  party  jointly  liable 
cannot  be  preserved  ;  and  we  think  that  we  are  bound  by  modern 
authorities  (see  Solly  v.  Forbes  ;3  Thompson  v.  Lack  ; 4  and  Payler  v. 

i  4  A.  &  E.  675.  2  16  M.  &  W.  136. 

s  2  Br.  &  B.  38.  4  3  Com.  B.  540. 


SECT.  II.]  PRICE    V.   BARKER.  149 

Homersham a)  to  carry  out  the  whole  intention  of  the  pai'ties  as  far  as 
possible,  by  holding  the  present  to  be  a  covenant  not  to  sue,  and  not  a 
release.  It  is  impossible  to  suppose  for  a  moment  that  the  parties  to 
this  deed  could  have  contemplated  the  extinguishment  of  their  rights 
as  against  parties  jointly  liable.  It  was  argued,  indeed,  that  the  par- 
ticular words  of  the  proviso  in  the  present  case  prevented  this  construc- 
tion by  appearing  to  recognize  that  Brown  was  not  to  be  sued,  and  that,  in 
an  action  against  him,  the  deed  was  to  operate  as  a  release  and  might 
be  pleaded  at  bar.  The  words,  however,  that  the  proviso  was  not  to 
extend  to  prevent  the  bank  from  suing  or  prosecuting  any  person  or 
persons  other  than  the  said  defendant  or  his  representatives,  which 
were  said  to  show  that  Brown  was  not  to  be  sued,  are  quite  as  appli- 
cable to  a  covenant  not  to  sue  as  to  a  release ;  and  the  later  general 
words  in  the  conclusion  of  the  deed,  "  that,  as  regards  any  such  suits 
or  prosecutions"  (against  parties  jointly  liable),  "  these  presents  shall 
not  operate  or  be  pleaded  in  bar,"  are,  we  think,  like  the  words  of 
actual  release,  too  general  to  prevent  us  by  inference  from  giving  effect 
to  the  plainly  expressed  intention  that  the  parties  jointly  liable  should 
not  be  discharged  by  an  extinguishment  of  the  debt.  If,  therefore, 
the  testator,  whom  the  defendants  represent,  had  been  in  the  situation 
of  co-obligor  merely,  we  should  think  that  he  was  not  discharged  by 
the  deed  in  question.*"  " 

It  remains,  however,  in  the  second  place,  to  consider  what  effect  the 
deed  had  upon  his  liabilities  in  reference  to  his  relation  as  surety  for 
Brown,  the  principal  debtor.  It  was  thrown  out,  indeed,  in  argument, 
that  we  were  bound  to  consider  him  as  a  principal  debtor  and  not  as  a 
surety  upon  this  bond,  the  obligatory  part  of  the  bond  being  joint  and 
several  without  any  reference  to  either  being  surety  or  principal.  But, 
for  the  purpose  of  seeing  the  relation  of  the  parties,  we  must  look  at 
the  condition  of  the  bond,  as  set  out  upon  the  pleadings,  which  plainly 
discloses  that  the  defendant  was  a  surety  for  the  liabilities  of  Brown. 

If  the  question,  whether  a  covenant  not  to  sue,  qualified  by  such  a 
proviso  as  that  in  the  present  case,  and  entered  into  by  the  creditor 
without  the  consent  of  the  surety,  discharges  the  surety,  were  a  new  one 
unaffected  by  authority,  we  should  pause  before  deciding  that  such  a 
case  does  not  fall  within  the  general  rule  of  the  creditor  diseharoino-  a 
surety  by  entering  into  a  binding  agreement  to  give  time  to  his  principal 
debtor ;  and  we  should  have  thought  the  forcible  observations  of  Lord 
Truro  in  the  recent  case  of  Owen  v.  Homan  2  entitled  to  much  consider- 
ation. We  find,  however,  that  the  Court  of  Exchequer  in  a  solemn  and 
well-considered  judgment,  in  the  case  of  Kearsley  v.  Cole,3  after  refer- 
ring to  all  the  authorities,  states  that  the  point  must  "  be  considered  as 
settled  ; "  and  they  rest  their  judgment  upon  this,  although  it  was  not 
necessary  to  decide  it,  as  the  surety  in  that  case  had  consented  to  the 
deed :  which  consent  they  treat  indeed  as  an  additional  reason ;  but 
they  expressly  state  that  it  was  not  necessary.     They  state  that  they 

1  4  M.  &  S.  423.  2  3  Macn.  &  G.  378.  3  16  m.  &  W.  128,  136. 


150  PRICE    V.    BARKER.  [CHAP.  II. 

"do  not  mean  to  intimate  any  doubt  as  to  the  effect  of  a  reserve  of 
remedies  without  such  consent ;"  and  they  add  that  "the  cases  are 
numerous  that  it  prevents  the  discharge  of  a  surety,  which  would 
otherwise  be  the  result  of  a  composition  with  or  giving  time  to  a 
debtor  by  a  binding  instrument ;"  and  they  then  explain  how  it  is  that, 
in  their  judgment,  the  reserve  of  remedies  has  that  effect.  After  this 
judgment,  and  after  the  strong  expression  of  opinion  by  the  present 
Lord  Chancellor  in  his  judgment  in  the  House  of  Lords  in  the  case  of 
Owen  v.  Homan,1  where  he  dissents  from  the  remarks  made  by  Lord 
Truro  in  the  Court  below,  and  states  that,  but  for  those  remarks,  he 
should  have  thought  that  the  principle  contended  for  by  the  plaintiffs 
was  "  a  matter  beyond  doubt,"  we  think  that  we  ought  to  consider  the 
law  on  this  subject  as  settled,  at  least  until  it  is  questioned  in  a  court 
of  error. 

It  seems  to  be  the  result  of  the  authorities  that  a  covenant  not  to  sue, 
qualified  by  a  reserve  of  the  remedies  against  sureties,  is  to  allow  the 
surety  to  retain  all  his  remedies  over  against  the  principal  debtor ;   and 
that  the  covenant  not  to  sue  is  to  operate  only  so  far  as  the  rights  oT 
the  surety  may  not  be  affected. 

Probably  many  deeds  of  this  nature  are  framed  continually  on  the 
supposition  that  the  law  has  been  supposed  to  be  settled  in  the  man- 
ner stated  in  the  Exchequer,  since  the  time  of  Lord  Eldon ;  and  we 
think  that,  sitting  as  a  court  of  co-ordinate  jurisdiction  with  the  Ex- 
chequer, we  ought  not  to  disturb  the  law  stated  by  them  in  a  solemn 
judgment  to  be  clearly  settled. 

Our  judgment,  therefore,  upon  the  demurrer  in  the  present  case  is 
in  favor  of  the  plaintiff.  Judgment  for  the  plaintiff.2 

i  4  H.  L.  Ca.  1037. 

2  Ex  parte  Gifford,  6  Ves.  805 ;  Malthy  v.  Carstairs,  7  B.  &  C.  735  ;  Thompson  v. 
Lack,  3  C.  B.  540  ;  Wyke  v.  Rogers,  1  D.  M.  &  G.  408  ;  Close  v.  Close,  4  D.  M.  &  G.  176 ; 
Green  v.  Wynn,  4  Ch.  204  ;  Nevill's  case,  6  Ch.  43  ;  Bateson  v.  Gosling,  L.  R.  7  C. 
P.  9;  Muir  v.  Crawford,  L.  R.  2  Sc.  Ap.  456  (explaining  Webb  v.  Hewitt,  3  K.  &  J. 
438) ;  Rockville  Bank  v.  Holt,  58  Conn.  526  ;  Mueller  v.  Dobschuetz,  89  111.  176  ;  Boat- 
men's Bank  v.  Johnson,  24  Mo.  Ap.  316  ;  Kirby  v.  Turner,  Hopk.  Ch.  309;  Lysaght 
v.  Phillips,  5  Duer,  106.  (But  see  Farmers'  Bank  v.  Blair,  44  Barb.  641  ;  Stirewalt 
v.  Martin,  84  N.  Ca.  4),  Accord. 

In  Nevill's  Case,  supra,  Sir  G.  Mellish,  L.  J.,  said  (p.  47):  "  The  reason  why  a 
simple  release  of  the  principal  debtor  discharges  the  surety  is,  that  it  would  be  a 
fraud  on  the  principal  debtor  to  profess  to  release  him,  ana  tnen  to  sue  the  surety, 
who  in  turn  would  sue  him  :  but  where  the  "oargain  is  that  the  creditor  is  to  retanThis 
remedy  againsMhV  surety,  there  is  mi  fraudjui  the  principal_ikl't<>r,  and  the  Court 
will  give  effect  to  the  intention  of  the  parties  by  construing  the  release  as  a  covenant 
not  to  sue  the  principal  debtor." 

The  release  "oTTTie  principal  by  the  creditor  will  not  pvonerat.e  the  snrej.y,  if 
the  latter,  either  before  or  at  the  time  of  such  release,  agrees  to  continue  liable. 
S'mith  yAVinteivt  M.  &,  VV .  'b I y ;  Union  Bank  v.  Beech,  3  H.  &  C.  672;  Ex  parte 
Harvey,  23  L.  J.  Bank,  26;  Davidson  v.  Cooper,  8  M.  &  W.  755;  Rockville  Bauk  v. 
Holt,  58  Conn.  526  ;  Osgood  v.  Miller,  67  Me.  174  ;  Parsons  v.  Gloucester  Bank,  10 
Pick.  533;  Hutchinson  v.  Wright,  61  N.  H.  108;  Bruen  v.  Marquand,  17  Johns.  58; 
Wright  v.  Storrs,  6  Bosw.  600.  See  however,  Eggemann  v.  Henschen,  56  Mo.  123; 
Broadway  Bank  v.  Schmucker,  7  Mo.  Ap.  171.  —  Ed. 


rktt    ti.]  JONES    V.    WARD.  151 

JONES,  Respondent,  jt>.  "WARD,  Appellant.  ji  _X__  - 
In  the  Sctreme  Court,  Wisconsin,  February  28,  1888. 
[Reported  in  71   FFfrconsin  Reports,  152.] 

Lyon,  J.1  Brief!}-  stated,  the  case,  so  far  as  there  is  any  contro- 
versy, is  as  follows  :  The  defendant  became  surety  for  Cook's  debt  to 
the  plaintiff,  and  Cook  indemnified  him  by  executing  to  him  a  chattel 
mortgage  on  certain  property.  The  plaintiff  released  Cook  from  lia- 
bility for  such  debt,  without  the  consent  of  the  defendant.  After- 
wards, defendant  sold  his  security  to  McArthur,  without  the  consent  of 
the  plaintiff,  for  the  consideration  (as  the  Circuit  Court  found)  of  $475. 

The  only  question  in  the  case  is,  Did  the  release  of  Cook  also  re- 
lease the  defendant,  his  surety?     The  general  rule  undoubtedly  is  that 
the  release  of  the  principal  debtor,  without  the  consent  of  the  surety, 
releases  the  surety.     But  if  the  surety  is  fully  indemnified  against  loss      a^  J2^— 
by  reason  of  having  become  such,  a  release  of  the  principal  without  //  — ^ 

payment  ot  the  debt  does  not  release  the  surety.     This  is  the  rule  laid  \J 

down  in  fay  v.  lower,'1  as  applied  to  a  case  in  which  an  unauthorized 
extension  of  credit  had  been  given  to  the  principal.3  Manifestly,  the 
same  rule  should  be  applied  where  the  suretyis  absolutel}-  released 
from  the  debt.  The  rule  is  founded  upon  a  very  plain  principle  of 
justice.  To  illustrate  :  A  becomes  security  for  B  to  C  for  the  payment 
of  SI, 000.  B  puts  property  into  the  hands  of  A,  worth  $1,000,  to 
indemnify  him  against  loss  because  of  the  obligation  thus  assumed  by 
him.  C  releases  B,  the  principal  debtor,  from  all  liability  on  account  of 
the  debt,  but  receives  no  payment  thereon.  A,  the  surety,  then  sells  the 
pledged  property  for  $1,000  and  retains  the  proceeds.  It  is  entirely 
reasonable  and  just  that,  notwithstanding  the  release  of  the  principal 
debtor,  C  should  have  his  remedy  against  the  surety  for  the  amount 
realized  by  him  in  the  sale  of  the  pledged  property.  Such,  we  think, 
is  the  law.     It  seems  to  us  that  we  have  here  just  such  a  case. 

By  the  Court.     The  judgment  of  the  Circuit  Court  is  affirmed.4 

1  Only  the  opinion  of  the  Court  is  given.  —  Ed.  '2  58  Wis.  286. 

3  Chilton  v.  Kobbins,  4  Ala.  223;  Home  Bank  v.  Waterman,  134  111.  461  (semble) ; 
Crim  v.  Fleming,  101  Ind.  154  ;  Keinhaus  v.  Generous,  25  Oh.  St.  667 ;  Smith  v.  Steele 
25  Vt.  427,  Accord.  —  En. 

*  Moore  v.  Paine,  12  Wend.  123,  Accord.  — Ed. 


X 


152  ENGLISH   V.    DARLEY.  [CHAP.  IL 

^^  ^_^  ~^^_  sot  ^.  *-£^  -T~*-^^n   O 

—a —  /->  In  the  Common   Pis^as    .Taxi; 

-  f\        t^Sf      ^  [Reported  in  2  Bosanquet  §•  F 

Assumpsit  by  the  indorsee  of  a  bill  of  exchange  against  the  indorser 
Lord  Eldon,  Ch.  J.,  before  whom  the  cause  was  tried  at  the  West- 
minster sittings  after  last  Michaelmas  Term,  nonsuited  the  plaintiff 
under  the  following  circumstances  :  Payment  of  the  bill  being  refused 
when  due,  the  plaintiff  commenced  actions  against  the  present  defend- 
ant and  the  acceptor,  and  having  sued  the  latter  to  judgment,  took  out 
execution  thereon  ;  but  although  the  acceptor  had  sufficient  to  answer 
the  execution,  the  plaintiff  at  his  instance  received  £100  in  part  pay- 
ment of  the  bill,  and  took  his  bond  and  warrant  of  attorney  as  a  security 
for  the  payment  of  the  remainder  by  instalments,  together  with  inter- 
est and  costs,  excepting  only  a  nominal  sum,  with  a  view  to  enable  himT 
the  plaintiff,  to  support  actions  against  the  other  parties  to  the  bill. 
Shepherd  and  Lens,  Sergts.,  now  moved  for  a  new  trial.1 
Lord  Eldon,  Ch.  J.  It  is  very  clear  that  the  holder  of  a  bill  may 
at  his  election  sue  an}'  or  all  the  parties  to  it,  and  that  if  they  all  be- 
come bankrupt,  he  may  prove  against  the  estates  of  all,  unless  he 
receive  part  of  the  debt  from  any  one.  And  although  the  debt  be 
reduced  from  time  to  time  by  dividends,  no  part  of  the  proof  shall 
be  expunged  under  an}'  of  the  commissions  till  20s.  in  the  pound  have 
been  received.  As  long  as  the  holder  is  passive,  all  his  remedies  re- 
main ;  and  if  any  of  the  parties  be  discharged  by  the  act  of  law,  as  by 
an  insolvent  debtor's  act,  that  operation  of  law  shall  not  prejudice  the 
holder.  With  respect  to  Hayling  v.  Mulhall,2  it  may  be  observed  that 
the  marginal  abstract  of  that  case  is  incorrect ;  for  it  appears  from  the 
report  that  the  person  first  sued  was  a  subsequent  indorser:  had  the 
plaintiff  first  sued  a  prior  indorser  and  discharged  him  from  execution, 
it  would  have  afforded  a  sufficient  objection  to  an  action  against  a  sub- 
sequent indorser.  If  a  holder  enter  into  an  agpn^pnt  wittl  a  prior 
indorser  in  the  morning  not  to  sue  him  for  a  certain  period  of  jime. 
and  then  oblige  a  subsequent  indorser  in  the  evening  to  pay  the,  debt, 
the  latter  must  immediately  resort  to  the  very  person  for  payment  to 

whom    the  holder  has  plpdapH  his   fnjth  that   hp   slmll    nnt.   hp   suprl       In 

the  case  Ex  parte  Smith,3  Lord  Thurlow,  after  consulting  with  all  the 
judges,  was  of  opinion,  that  the  holder  of  a  bill  by  entering  into  a 
composition  with  the  acceptor  discharged  the  indorser,  and  accordingly 
ordered  the  proof  against  the  estate  of  the  latter  to  be  expunged,  pro- 
ceeding on  the  ground  of  the  acceptor's  liability  being  varied  by  the 
act  of  the  holder.  We  all  remember  the  case  where,  Mr.  Richard 
Burke  being  co-surety  for  an  annuity,  the  grantee  gave  time  to  the 

1  The  argument  in  support  of  the  motion  is  omitted.  —  Ed. 

*  2  Bl.  1235.  3  Co.  B.  L.  168, 172.     Ed.  4. 


SAMUELL    V.    IIOWARTII.  153 

principal,  and  yet  argued  that  Mr.  Burke  was  not  relieved  thereby, 
though  the  principal  was  ;  but  it  was  answered  that  the  grantee  could 
make  no  demand  upon  the  co-surety,  because  he  must  by  so  doing  en- 
force a  payment  from  the  principal  contrary  to  the  agreement.  Here 
the  plaintiff,  having  taken  a  new  security  from  the  acceptor,  has  dis- 
charged the  defendant. 

Heath  and  Kooke,  Js.,  were  of  the  same  opinion. 

Shepherd  and  Lens  took  nothing  by  their  motion.1  , 

^J&T^x*-  e.  — -£-^<-  ^>-  '*•**." 

/   SAMUELL  v.  HOWARTH.  p 

In  Chancery,  before  Lord  Eldon,  C,  August  7,  1817. 

[Reported  in  3  Merivale,  272.]  /  £jj£ 

Bill  in  equity  by  a  guarantor  against  the  creditor,  praying  that  the 
guaranty  might  be  delivered  up  to  be  cancelled,  and  that  the  creditor 
be  restrained  from  proceeding  at  law,  inasmuch  as  he  had  given  time 
to  the  principal  debtor.2 

The  Lord  Chancellor.  The  guaranty  given  in  this  case  is  gen- 
eral in  its  terms,  and  must  be  construed,  according  to  its  legal  effect, 
in  favor  of  the  surety. 

The  liabilities  of  sureties  are  governed  by  principles  which  have 
been  long  settled  in  equity  and  are  now  adopted  in  courts  of  law.  I 
say,  now,  because  the  Court  of  Common  Pleas  formerly  held  a  differ- 
ent doctrine.*  But  at  present  it  is  firmly  established  that  the  same 
principles  which  have  been  held  to  discharge  the  surety  in  equity  will 

1  Many  cases  in  accord  with  English  v.  Barley  are  cited  in  2  Ames,  Cases  on  Bills 
and  Notes,  120,  n.  2.  To  these  maybe  added  the  following:  Anderson  v.  George, 
Selw.  N.  P.  (8th  ed.)  389  ;  Ex  parte  Wilson,  11  Ves.  410 ;  Isaacs  Daniel,  8  Q.  B.  500; 
Daggett  v.  Whiting,  35  Conn.  366  ;  Randolph  v.  Fleming,  59  Ga.  776  ;  First  Bank  v. 
Day,  64  Iowa,  118;  Eggerman  v.  Henschner,  56  Mo.  123  ;  Place  v.  Mcllvaine,  38  N.  Y. 
96  ;  Seoville  v.  Landon,  50  N.  Y.  686  ;  Siebeneck  v.  Anchor  Bank,  111  Pa.  187  ;  Hamil- 
ton v.  Prouty,  50  Wis.  592. 

In  Devore  v.  Mundy,  4  Stroh.  15,  the  giving  of  time  to  the  principal  by  the  holder 
of  a  note,  it  was  held,  was  no  defence  for  the  surety  in  an  action  brought  by  a  subse- 
quent transferee  of  that  holder,  and  that,  too,  although  the  subsequent  transfer  was 
after  the  maturity  of  the  note.  —  Ed. 

2  This  statement  of  the  case  has  been  greatly  abridged,  and  the  arguments  of 
counsel  are  omitted.  —  Ed. 

3  "  This  defence  is  borrowed  from  a  court  of  equity  :  There,  if  day  of  payment  be 
given  to  the  debtor,  the  sureties  are  discharged.  It  is  the  equitable  right  of  sureties 
to  come  into  a  court  of  equity  and  demand  to  sue  in  the  name  of  the  creditor.  Now 
if  the  creditor  have  given  time  to  his  debtor,  the  surety  cannot  sue  him,"  per  Gibbs, 
C.  J.,  in  Orme  v.  Young,  Holt  N.  P.  86.  See,  also,  Melvill  v.  Glendinning,  7  Taunt 
126  ;  Hawkshaw  v.  Parkins,  2  Sw.  539,  544,  545,  546.— Ed. 


154 


SAMUELL   V.    HOWARTH. 


[CHAP.  IL 


operate  to  discharge  him  also  at  law.1  However,  as  the  same  relief  is 
to  be  obtained  in  both,  a  court  of  equitj-  will  not  send  a  party  who  is 
suing  here  to  a  court  of  law  for  the  discharge  to  which  he  is  equally 
entitled  in  this  place. 

The  rule  is  this  :  That,  if  a  creditor,  without  the  consent  of  the 
surety,  gives  time  to  the  principal  debtor,  b}'  so  doing  he  discharges 
the  surety  ;  that  is,  if  time  is  given  b}-  virtue  of  positive  contract  be- 
tween the  creditor  and  the  principal  —  not  where  the  creditor  is  mereh' 
inactive.  And,  in  the  case  put,  the  surety  is  held  to  be  discharged, 
for  this  reason,  because  the  creditor,  b}-  so  giving  time  to  the  principal, 
has  put  it  out  of  the  power  of  the  surety  to  consider  whether  he  will 
have  recourse  to  his  remedy  against  the  principal,  or  not ;  and  because 
he,  in  fact,  cannot  have  the  same  remedy  against  the  principal  as  he 
would  have  had  under  the  original  contract. 

Now,  in  the  present  case,  the  creditor  has  been  supplying  goods  to 
the  principal  debtor,  from  time  to  time,  upon  a  certain  credit,  the  ex- 
tent of  which,  not  being  expressly  stipulated  between  the  parties,  I 
must  take  to  be  credit  given  according  to  the  usual  course  of  trade. 
The  surety  says,  I  will  be  answerable  for  the  amount  of  such  goods  as 
you  shall  furnish  during  the  period  from  the  2d  of  April,  1814,  to  the 
2d  of  April,  1815.  It  is  impossible  for  me  to  hold  that  this  is  an 
engagement  by  which  he  (the  suret}-)  has  rendered  himself  liable  for 
an  indefinite  time  beyond  the  expiration  of  the  period  limited  for  the 
delivery  of  the  goods.  It  cannot  be  supposed  that  the  plaintiff  meant 
he  should  continue  liable,  after  the  2d  of  April,  1815,  so  long  as  the 
defendant  might  choose  to  renew  the  bills  of  the  principal  debtor.  You 
cannot  contend  in  support  of  such  an  extravagant  proposition.  It  has 
been  truly  stated  that  the  renewal  of  these  bills  might  have  been  for 
the  benefit  of  the  surety  ;  but  the  law  has  said  that  the  surety  shall  be 
the  judge  of  that,  and  that  he  alone  has  the  right  to  determine  whether 
it  is,  or  is  not,  for  his  benefit.  The  creditor  has  no  right  —  it  is  against 
the  faith  of  his  contract — to  give  time  to  ttie  principal,  even  though 
manifestly  for  the  benefit  of  the  surety,  without  tUe  consent  of  the 
surety.  Injunction  continued. 


?   — "7* 


1  At  the  time  Lord  Eldon  made  this  statement  there  were  singularly  few  reported 
cases  in  which  a  surety  had  defeated  an  action  at  law  by  showing  that  the  creditor  had 
agreed  to  give  time  to  the  principal ;  and  these  few  were  all  cases  in  which  a  subse- 
quent party  to  a  bill  or  note  relied  on  the  giving  of  time  to  a  prior  party.  English 
v.  Darlev  (1800),  supra:  Smith  v.  Knox  (1800),  3  Esp.  46;  Gould  v.  Robson  (1807), 
8  East,  576  ;  Claridee  v.  Dalton  (1815),  4  M.  &  Sel.  232. 

ut  Lord  Eldon's  statement  has  been  generally  recognized  to  be  correct  as  to  all 
ises  where  the  suretyship  is  disclosed  by  the  form  of  the  contract.  Comoe  v. 
Wolf",  8  Jiing.  156 ;  Howell  v.', Jones,  1  C.  M  &  R.  97.  For  the  American  decisions, 
which  are  legion,  the  learned  reader  is  referred  to  24  Am.  &  Eng.  Encycl.  of  Taw. 
822,  where  the  cases  arc  arranged  by  States. 

A  creditor's 


-^=^8 


[VINT,     TIMF.     win:     i:i:si;i;v  vn"n\-     ok    incurs     AGAINST    SIRETY. 


9' 


^■Agreement  witn  the  principal  tor  forbearance,  either  temporary  or  perpetual,_will  not 
discharge  the  surety,  if  the  creditor  at  the  time  of  the  agreement,  and,  as  a  part  of  it, 

reserves  His  rights  against  tliesnrcty.      Price?'.  Barker,  supra,  147,  150,  a,  2;  cases  cited 


-  ■ 


-5  JU^" 


•zz~ /jzzfr- 


■A 


sC& 


\/ +*^>    :  -      -?  -wt^  ^f-p-*^—4<i  s*^J    A__  **P**-~is*C'    <*—- S    *-<_  d 


SECT.  nJ  DAVSY    V.    PRENDERGRASS.  155 


N,         ^_     DAYW   AND  0tiiers   v.   PRENDERGRA 
In  the^Iving's  BeTncii,  Nove3£ber  5,  1821 


[Reported  in  5  BaTnewall  <j-  Alder son,  187.] 

Declaration  in  debt  on  a  surety  bond,  executed  by  the  defendants, 
conditioned  for  the  payment  within  one  month  after  demand  of  such 
balance,  not  exceeding  the  sum  of  £500  as  upon  the  settlement  of  ac- 
counts between  the  plaintiffs  and  Samuel  Prendergrass  and  James  Peter 
Prendergrass,  should  appear  to  be  due  from  the  latter  to  the  former  for 
coals,  to  be  delivered  b}T  them  to  the  said  S.  and  J.  P.  Prendergrass. 
Breach,  non-payment  of  the  said  sum  after  demand.  The  defendants 
craved  03*01*  of  the  bond,  and  pleaded,  first,  non  est  factum,  and  sec- 
ond, a  special  plea  in  bar,  that  the  plaintiffs  had,  by  parol  agreement, 
without  the  privity  of  the  defendants,  given  time  to  the  principal  debt- 
ors to  pay  by  instalments,  and  had  taken  a  warrant  of  attorney  to  pay, 
by  monthly  instalments  of  £100  each,  a  balance  of  £1,099  9s.,  found  to 
be  due  from  the  latter  to  the  former,  upon  an  adjustment  of  accounts 
for  coals  sold  and  delivered,  with  a  power  of  issuing  execution,  in  case 
of  default  of  payment  of  any  one  instalment  when  due.  To  this  last 
plea  there  was  a  demurrer  and  joinder  in  demurrer. 

W.  H.  JSLtuh,  for  the  plaintiffs. 

Chitty,  contra.1 

Abbott,  C.  J.  Looking  at  the  nature  of  the  security  in  this  case,  it 
is  impossible  to  say,  that  the  sureties  sustained  any  prejudice  b}-  what 
has  taken  place,  for,  if  the  first  £100  was  not  paid,  immediate  execu- 
tion might  have  issued,  and  it  could  not  have  been  set  aside.  The 
ground,  however,  of  mj'  opinion  in  this  case  is,  that  general  rule  of  J^p 
the  common  law  which  requires  that  the  obligation  created  by  anTn-  ^ 
strument  under  seal  shall  be  discharged  by  force  of  an  instrument  of 
equal  validity.  The  operation  of  that  rule  is,  indeed,  sometimes  such 
"as  to  make  it  imperative  upon  a  court  of  equity  to  interpose  and  grant 
relief;  but  it  by  no  means  follows,  that  the  rule  of  law  is  to  be  broken 

in  2  Ames,  Cases  on  Bills  &  Notes,  120,  n.  2 ;  Kearsiey  r.  Cole,  16  M.  &  W.  128  ;  Owen 
v.  Honian,  4  H.  L.  C.  997  ;  Wyke  v.  Rogers,  1  D.  M.  &  G.  408  ;  Boaler  v.  Mayor,  19  C. 
B.  N.  S.  76;  Jones  v.  Whitaker,  57  L.  T.  Rep.  216;  Dupee  v.  Blake,  148  111.  465; 
First  Bank  r.  McKenny,  67  Me.  272  ;  Sohier  v.  Loring,  6  Cush.  537 ;  Kenworthy  v. 
Sawyer,  125  Mass.  28;  Rucker  v.  Robinson,  38  Mo.  154;  Morgan  v.  Smith,  70  N.  Y. 
537  ;  Nat.  Bank  v.  Bigler,  83  N.  Y.  51  ;  Bank  v.  Lineberger,  83  N.  Ca.  454. 

In  Hatching  v.  Nichols,  10  Cush.  299,  the  creditor  agreed  with  the  principal  never 
to  sue  him,  and  not  to  proceed  against  the  surety  for  nine  months.  This  agreement 
was  held  not  to  discharge  the  surety,  but  to  suspend  the  creditor's  remedy  for  nine 
months.  —  Ed. 

CoMPrLSORY  giving  of  time.  If  the  creditor  is  compelled  to  refrain  from  pro- 
ceeding against  tne  principal  In  consequence  01  an  injunction  obtained  by  the  latter, 
the  surety  is  not  discharged!     Hodges  c.  Gewin,  6  Ala.  478. 

1  The  arguments  of  counsel  and  the  concurring  opinions  of  Holrotd  and  Best,  JJ.; 
are  omitted.  —  En. 


V 


156  DAVEY    V.    PRENDERGRASS.  [CHAP.  II 

down,  because  a  court  having  jurisdiction  of  another  kind  will  inter- 
pose where  there  is  a  particular  case,  in  which  the  rule  of  law  ma}'  be 
found  to  operate  harshly.  There  is  great  objection  to  a  court  of  law 
taking  upon  itself  to  act  as  a  court  of  equity,  because  the}*  have  not 
the  means  of  doing  that  full  and  ample  justice  which  the  particular  case 
ma}'  require.  We  ought  not,  therefore,  to  interpose  in  a  matter  which 
seems  peculiarly  to  belong  to  the  jurisdiction  of  a  court  of  equity.1  If 
a  parol  agreement  is  entered  into  to  give  time  to  the  parties,  supposing 
it  not  the  case  of  a  surety,  but  simply  the  case  of  a  common  bond  con- 
ditioned for  payment  of  money  at  a  certain  day,  it  will  not  prevent  the 
party  from  proceeding  at  law  immediately,  whatever  the  consideration 
for  the  delay  may  be.  And  if  that  be  so,  how  can  the  giving  of  time 
to  a  third  person  by  such  an  agreement,  prevent  the  obligee  of  the  bond 
from  proceeding  at  law  against  the  surety?  There  may  indeed  be  such 
a  consideration  for  the  agreement  as  may  induce  a  court  of  equity  to 
direct  that  the  party  shall  not  proceed  to  enforce  his  remedy  at  law. 
But  a  parol  agreement  of  this  nature  can  never  operate  to  control  the 
obligation  of  this  bond  in  a  court  of  law.  The  decisions  which  have 
taken  place  in  the  courts  of  equity  in  cases  of  this  nature,  have  always, 
as  I  understand  them,  proceeded  on  the  notion  that  at  law  the  thing 
prayed  for  could  not  be  done.  Bills  of  exchange  stand  upon  a  very 
different  footing :  there  the  law  merchant  operates,  and  the  courts  of 
law  decide  upon  them  with  reference  to  that  law.  Guaranties  for  the 
payment  of  debts  are  not  in  general  instruments  under  seal,  and  there 
is  no  strict  technical  rule  which,  as  to  them,  prevents  a  court  of  law 
from  looking  to  the  real  justice  of  the  case.  The  cases  of  bail  and 
replevin  bonds  are  provided  for  by  acts  of  parliament  giving  to  the 
court  an  authority  over  them.  But,  in  both  these  cases,  the  jurisdiction 
is  exercised  always  upon  special  application  founded  upon  affidavits 
and  not  upon  plea.  A  recognizance  of  bail  stands  upon  a  different 
ground  from  bail  bonds  as  to  the  jurisdiction  of  the  court.  There  the 
jurisdiction  is  not  founded  upon  statute,  but  upon  a  general  authority 
in  the  court  to  see  that  an  improper  use  is  not  made  of  its  own  records. 
Therefore,  in  that  case,  as  well  as  in  the  case  of  bail  to  the  action, 
and  of  bail  to  the  sheriff,  if  the  Court  sees  that  an  improper  use  is  at- 
tempted to  be  made  of  the  security  which  the  party  has  given,  it 
immediately  interferes.  And  that  also  is  always  done  upon  special 
application  to  the  Court,  upon  affidavits  setting  forth  all  the  circum- 
stances of  the  case.  In  the  case  of  Bulteel  v.  Jarrold  in  the  House  of 
Lords,   which  has  been   referred  to,   in  which   an  attempt  was  made 

1  The  doctrine  that  an  agreement  to  give  time  to  the  principal  discharges  the  surety 
in  equity  spins'  to  be  a  comparatively  modern  notion.  Tjje  editor  has  not  discovered 
any  eaflier  instances  of  the  application  of  the  doctrine  than  Lord  Thurlow's  decision 
in  1789.  in  the  case  of  Nisbet  v.  Smith,  2  Bro.  C.  C.  579,  which  was  followed  by  Eees  v. 
Berrington  (1795),  2  Yes.  Jr.  540;  Boultbee  v.  Stubbs  (1810),  18  Ves.  20;  Bowmaker 
v.  Moore  (1S16),  3  Price,  214  ;  Eyre  v.  Bartrop  (1818),  3  Mad.  221.  In  all  of  thecases 
just  cited  the  surety  was  a  specialty  obligor.  —  Ed. 


SECT.  II.]  FENTUM   V.   POCOCK.  157 

to  put  the  matter  on  the  record  by  way  of  plea,  it  was  held,  that 
it  was  no  bar  to  the  action.  So  in  this  case,  which  appears  to  be 
the  first  of  the  kind  brought  before  this  Court,  although  similar  cases 
must  have  occurred  very  frequently,  I  am  of  opinion  that  we,  deciding 
on  legal  principles,  are  bound  to  say,  that  this  plea  is  no  answer  to 
the  plaintiff's  action.  There  must,  therefore,  be  judgment  for  the 
plaintiff.  v    Judgment  for  the  plaintiffs} . 

In  the  Cq3imoh_Eleas,  Novembei  " 

~^t     ^<£L^>     TlUr     -:^tk_   A     -^~, 

«-"C    ^t-— «*L_  *~~~  [Reported  in  5  Taunton,  192.] 

This  was  an  action  brought  by  the  indorsee  of  a  bill  of  exchange 
against  the  acceptor,  and  was  tried  before  Lord  Chief-Justice  Mans- 
field, at  the  sittings  at  Westminster  after  last  Easter  Term,  when  a 
verdict  was  found  for  the  plaintiff  with  £80  damages,  with  liberty  to 
the  defendant  to  move  to  enter  a  nonsuit,  on  the  ground  that  the  plain- 
tiff had  discharged  the  defendant,  by  having  accepted  a  cognovit,  pay- 
able by  instalments,  from  the  drawer. 

The  bill,  as  appeared  on  the  trial,  had  been  accepted  for  the 
accommodation  of  the  drawer,  payable  at  Messrs.  Davison  &  Co.'s., 
Pall  Mall,  who  refused  payment,  saying  they  knew  nothing  of  Pocock 
&  Son.  The  plaintiff  had  given  a  valuable  consideration  for  it,  and 
knew  nothing  of  its  being  an  accommodation  bill  till  after  it  became  j^ 
due. 

Mr.  Sergt.  Shepherd  in  Trin.  Term  obtained  a  rule  nisi  on  the  above 
ground. 

Mr.  Sergt.  Marshall  now  showed  cause  against  the  rule.2 

Mansfield,  C.  J.  No  doubt,  if  the  defendant  can  succeed  in  estab- 
lishing the  principle  that  we  must  so  subvert  and  pervert  the  situation 
of  the  parties  as  to  make  the  acceptor  merel}*  a  surety,  and  the  drawer 
the  principal,  the  consequence  contended  for  must  follow.  This  case 
of  Laxton  v.  Peat  certainly  is  the  first  in  which  it  was  ever  supposed 
that  the  acceptor  of  a  bill  of  exchange  was  not  the  first  person  and  the 

1  Bulteel  v.  Jarrold,  8  Price,  467  ;  Ashbee  v.  Pidduck,  1  M.  &  W.  564  ;  Parker  v. 
Watson,  8  Ex.  404  ;  Sprigg  v.  Mt.  Pleasant  Bank,  10  Pet.  257  ;  U.  S.  v.  Howell,  4  Wash. 
C.  C.  620  ;  Locke  v.  U.  S.,  3  Mass.  446 ;  Wittmer  v.  Ellison,  72  111.  301 ;  Tate  v.  Wy- 
mond,  7  Blackf.  240  ;  Lewis  v.  Harbin,  5  B.  Mon.  564  ;  Pintard  v.  Davis,  Spencer,  205  ; 
Shaw  v.  MeFarlane,  1  Ired.  216;  Holt  v.  Bodey,  18  Pa.  207  ;  Dozier  v.  Lee,  7  Humph. 
520 ;  Burke  v.  Cruger,  8  Tex.  66 ;  Steptoe  v.  Harvey,  7  Leigh,  501  ;  Sayre  v.  King, 
17  W.  Va.  562,  Accord. 

See  also  supra,  140,  n.  5.  —  Ed. 

2  The  statement  of  the  case  is  taken  from  the  report  in  Marshall,  14.  The  argu 
ments  of  counsel,  and  the  concurring  opinions  of  Heath  and  Chambre,  JJ.,  art 
omitted.  — Ed. 


158  FENTUM   V.    POCOCK.  [CHAP.  IL 

last  person  compellable  to  pay  that  bill  to  the  holder  of  it,  and  that 
anything  could  discharge  the  acceptor,  except  payment,  or  a  release ; 
and  I  never  before  knew  that  there  was   any  difference  between   an 
acceptance  given  for  accommodation,   and   an   acceptance   for  value. 
When  I  first  saw  that  case  in  Campbell,  I  was  in  the  same  state  as  Mr. 
Justice  Gibbs,  and  doubted  a  great  deal  whether  it  could  be  law.     The 
case  of  Collott  v.  Haigh  must  be  considered,  not  as  a  separate  decision, 
but  as  resting  on  the  authority  of  the  former.     It  is  utterly  impossible 
for  any  judge,  whatever  his  learning  and  abilities  ma}-  be,  to  decide  at 
once  rightly  upon  every  point  which  comes  before  him  at  nisi  prias  ; 
and  whoever  looks  through  Campbell's  Reports  will  be  greatly  sur- 
prised to  see,  among  such  an  immense  number  of  questions,  many  of 
them  of  the  most  important  kind,  which  came  before  that  noble  and 
learned  judge,  not  that  there  are  mistakes,  but  that  he  is  in  b}r  far  the 
most  of  the  causes  so  wonderfully  right,  be3ond  the  proportion  of  any 
other  judges.     But  upon  this  case  we  think  that  we  are  bound  to  differ 
from   him,   and  to  hold   that  it  is   impossible  for  us  to  consider  the 
acceptor  of  an  accommodation  bill  in  the  light  of  a  surety  for  the  pay- 
ment by  the  drawer,  and  that  we  cannot  therefore  say  that  he  is  dis- 
charged  by  the  indulgence  shown  to  the  drawer.     Certainly  the  paying 
respect  to  accommodation   bills  is  not  what  one  would   wish  to  do, 
seeing  the  mischiefs  arising  from  them.     One  might  find  here  a  very 
important  distinction  between  this  case  and  the  case  decided  by  Lord 
Ellenborough  ;   namely,  that  here  the  person  taking  the  bill  did  not,  at 
the  time  when  he  took  it,  know  that  it  was  an  accommodation  bill ;  and 
if  he  did  not  then  know  it,  what  does  it  signify  what  came  1o  his  know- 
ledge afterwards,  if  he  took  the  bill  for  a  valuable  consideration?     But 
it  is  better  not  to  rest  this  case  upon  that  foundation,  for,  as  it  appears 
to  me,  if  the  holder  had  known  in  the  clearest  manner.,  ni._t,h.e  time  of 
his  taking  the  bill,  that  it  was  merely  an  accommodation  bill,  it  woukl 
make  no  manner  of  difference  ;  for  he  who  nonepts  fl  T->ni ,  ^i^W  fay 
value   or   to   serve    a   friend,   makes   himself  in  all  events  liable,   as 
acceptor,  and  nothing  can  fliscnarge  him  but  payment  or  release.     The 
case  before  Gibbs,  J.,  lias  shaken  this  decision  in  Laxton  v.  Peat,  and 
we  think  rightly  ;  the  case  cited  of  English  v.  Darley  is  not  applicable, 
where  the  giving  time  to  an  acceptor  was  held  to  be  a  discharge  of  an 
indorser,  who  stands  only  in  the  situation  of  a  surety  for  the  first.   The 
rule,  therefore,  which  has  been  obtained  for  setting  aside  the  verdict 
and  entering  a  nonsuit  must  be  discharged. 

Hide  discharged.1 

1  Numerous  cases  in  accord  with  Fentura  v.  Pocock  are  cited  in  2  Ames,  Cases  on 
Bills  and  Notes,  16,  n.  1.  To  these  may  be  added  Bank  v.  Thomas,  11  Up.  Can.  C.  P. 
515;  Bank  v.  Brown,  3  Pugs.  &  B.  106;  Diversy  v.  Moor,  22  111.  330;  Stephens  v. 
Mononghahela  Bank,  88  Pa.  157  ;  Fourth  Bank  v.  Frazier,  9  Phila.  213. 

But  see  contra,  Laxton  v.  Peat,  2  Camp.  185;  Ex  parte  Glendinning,  Buck,  517; 
Hall  v.  Capital  Bank,  71  Ga.  715;  Lacy  v.  Lofton,  26  Ind.  324  (overruling  Gordon  ». 
Southern  Bank,  19  Ind.  192);  Adle  v.  Metoyer,  1  La.  An.  254;  Canadian  Bank  v 
Coumbe,  47  Mich.  358  :  Meggatt  v.  Baum,  57  Miss.  22.  —  Ed. 


SECT.   II.]  rOOLEY    V.    HARRADINE.      •"^  159 

RICHARD   POOLEY  r.  WILLIAM  TIIANG  HARRADINE. 
In  the  Queen's  Bench,  February  24,  1857. 

[Reported  in  7  i?//is  #■  Blackburn,  431.] 

Coleridge,  J.,1  in  this  vacation  (February  24th),  delivered  judgment. 

This  was  an  action  by  the  payee  against  the  maker  of  three  promis- 
sory notes.  The  defendant  pleaded,  by  way  of  equitable  defence,  that 
the  notes  were  made  by  him  jointly  with  John  Harradine  and  Thomas 
Harradine,  and  that  he  made  them  at  the  request  and  for  the  accom- 
modation of  John  Harradine,  as  the  surety  only  of  John  Harradine,  and 
to  secure  a  debt  due  from  John  Harradine  solely  to  the  plaintiff,  and 
without  value  or  consideration  ;  and  that  the  notes  were  delivered  to 
the  plaintiff,  and  accepted  by  him  from  the  defendant,  upon  an  express 
agreement  between  them  that  the  defendant  should  be  liable  thereon  as 
surety  onhy  for  the  said  John  Harradine ;  and  that  the  plaintiff,  at  the 
time  the  notes  were  made,  had  notice  and  knowledge  of  the  same  having 
been  so  made  by  him  as  such  surety.  The  plea  then  stated  that  the 
plaintiff,  whilst  holder  of  the  notes,  without  the  knowledge  or  consent 
of  the  defendant,  for  a  good  and  valuable  consideration,  agreed  to  give 
and  did  give  the  said  John  Harradine  time  for  the  payment  of  the  notes, 
and  forbore  to  enforce  them  ;  and  that  he  could  and  might,  had  he  not 
given  such  time,  have  obtained  payment  from  the  said  John  Harradine. 
The  plaintiff  having  demurred  to  this  plea,  we  have  to  determine  whether 
the  facts  stated  in  the  plea  amount  to  an  equitable  defence. 

At  law  it  seems  to  have  been  thought  that  the  discharge  of  the  surety 
by  such  giving  time  to  the  principal  was  founded  on  a  variation  of  the 
contract  between  the  creditor  and  the  surety  ;  and  if  that  be  so,  it 
necessarily  follows  (the  rule  of  evidence  as  to  not  varying  a  written 
contract  by  parol  being  the  same  at  law  and  in  equity)  that  no  parol 
contemporaneous  agreement  could  be  allowed  to  vary  the  contract  in 
the  case  of  a  written  instrument.  Probably  the  cases  at  law  would  be 
too  strong  to  make  it  proper  for  us,  not  sitting  in  a  court  of  error,  to 
decide  contrary  to  the  current  of  authorities  on  this  subject,  were  we 
disposed  so  to  do,  if  the  case  now  before  us  were  that  of  a  legal  plea. 
It  is  important,  however,  for  the  decision  of  this  case,  to  consider 
whether,  in  equity,  the  doctrine  of  the  discharge  of  the  surety  by  time 
given  to  the  principal  debtor  is  confined  to  cases  where  the  relation  of 
suretyship  appears  on  the  original  contract  between  the  creditor,  the 
principal,  and  the  alleged  surety,  or  whether  an  equity  does  not  arise 
from  the  relation  of  the  co-obligors  or  co-promisors  inter  se,  and  on  the 
knowledge  by  the  creditor  of  the  existence  of  that  relation.   .    .  .  2 

Whether  that  relation  must,  according  to  some  of  the  expressions 

1  Only  the  opinion  of  the  Court  is  given.  —  Ed. 

2  The  Court  here  discussed  Hollier  v.  Eyre,  9  CI.  &  F.  1 ;  Strong  v.  Foster,  17  C.  B 
201 ;  and  Davies  v.  Stainbank,  6  D.  M.  &  G.  679.  — Ed. 


160  POOLE Y    V.    HARRADINE.  [CHAP.  II. 

used  by  learned  judges,  have  been  known  to  the  principal  at  the  time 
of  the  original  transaction  is  immaterial  with  reference  to  the  plea  now 
before  us,  as  it  contains  an  allegation  of  knowledge  by  the  creditor  at 
the  time  of  the  making  and  receipt  of  the  notes  ;  but  we  may  remark 
that  there  does  not  appear  to  have  been  such  knowledge  at  the  date  of 
the  original  transaction  in  the  case  of  Stainbank  v.  Davies  ; 1  and  ifjthe 
equity  does  not  depend  on  an}-  contract  with  the  creditor,  but  on  its 
being  unequitable  in  mm  knowing!}-  to  prejudice  the  rights  of  the  surety 
against  the  principal,  the  equity  would  seem  to  extend  to  the  case  of 
the  principal  knowing  the  existence  of  the  relation  of  suretyship  only 
at  the  time  of  his  dealing  in  such  a~manner  with  the  principal  debtor  as 
to  prejudice  the  rights  of  the  surety.  We  believe  the  doctrine  laid  down 
in  the  cases  we  have  cited  from  the  courts  of  equity  is  well  warranted  by 
the  authorities  in  equity,  many  of  which  are  collected  in  the  report  of 
the  case  of  Strong  v.  Foster ; 2  and  we  think  it  quite  consistent  with 
the  principle  on  which  the  interfering  with  the  rights  of  the  surety 
against  his  principal  are  founded.  The  surety,  we  apprehend,  on 
paying  the  debt,  has  always  a  right  to  require  the  creditor  to  sue,  or 
allow  him  to  sue  the  principal  in  his  (the  creditor's)  name  ;  and  if,  to 
use  the  words  of  m}r  brother  Williams  in  Strong  v.  Foster,3  "  the  cred- 
itor has  voluntarily  placed  himself  in  such  a  position  as  to  be  compelled 
to  say  he  cannot  sue  him,  he  thereby  discharges  the  suret}'."  He  has, 
on  this  supposition,  knowingly  and  wrongfully  interfered  with  the  posi- 
tion and  rights  of  the  surety.  Now,  does  this  right  of  placing  himself, 
as  it  is  said,  in  the  shoes  of  the  creditor  depend  on  a  prior  contract 
between  the  creditor  and  surety,  or  on  an  implied  duty  of  the  creditor 
not  to  injure  the  surety's  rights  when  he  knows  of  the  relation  sub- 
sisting between  him  and  his  principal?  We  do  not  see  that  by  the 
doctrine  asserted  in  courts  of  equity  the  primary  liability  is  at  all 
altered.  In_  truth,  the  defence,  either  at  law  or  in  equity,  does  not 
arise  by  any  alteration  of  the  original  contract,  which  indeed  it  as*sumes 
and  relies  on  in  its  original  terms.  Out  that  the  creditor  cannot  fairly  or 
equitably  sue  the  surety  wtiere,  knowing  or  tne  existence  of  the  relation 
of  suretyship,  Ue  has  voluntarily  tied  up  his  hands  from  proceeding 
against  the  principal.  We  agree  that  no  defence  could  be  set  up  by 
parol  which  should  depend  on  altering  the  rights  of  the  creditor  on 
the  contract  as  between  himself  and  the  alleged  surety  as  a  primary 
debtor ;  as,  for  instance,  by  making  him  liable  only  on  default  of  the 
principal,  or  after  a  request  to  him  ;  but  in  truth  the  surety,  in  most  of 
the  cases  where  the  suretyship  is  apparent  on  the  deed  or  written  in- 
strument, contracts,  not  as  surety  collaterally,  but  as  a  principal  debtor 
or  covenantor.  His  being  named  as  surety  may  operate  as  proof  of 
notice  or  knowledge  ;  but  his  contract  is  generally  that  of  primary 
liability.  Thus,  in  the  case  of  common  money  bonds,  the  liability  is 
not  collateral,  but  primary,  though  in  bonds  and  contracts  to  indemnify, 

a  6  D.  M.  &  G.  679.  2  17  Com.  B.  201.  3  17  Com.  B.  201,  269. 


SECT.  II.]  POOLEY   V.    HARRADINE.  161 

it  is  generally  collateral.  In  the  case  of  rnone}'  bonds,  where  the  party 
is  sued  as  surety,  there  is  no  contract  as  between  the  surety,  obligor, 
and  the  obligee  of  any  kind  but  that  which  imposes  a  primary  liability  ; 
and  it  ma}*  well  be  argued  that  it  is  immaterial  whether  the  knowledge 
proceeds  from  a  recital  in  the  instrument  or  from  extraneous  facts. 
We  conceive  that  equity  would  relieve  in  the  case  of  a  co-obligor  in  a 
common  money  bond  being  made  out  to  be  a  surety  by  extrinsic  evi- 
dence only,  if  time  were  given  in  such  a  way  as  to  discharge  a  suretj" 
in  the  ordinary  case  of  principal  and  surety,  when  the  relation  of  surety- 
ship appears  on  the  face  of  the  instrument.  It  may  be  worth  remarking 
that  in  Laxton  v.  Peat,1  one  of  the  earliest  cases  on  this  subject,  Lord 
Ellenborough  seems  to  have  proceeded  on  the  ground  of  the  plaintiff 
having  notice  of  the  suretyship  when  he  gave  the  time,  as  the  plaintiff 
was  the  indorsee  of  the  bill,  and  there  does  not  appear  to  have  been 
evidence  of  any  agreement  between  him  and  the  surety.  The  plaintiff 
(the  indorsee)  gave  value,  but  had  notice  of  the  circumstances  of  the 
original  formation  of  the  bill ;  and  his  giving  time,  with  such  knowl- 
edge, discharged  the  surety,  although  the  suretyship,  as  regarded  the 
indorsee,  depended  on  no  agreement  with  him. 

In  the  more  recent  cases  at  law,  however,  the  rule  in  question  has 
apparently  been  treated  as  arising  out  of  the  original  contract  with  the 
creditor  ;  and  if  this  was  a  plea  of  a  legal  defence,  we  should  probably 
have  felt  bound  by  those  authorities,  and  have  left  it  to  a  court  of 
error  to  consider  the  whole  question,  taking  into  their  consideration 
whether  the  same  rule  in  such  matters  ought  not  to  exist  in  courts  of 
law  and  equity,  and  to  decide,  if  there  be  a  difference,  what  the  rule 
should  be.  As  we  are,  however,  called  upon  to  deal  with  this  case  as 
if  we  were  sitting  in  a  court  of  equity,  we  think  that  we  ought  to  decide 
it  according  to  what  we  believe  to  be  the  doctrine  in  courts  of  equity. 
At  the  same  time  we  shall  not  regret  if  this  important  subject  should 
now,  or  on  any  future  occasion,  be  reviewed  in  all  its  bearings  by  a 
court  of  error. 

We  give  our  judgment  for  the  defendant  on  the  present  plea,  on  the 
ground  that  it  appears  to  us  sufficiently  to  state  that  the  relation  of 
principal  and  surety  existed  between  the  defendant  and  the  principal 
debtor,  inter  se,  and  that  the  plaintiff  had  knowledge  of  that  fact  when 
the  notes  were  made  and  received  by  him,  and  when  he  entered  into  a 
binding  agreement  to  give  time  to  the  principal  debtor. 

Judgment  for  the  defendant? 

1  2  Camp.  185. 

2  Taylor  v.  Burgess,  5  H.  &  N.  1 ;  Greenough  v.  McClelland,  2  E.  &  E.  424 ;  Mut. 
Assoc,  v.  Sudlow,  5  C.  B.  n.  s.  449 ;  Swire  v.  Redman,  1  Q.  B.  D.  536 ;  Maingay  v. 
Lewis,  Ir.  R.  5  C.  L.  229,  Accord.  In  Swire  v.  Redman,  supra,  Cockburn,  C.  J.,  said 
(p.  541):  "The  relation  of  principal  and  surety  gives  to  the  surety  certain  rights. 
Amongst  others  the  surety  has  a  right  at  any  time  to  apply  to  the  creditor  and  pay 
him  off,  and  then  (on  giving  proper  indemnity  for  costs)  to  sue  the  principal  in  the 
creditor's  name.  We  are  not  aware  of  any  instance  in  which  a  surety  ever  in  practice 
exercised  this  right;  certainlv  the  cases  in  which  a  surety  uses  it  must  be  very  rare 

11 


162  EWIN   V.    LANCASTER.  v 

EWIN  v.  LANCASTER. 


In  the  Queen's  Bench,  May  29,   1865. 

[Reported  in  6  Best  tj-  Smith,  571.]  M0*"" 


Cockburn,  C.  J.1  The  plaintiff  is  the  holder  of  bills  of  exchange 
accepted  by  the  defendant  for  the  accommodation  of  Bnrtwell,  the 
drawer,  and  after  they  became  due  he  entered  into  an  agreement  with 
Burtwell,  that  if  Bnrtwell  would  give  him  a  mortgage  security  on  real 
estate  he,  the  holder,  would  cancel  the  bills  and  release  all  parties 
from  liability  upon  them.  That  is  the  state  of  facts  on  the  findings  of 
the  jury.2  The  third  plea  is  not  made  out  to  the  full  extent ;  but  in 
order  that  justice  might  be  done  I  reserved  power  to  the  Court  to 
amend  it,  if  necessary  ;  and,  the  Court  having  power  to  add  a  plea,  I 
think  such  a  plea  might  be  put  on  the  record  as  would  establish  a 
defence  on  equitable  grounds.     In  Bailey  v.  Edwards  3  it  was  held  that 


Still,  the  surety  has  this  right.  And  if  the  creditor  binds  himself  not  to  sue  the  prin- 
cipal debtor,  for  however  short  a  time,  he  does  interfere  with  the  surety's  theoretical 
right  to  sue  in  his  name  during  such  period.  It  has  been  settled  by  decisions  that 
there  is  an  equity  to  say  that  such  an  interference  with  the  rights  of  the  surety  —  in 
the  immense  majority  of  cases  not  damaging  him  to  the  extent  even  of  a  shilling  — 
must  operate  to  deprive  the  creditor  of  his  right  of  recourse  against  the  surety,  though 
it  may  be  for  thousands  of  pounds.  But  though  this  seems  —  if  it  may  be  permitted 
to  speak  in  such  terms  of  the  doctrine  sanctioned  by  very  great  lawyers  —  consistent 
neither  with  justice  nor  common  sense,  it  has  been  long  so  firmly  established  that  it 
can  only  be  altered  by  the  legislature.  And  as  it  depends  on  tin-  supposed  inequity 
of  interfering  with  the  rights  which  the  surety  has  as  between  him  and  jthe  principal 
debtor,  it  is  not  material  tnat  tlie  knowledge  on  the  part  of  the  creditor  that  the  surety 
was  from  the  beginning  such,  and  therefore  naci  such  rights,  was  not  acquired  till  after 
the  surety  had  become  liable  to  the  creditor/' 

In  England,  Maryland,  and  JNew  Jersey,  where  a  principal  and  surety  are  co-makers 
of  a  note,  aud  the  holder,  with  knowledge  of  the  suretyship,  agrees  to  give  time  to  the 
principal,  the  surety  has  no  common-law  defence  to  an  action  on  the  note.  Manley  v. 
Boycott,  2  E.  &  B.  46  ;  Yates  v.  Donaldson,  5  Md.  389  ;  Anthony  v.  Fritts,  45  N.  J.  1. 

But  generally  in  this  country  the  surety's  defence  under  such  circumstance^,  is 
allowed  at  law  as  well  as  jp  pqnity.  See,  in  addition  to  the  numerous  citations  in 
2  Ames,  Cases  on  Bills  and  Notes,  82,  n.  2,  the  following  cases  to  the  same  effect: 
Vary  v.  Norton,  G  F.  R.  808 ;  Scott  v.  Scruggs,  60  F.  R.  721 ;  Capital  Bank  v.  Real, 
62  Cal.  419;  Buck  v.  Smiley,  64  Ind.  431;  Arms  v.  Beitman,  73  Ind.  85  (semble) ; 
Kales  v.  Hise,  79  Ind.  301  ;  Sample  v.  Cochran,  84  Ind.  594;  Corielle  v.  Allen,  13 
Iowa,  289 ;  Lanman  v.  Nichols,  15  Iowa,  161  ;  Piper  v.  Newcomer,  25  Iowa,  221 ;  Wend- 
ling  v.  Taylor,  57  Iowa,  354;  Lambert  v.  SheHer,  71  Iowa,  463;  Calloway  v.  Snapp, 
78  Ky.  561  ;  Andrews  ».  Marrett,  58  Me.  539;  Guild  v.  Butler,  127  Mass.  386;  Gano 
v.  Heath,  36  Mich.  441  [semble) ;  German  Association  v.  Helmrick,  57  Mo.  100;  Still- 
well  v.  Larou,  69  Mo.  539;  Welfare  v.  Thompson,  83  N.  Ca.  276;  Calvert  v.  Good,  95 
Pa.  65 ;  First  Bank  v.  Skidmore,  Tex.  Ap.  '95,  30  S.  W.  R,  564 ;  Irvine  v.  Adams, 
48  Wis.  468;  Moulton  v.  Posten,  52  Wis.  169.  — En. 

1  Only  the  opinions  of  the  Court  are  given.  —  Ed. 

2  The  jury  found  that  the  plaintiff  kuew,  when  he  took  the  mortgage  security,  thai 
the  defendant  was  an  accommodation  acceptor.  —  Ed. 

3  4B.  &  S.  761. 


SECT.  II.]  EWIN    V.   LANCASTER.  163 

the  giving  time  to  a  prior  indorser  of  a  bill  of  exchange  discharged  an 
accommodation  acceptor ;  the  principle  on  which  that  decision  was 
founded  being,  that  the  parties  to  an  accommodation  acceptance  stand 
in  the  relation  of  principal  and  surety.  Where  one  is  surety  for  another 
and  the  creditor  gives  time  to  the  principal  debtor  the  surety  is  dis- 
charged ;  for  if  the  surety  pays  the  debt  he  is  entitled  to  sue  the  debtor 
in  the  name  of  the  creditor  in  order  to  recover  back  from  him  the 
money  he  has  paid.  In  the  present  instance,  if  the  accommodation 
acceptor  had  gone  to  the  holder  of  the  bills,  and  in  order  to  get  posses- 
sion of  them  had  proposed  to  him  to  pay  them  with  the  view  to  enforce 
in  the  name  of  the  creditor  the  liability  of  the  drawer  to  repay  him 
what  he  had  so  paid,  the  holder  could  not  have  given  them  up  to  him  ; 
for  he  had  entered  into  an  agreement  to  cancel  them.  And  as  soon  as 
he  put  it  out  of  his  power  to  deliver  up  the  bills  to  the  acceptor  on 
payment  of  their  amount,  he  deprived  the  accommodation  acceptor  of 
his  right  as  surety  to  recover  from  the  principal  debtor.  On  that 
ground,  as  well  as  on  the  authority  of  Bailey  v.  Edwards,1  I  am  of 
opinion  that  the  plaintiff  has  discharged  the  surety,  and  therefore  the 
rule  should  be  made  absolute. 

Crompton,  J.  Originally  the  cases  at  law  were  extremely  strong 
that  the  position  of  parties  to  a  bill  of  exchange  or  promissory  note 
could  not  be  reversed  by  making  the  party  who  appeared  on  the  face 
of  the  instrument  to  be  the  principal  debtor  surety  for  the  other.  The}7 
proceeded  on  the  principle  that  parol  evidence  is  not  allowed  to  alter  a 
written  contract :  that  principle  is  a  sound  one,  and  has  governed  many 
cases  in  Courts  of  law.  But  cases  in  equity  establish  that  when  one 
or  both  of  two  parties  to  an  instrument  are  primarily  liable,  as  in  the 
instance  of  a  common  bond  where  several  join  as  obligors,  and  tlTe 
creditor  may  sue  any  one  of  them  at  an}'  time,  it  is  competent  for  him 
to  show  that  the  relation  of  principal  and  surety  exists  between  the 
parties.  Lord  Cottenham,  in  Hollier  v.  Eyre,2  referred  to  in  Pooley  y. 
HanacTine,  explained  that  the  doctrine  on  which  the  courts  of  equity 
proceed  arose  from  its  being  inequitable  that  the  creditor  should  pre- 
judice the  rights  of  the  surety  against  the  principal.  In  Strong  v.  Fos- 
ter,3 which  was  after  pleas  on  equitable  grounds  had  been  introduced, 
the  evidence  failed  to  support  the  equitable  defence,  and  it  was  not 
necessary  to  pronounce  an  opinion  on  the  validity  of  it.  In  Pooley  v. 
Harradine,  this  Court  upheld  a  plea  on  equitable  grounds,  which 
stated  that  the  defendant  made  the  note  jointly  with  A  as  surety  only 
for  him,  of  which  the  plaintiff  had  notice  at  the  time,  and  that  the 
plaintiff  gave  time  to  A  without  the  defendant's  knowledge.  That 
decision  was  adopted  by  the  Court  of  Exchequer  in  Taylor  v.  Burgess,4 
and  was  held  to  be  law  by  the  Exchequer  Chamber  in  Greenough  v. 
McClelland.5    But  Poole}7  v.  Harradine  left  one  matter  in  doubt,  viz.. 

1  4B.  &S.  761.  2  9  C1.  &-p.  1,45. 

3  17  C.  B.  201.  *  5H.  &N.  1. 

6  2  E.  &  E.  424,  429. 


164 


ROUSE   V.   BRADFORD   BANKING  CO. 


[CHAP.  II. 


whether  the  creditor  must  have  had  notice  of  the  suretyship  at  the 
time  of  taking  the  notes,  or  whether  notice  at  the  time  of  the  dealing 
tillered  to  amount  to  :i  discharge  of  the  surety  was  sufficient.  That 
case  came  before  this  Court  in  Bailey  v.  Edwards,1  which  is~very  anal- 
ogous to  the  present ;  and  the  law  accuratel}'  laid  down  by  m}-  brother 
Blackburn  in  that  case,  applies  here.  There  the  plaintiffs,  when  they 
executed  the  deed  by  which  time  was  given,  had  notice  that  the  bill 
was  accepted  for  the  accommodation  of  their  debtor ;  and  that  is  the 
time  to  be  looked  at,  because  it  is  the  time  when  the  equity  arises.  It 
is  clear  that  a  creditor  is  not  bound  10  sue  either  the  principal  or  the 
surety  ;  no  delay  in  suing  the  surety  will  prejudice  him,  but  he  must 
not  make  a  binding  agreement  by  which  he  ties  up  his  hands  from 
suing  the  principal ;  if  he  does  so  the  surety  is  discharged,  on  the 
principle  explained  by  Williams,  J.,  in  Strong  v.  Foster.2  Here  the 
plaintiff  made  a  contract  with  the  principal  upon  good  consideration  to 
give  up  the  bills  to  be  cancelled.  Whether  that  is  a  waiver  of  the 
right  of  action  against  the  surety  may  be  doubtful ;  for  a  waiver  can 
only  be  to  the  party  himself  who  relies  upon  it.  But  by  that  contract 
the  plaintiff  for  a  good  consideration  tied  up  his  hands  from  suing  the 
principal  debtor.  It  ma}r  be  shown  by  parol  evidence  that  in  the  trans- 
action between  the  creditor  and  his  debtors,  according  to  truth  and  for 
the  purposes  of  equity,  one  of  the  debtors  was  suretj'  for  the  other ; 
and  then  the  creditor  is  within  the  rule  by  which,  if  he  gives  time  to 
the  principal  debtor,  the  surety  is  discharged. 

Shee,  J.,  concurred.  Hide  absolute.6 


ROUSE  v.  THE  .BRADFORD   BANKING   COMPANY. 

/  '    ■  73CL.  "$  *"h   ^-*<^-^^^i*c  - 

In  the  House  of  Lords,  July  30,  1894. 

[Reported  in  [1 894]  Appeal  Cases,  586.] 

Lord  Herschell,  L.  C.4  My  Lords,  the  appellant,  who  was  the 
plaintiff  in  the  action,  was  formerly  in  partnership  with  certain  other 
persons  carrying  on  business  as  worsted  spinners  under  the  firm  of 
William  Rouse  &  Co.  The  partnership  between  them  was  dissolved 
by  a  deed  of  the  17th  of  April,  1885.  By  that  deed  William  Rouse 
was  to  cease  to  carry  on  the  business,  and  the  other  members  of  the 
firm,  John  Frederick  Rouse,  Frank  Rouse,  and  Herbert  Rouse,  were  to 
continue  to  do  so.     By  that  deed  also  the  debts  of  the  firm  were  to  be 

i  4B.  &S.  761.  2  17  C.  B.  201,219. 

3  Davies  v.  Stainbank,  6  D.  M.  &  G.  679  ;  Bailey  v.  Edwards,  4  B.  &  S.  761  ; 
Oriental  Corp.  v.  Overend,  7  Ch.  142,  348  (overruling  Ex  parte  Graham,  5  D.  M.  & 
G.  356) ;  Valley  Bank  v.  Meyers,  17  N.  B.  R.  257  ;  Westervelt  v.  Freeh,  33  N.  J.  Eq. 
451;  Shelton  v.  Hurd,  7  R.  I.  403,  Accord.  —  Ed. 

4  Only  the  opinions  of  the  judges  are  given.  —  Ed. 


SECT.  II.]  HOUSE   V.    BRADFORD    BANKING   CO.  165 

paid  by  the  new  partnership,  who  were  to  take  over  its  assets,  and  the}' 
covenanted  with  William  Rouse,  the  retiring  partner,  to  indemnify  him 
against  those  debts.  The  covenant  contained  a  proviso  to  which  I  will 
call  attention  presently. 

My  Lords,  at  the  time  of  the  dissolution,  amongst  the  debts  owing 
was  a  debt  of  upwards  of  £50,000  to  the  Bradford  Banking  Company, 
in  which  the  appellant  was  a  shareholder.  At  the  time  when  the  new 
firm  failed,  some  years  afterwards,  the  debt  had  been  reduced  below 
£50,000,  but  a  considerable  amount  was  still  owing  to  the  bank,  and 
this  action  having  been  brought  to  establish  the  appellant's  claim  to 
his  shares  free  from  any  lien,  the  respondents  sought  by  counter-claim 
to  enforce  their  right  to  hold  William  Rouse's  shares  as  securit}'  for  the 
debt.  The  answer  to  this  claim  was  that  William  Rouse  had  been  dis- 
charged from  all  his  liability  to  the  bank  b}'  reason  of  transactions 
between  the  bank  and  the  new  firm.  The  case  was  put  in  this  way  • 
that  upon  the  dissolution  of  the  firm  under  the  deed  which  I  have  men- 
tioned, the  continuing  partners  became  as  between  themselves  the  prin- 
cipal debtors,  and  William  Rouse  merely  a  suret}'  for  them ;  and  that 
inasmuch  as  the  bank  had  notice  of  the  deed  of  dissolution  and  its 
terms,  it  was  brought  to  the  knowledge  of  the  bank  that  this  was 
the  relation  of  the  parties  after  that  date.  Then  it  was  said  that  the 
bank  thus  knowing  that  William  Rouse  had  become  surety  onl}'  as  be- 
tween him  and  his  former  co-partners,  gave  time  to  the  continuing 
members  of  the  firm  for  the  payment  of  the  debt  in  question,  and  so 
discharged  William  Rouse.  It  was  contended  indeed  alternatively,  that 
there  had  been  a  novation,  and  that  the  bank  had  accepted  the  nev 
firm  as  their  debtors  in  place  of  the  co-debtors  who  had  previously 
been  liable  to  them,  and  that,  by  this  novation,  William  Rouse  was 
discharged.  That  argument  has  not  found  favor  with  an}'  of  the 
learned  judges  before  whom  the  case  has  come,  and  your  Lordships 
.have  already  intimated  that,  in  30111*  opinion,  it  cannot  be  supported. 

My  Lords,  with  regard  to  the  question  whether  time  was  given  so  as 
to  discharge  the  surety,  the  general  principle  of  equity  was  not  con- 
tested that  where  there  is  a  contract  with  two  persons,  one  as  principal 
and  the  other  as  surety,  and  time  is  given  to  the  principal  without  the 
assent  of  the  surety,  and  without  the  rights  against  the  suretv  being 
reserved,  the  right  against  the  surety  is  extinguished  ;  but  it  was  said 
to  be  inapplicable  to  such  a  case  as  the  present  where  those  who  as~be 
tweeiithemselvcs  became  principal  and  surety  had  been  originally  botl 
of  them  principal  debtors  to  the  creditor. 

On  the  other  hand,  it  was  contended  that  this  made  no  difference  and 
that  the  rule  of  equit}'  was  as  applicable  to  a  case  where  two  having 
both  been  principal  debtors,  one  afterwards  became,  with  notice  to  the 
creditor,  a  surety,  as  it  was  to  a  case  where  the  contract  with  the  credi- 
tor was  one  of  principal  debtor  and  surety.  Reliance  was  placed  for 
this  proposition  upon  the  case  of  Oakeley  v.  Pasheller,1  decided  in  this 

1  4  CI.  &  F.  207 ;  10  Bli.  (N.  S.)  548. 


166  ROUSE   V.    BRADFORD    BANKING   CO.  [CHAP.  II. 

House.  That  case  has  been  very  much  discussed,  and  inasmuch  as  I 
believe  all  your  Lordships  have  formed  a  clear  opinion  upon  the  argu- 
ment which  has  been  addressed  to  you  on  that  point,  it  is  probably  well 
to  express  it,  although  the  decision  in  this  House  does  not  turn  upon 
the  conclusion  arrived  at  with  regard  to  Oakeley  v.  Pasheller.1 

In  Oakeley  v.  Pasheller,1  Lord  Lyndhurst,  in  delivering  judgment, 
said  this  :  "  Now  in  consequence  of  an  arrangement  which  took  place 
between  the  representatives "  (that  is  the  representatives  of  the  de- 
ceased partner)  "•  and  the  new  partnership  "  (in  that  case  an  additional 
partner  was  taken  in  when  one  of  the  partners  died)  "  they  stood  in 
the  character  of  sureties  :  and  the  principle  of  law  is  this,  that  where 
a  creditor  gives  time  to  the  principal,  there  being  a  surety,  without  any 
communication  with  the  surety,  and  without  the  consent  of  the  surety, 
it  discharges  him  from  liability  because  it  places  him  in  a  new  situation 
and  exposes  him  to  risk  and  contingencies  which  he  would  not  other- 
wise be  liable  to."  The  proposition  is  there  laid  down  in  terms  quite 
unequivocal  by  Lord  Lyndhurst  affirming  Lord  Brougham  as  Lord 
Chancellor  and  the  Master  of  the  Rolls. 

My  Lords,  it  was  suggested,  in  the  case  of  Swire  v.  Redman,2  that 
the  judgment  in  Oakeley  v.  Pasheller1  turned  upon  the  fact  that  the 
creditor  had  been  a  part}'  to  an  arrangement  by  which  the  represen- 
tatives of  the  deceased  partner  were,  as  between  him  and  them,  to  be 
sureties  only.  I  cannot  myself  find  any  trace  of  such  an  arrangement 
as  being  the  foundation,  in  airy  respect,  of  the  judgment  of  Lord 
Lyndhurst. 

In  the  case  of  Overend,  Gurney  &  Co.  v.  Oriental  Financial  Corpo- 
ration 3  before  Lord  Hatherley  when  Lord  Chancellor,  he  referred  some- 
what elaborately  to  the  facts  in  Oakele}'  v.  Pasheller,1  and  he  said : 
"There  is  really  in  substance  no  hardship;  and  that  is  one  reason 
why  I  dwelt  at  some  little  length  to  show  that  it  was  not  a  doctrine 
which  was  at  all  shaken  by  the  right  of  th"e  creditor  to  preserve  his 
remedies  against  the  surety ;  and  if  there  was  an}'  small  hardship,  they 
could  have  freed  themselves  from  that  hardship  and  all  difficulty  what- 
ever. A  person  conies  and  tells  them  that  since  the  debt  was  con- 
tracted circumstances  have  arisen  by  which  he  is  in  fact  surety  and  the 
other  debtor  is  the  principal  debtor.  Thereupon  all  that  they  have  to 
do  is  to  give  the  principal  debtor  time  and  reserve  their  rights  against 
the  surety."  It  is  quite  clear,  from  the  language  used  in  the  earlier 
part  of  the  judgment,  that  Lord  Hatherley  considered  he  was  really 
following  the  principle  laid  down  in  Oakeley  v.  Pasheller.1  The  case 
of  Overend,  Gurney  &  Co.  v.  Oriental  Financial  Corporation  3  was  this : 
that  two  persons  had  appeared  to  the  creditor,  at  the  time  the  contract 
was  entered  into,  to  be  both  principal  debtors,  and  he  afterwards  ob- 
tained notice  of  the  fact  that  one  of  them  was  a  surety  only.  It  was 
held  that  when  once  he  had  received  that  notice  he  could  not  2:ive  time 

1  10  Bli.  (N.  S.)  548,  590.  2  1  Q.  B.  D.  536. 

3  Law  Rep.  7  Ch.  142;  41  L.  J.  (Ch.)  332,  336. 


SECT.  II.]  ROUSE    V.    BRADFORD    BANKING   CO.  167 

to  the  one  who,  as  between  themselves,  was  the  principal  debtor,  with- 
out discharging  the  surety. 

My  Lords,  that  case  caine  before  this  House  on  appeal  from  the 
decision  of  Lord  Ilatherley  as  Chancellor,  and  the  judgment  was 
affirmed.  Lord  Cairns  said  : 1  "  My  Lords,  it  appears  to  me  that  after 
the  case  which  was  referred  to  at  the  Bar,  decided  by  }-our  Lordship's 
House,  of  Oakeley  v.  Pasheller,2  it  is  impossible  to  contend  if  after  a 
right  of  action  accrues  to  a  creditor  against  two  or  more  persons,  he  is 
informed  that  one  of  them  is  a  surety  only,  and  after  that  he  gives 
time  to  the  principal  debtor  without  the  consent  and  knowledge  of  the 
surety,  that  under  those  circumstances  the  rule  as  to  the  discharge  of 
the  surety  does  not  apply.  That  is  a  distinct  and  clear  expression  of 
opinion  as  to  the  limits  and  the  grounds  of  decision  in  Oakeley  v.  Pashel- 
ler,'2 and  it  is  in  accordance  with  the  view  which  I  have  myself  formed 
of  that  case.  And  in  this  House,  as  I  have  said,  the  decision  of  Lord 
Ilatherley  was  affirmed,  and  therefore  the  proposition  was  actually 
applied  in  a  case  where  the  two  debtors  had  both  been  believed  to  be 
principal  debtors  by  the  creditor  at  the  time  the  contract  was  entered 
into. 

My  Lords,  I  own  I  am  quite  unable  to  see  any  distinction,  even  if 
Oakeley  v.  Pashelier  2  did  not  exist,  between  that  case  in  the  House  of 
Lords  and  the  present.  If,  notwithstanding  that  both  the  debtors  ap- 
peared to  be  principal  debtors,  the  knowledge  afterwards  that  one  of 
them  is  a  surety  only  disentitles  you  to  deal  with  the  other  in  the  way 
of  giving  time  without  discharging  that  debtor,  then  it  seems  to  me  it 
must  equally  be  the  case  (for  otherwise  there  would  be  a  distinction, 
resting  on  no  intelligible  or  solid  basis),  that  where,  although  hoth  _are 
principal  debtors  at  the  time,  one  of  them  afterwards,  as  between  him- 
self and  his  co-debtor,  becomes  a  surety,  that  one  is  discharged  if  time 
be  given  to  the  other.  .   .   .A 

Lord  Watson.  My  Lords,  when  two  or  more  persons  bound  as  full 
debtors  arrange,  either  at  the  time  when  the  debt  was  contracted,  or 
subsequently,  that,  inter  se,  one  of  them  shall  only  be  liable  as  a  surety, 
the  creditor  after  he  has  notice  of  the  arrangement  must  do  nothing  to 
prejudice  the  interests  of  the  surety  in  any  question  with  his  co-debtors. 
That  appears  to  me  to  be  the  law  as  settled  by  the  judgments  of  this 
House  in  Oakeley  v.  Pasheller,4  and  Overend,  Gurney  &  Co.  v.  Oriental 
Corporation.5 

Order  appealed  from  affirmed  and  appeal  dismissed  with  costs.9 

1  Law  Rep.  7  II.  L.  at  p.  360.  2  10  Bli.  (N.  S.)  548,  590. 

3  The  Lord  Chancellor  here  discussed  the  documentary  evidence  in  the  case,  and 
concluded  that  there  was  in  fact  no  binding  agreement  of  the  creditor  to  give  time  to 
those  who  had  become  the  principal  debtors.  Lord  Watson  was  inclined  to  take  the 
same  view  on  this  point.  —  Ed. 

*  lOBli.  (N.S)  548. 

5  L.  R.  7  H.  L.  348. 

Lord  Ashbourne,  Lord  Macnaghten,  and  Lord  Morris  concurred.  —  Ed. 

6  Oakley  v.  Pasheller,  4  CI.  &  F.  207,  10  Bligh,  N.  S.  548  s.  c. ;  Oakford  v.  Euro- 
pean Co.,  1  H.  &  M.  182  (semble);  Oriental  Corp.  v.  Overend,  L.  R.  7  H.  L.  348,  360. 


168  « m.  MUKKAY   V.    MARSHALL. 


SUSAN  E.  MURRAY  and  Others,  Executors,  Respondents, 

v.  PHEBE  MARSHALL,,  Appellant.  -X, 

-  ***»***+  |  -^^i  *^*~  ^y>g  ""   ^T£?7 

In  the  Court  or  Appeals,  New  York,  February  8,  1884. 

[Reported  in  94  A7ew  York  Reports,  611.] 

Appeal  from  order  of  the  General  Term  of  the  Supreme  Court  in 
the  second  judicial  department,  made  December  12,  1882,  which  re- 
versed a  judgment  in  favor  of  defendant,  entered  upon  a  decision  of 
the  Court  on  trial  without  a  jury. 

This  action  was  upon  a  bond  executed  by  defendant  to  plaintiffs' 
testator.  The  answer  averred,  and  the  Court  found  in  substance,  that 
at  the  time  the  bond  was  executed,  a  mortgage  was  also  executed  by 
defendant  to  secure  the  payment  thereof;  that  thereafter  defendant 
sold  and  conveyed  the  mortgaged  premises  subject  to  said  mortgage  ; 
that  plaintiff's  testator,  in  consideration  of  the  payment  to  him  by  the 
grantee  of  $500  of  the  principal  and  of  the  interest  due  upon  the  bond 
and  mortgage,  executed  and  delivered  to  said  grantee,  without  the 
knowledge  or  assent  of  defendant,  an  instrument  under  seal,  extend- 
ing the  time  of  payment  of  the  balance  unpaid  for  three  years,  whereby 
the  answer  claimed,  and  the  trial  court  found  defendant  was  released 
and  discharged  from  all  liabilit}*. 

Henry  D.  JBirdsall,  for  appellant. 

Josiah  T.  Marean,  for  respondents.1 

per  Lord  Cairns;  Wilson  v.  Lloyd,  16  Eq.  60;  Vary  v.  Norton,  6  F.  R.  808;  Home 
Bank  v.  Waterman,  134  111.  461,  467;  Williams  v.  Boyd,  75  Ind.  286  (semble) ; 
M'Taggart  v.  Dolan,  86  Iud.  314  (semble) ;  (but  see  Fensler  v.  Prather,  43  Ind.  119) ; 
Smith  v.  Sheldon,  35  Mich.  42  ;  Cornwell  v.  Megins,  39  Minn.  407  (semble) ;  Patterson 
v.  Camden,  25  Mo.  13  (semble) ;  Millerd  v.  Thorn,  56  N.  Y.  402  ;  Colgrove  v.  Tallman, 
67  N.  Y.  95;  Palmer  v.  Purdy,  83  X.  Y.  144  (semble);  Thurber  v.  Corbin,  51  Barb. 
215  (semble)  ;  Morrison  v.  Perry,  11  Hun,  33  (semble) ;  Dodd  v.  Dreyfus,  17  Hun,  600  ; 
Main  v.  Canavan,  8  Daly,  272  ;  Hall  v.  Johnston,  6  Tex.  Ap.  110  ;  Gates  v.  Hughes,  44 
Wis.  332  (semble)  ;  Maingay  v.  Lewis,  Ir.  R.  5  C.  L.  229  (reversing  s.  c.  Ir.  R.  3  C.  L. 
495) ;  Mathers  v.  Halliwell,  10  Grant,  Ch.  172  ;  Blackley  v.  Kenney,  19  Ont.  Ap.  169 
(compare  Aldous  v.  Hicks,  21  Ont.  Ap.  95)  ;  Bailey  v.  Griffith,  40  Up.  Can.  Q.  B.  418 
(but  see  Birkett  v.  McGuire,  7  Ont.  Ap.  53,  and  Allison  v.  McDonald,  23  Ont.  Ap.  288, 
20  Out.  Ap.  695),  Accord. 


"  Swire  v.  Redman,  1  Q.  B.  D.  536  (overruled)  ;  James  v.  Day,  37  Iowa,  164;  Raw- 
jp  X^'son  v.  Taylor,  30  Ohio  St.  389  (semble)  ;  Barnes  v.  Boyers,  34  W.  Va.  303,  Contra.  —  Ed. 

fi/^^    _»«*•■»  •  On  the  same  principle,  if  a  mortgagor  sells  the  property  subject  to  the  mortgage, 
■    receiving  the  purchaser's  promise  to  assume  the  payment  of  the  mortgagor,  acid  the 
ortgagee,  with  knowledge  of  tins  assumption,  agrees  with  the  purchaser  to  extend 
le  time  of  payment,  the  mortgagor,  being  in  effect  a  surety,  will  be  discharged. 
Union  Co.  v.  Harford,   143  U.  S.  IB"    (but  see" "Keller  v.  Ashiord,  133   U.  is.  610) ; 
George  v.  Andrews,  60  Md.  26 ;  Chilton  v.  Brooks,  72  Md.  554  (semble) ;  Dedrick  v. 
^fcBlyker,  85  Mich.  475  ;  Calvo  v.  Davies,  73  N.  Y.  211  ;  Fish  v.  Hayward,  28  Hun,  456  ; 
Commercial  Bank  v.  Wood,  56  Mo.  Ap.  214;  Wayman  v.  Jones,  58  Mo.  Ap.  313  (re- 
pudiating Conn.  Co.  v.  Mayer,  8  Mo.  Ap.  18). 

But  see  contra,  Corbet  v.  Waterman,  11  Iowa,  86;  James  v.  Day,  37  Iowa,  164 
—  Ed. 

1  The  arguments  of  counsel  are  omitted.  —  Ed. 


&^, 


SECT.  II.]  MURRAY    V.   MARSHALL.  1G9 

Finch,  J.     The  trial  court  held,  that  the  extension  by  plaintiffs' 
testator  of  the  time  of  payment  of  defendant's  bond  and  mortgage, 
by  a  valid  agreement  with  her  grantee,  who  had  taken  a  deed  subject 
to  the  mortgage  but  without  assuming  its  payment,  operated  to  dis- 
charge the  defendant  wholly   from   liability.     This  conclusion  rested 
upon  the  rule   applicable  to  principal  and  surety,  which  forbids  the 
former  to  change  the  essential  terms  of  the  contract  without  the  con- 
sent of  the   latter,  except  at  the  peril  of  the  surety's  complete  dis- 
charge.    In  most  of  these  cases  the  Courts  have  refused  to  enter  upon 
the  inquiry  whether  the  surety  was  damaged  or  not  by  the  change,  and 
the   justification  ot  such  refusal  ordinarily  lies  in  the   fact  that  the 
surety  is  bound  only  by  the  contract  which  he  made,  and   not  by  the 
new  and  substituted  one  which  alone  can  be  legally  enforced.     Ducker 
v.  Rap  p.1     But  the  present  is  not  a  case  of  principal  and  surety  in  the 
strict  and  technical  definition  of  such  relation  ;  and  upon  that   fact  the 
General  Term   founded   a  different  view  of  the  rights  of  the  parties, 
and  reversed  the  decision  of  the  Special  Term  on  appeal.     Conceding 
that,  by  the  conveyance  subject  to  the  mortgage,  the  land  became  the 
primary  fund  for  the  payment  of  the  mortgage  debt,  and  that  the  grantor 
in  defence  of  his  liability  on   the  bond  had  the  right  to  pay  the  mort- 
gage debt  and   be  subrogated  to  the  remedies  of  the  creditor,  and  so 
could  enforce  payment  out  of  the  land  to  the  extent  of  its  value,  (John- 
son v.  Zink,2  Flower  v.    Lance,3)  the  General  Term  nevertheless  held, 
affirming  the  authority  of  Penfield  v.  Goodrich,4  that  the  mortgagor  and 
grantor  was   all  the  time   the  principal  debtor,  and   the  grantee  onby 
became    such   when   he   covenanted    to   pay   the  mortgage  debt   and 
assumed  it  as  a  personal  liability.     We  do  not  approve  of  this  con- 
clusion, or  the  result  to  which  it  leads,  and  deem   it  our  duty  to  affirm 
the  decision  of  the  Special  Term,  although  not  approving  the  doctrine 
upon  which  it  rests,  except  with  some  necessaiy  qualification. 

While,  as  we  have  said,  no  strict  and  technical  relntinn  nf  pritjeipal 
and  sure t}~  arose  between  the  mortgagor  and  his  grantee  from  the  con- 
veyance subject  to  the  mortgage,  an  equity  did  arise  which  could  not 
be  taken"  from  the  mortgagor  without  his  ennspnt,,  «"ri  mWh_hoana  a 
very  closl'  1'L'semblance  to  the  equitable  right  of  a  surety,  the  terms  of 
whose  contract  have  been  modified.  We  cannot  accurately  denominate 
the  grantee  a  principal  debtor,  since  he  owes  no  debt,  and  is  not  per- 
sonally a  debtor  at  all,  and  yet,  since  the  land  is  the  primary  fund  for 
the  payment  of  the  debt,  and  so  his  property  stands  specifically  liable 
to  the  extent  of  its  value  in  exoneration  of  the  bond,  it  is  not  inaccu- 
rate to  say  that  as  grantee,  and  in  respect  to  the  land,  and  to  the  ex- 
tent of  its  value,  he  stands  in  the  relation  of  a  principal  debtor,  and  to 
the  same  extent  the  grantor  has  the  equities  of  a  surety.  This  follows 
inevitably  from  the  right  of  subrogation  which  inheres  in  the  original 
contract  of  sale  and  conveyance.     It  is  a  definite  and  recognized  right, 

1  67  N.  Y.  473.  2  51  N.  Y.  3.36. 

8  59  Id.  603.  4  10  Huu,  41. 


170  MURRAY    V.   MARSHALL.  [CHAP.  IL 

which,  in  the  absence  of  an  express  agreement,  will  be  founded  upon 
one  implied.  Gans  v.  Thieme.1  When  the  mortgagor  in  this  case 
sold  expressly  subject  to  the  mortgage,  remaining  liable  upon  his  bond, 
he  had  a  right  as  against  his  grantee  to  require  that  the  land  should, 
first  be  exhausted  in  the  payment  of  the  debt.  Presumably  the  amount 
of  the  mortgage  was  deducted  from  the  purchase-price,  or  at  least  the 
transfer  was  made  and  accepted  in  view  of  the  mortgage  lien.  Seller 
and  buyer  both  acted  upon  the  understanding  that  the  land  bound  for 
the  debt  should  pay  the  debt  as  far  as  it  would  go,  and  their  contract 
necessarily  implied  that  agreement.  Through  the  right  of  subrogation 
the  vendor  could  secure  his  safety,  and  that  right  could  not  be  invaded 
with  impunity.  It  was  invaded.  When  the  creditor  extended  the 
time  of  payment  by  a  valid  agreement  with  the  grantee,  he  at  once,  for 
the  time  being,  took  away  the  vendor's  original  right  of  subrogation. 
He  suspended  its  operation  beyond  the  terms  of  the  mortgage.  He 
put  upon  the  mortgagor  a  new  risk  not  contemplated,  and  never  con- 
sented to.  The  value  of  the  land,  and  so  the  amount  to  go  in  exoner- 
ation of  the  bond,  might  prove  to  be  very  much  less  at  the  end  of  the 
extended  period  than  at  the  original  maturity  of  the  debt,  and  the 
latter  might  be  increased  by  an  accumulation  of  interest.  The  creditor 
had  no  right  thus  to  modify  or  destro}*  the  original  right  of  subro- 
gation. What  he  did  was  a  conscious  violation  of  this  right,  for  the 
fact  that  he  dealt  with  the  grantee  for  an  extension  of  the  mortgage 
shows  that  he  knew  of  the  conveyance,  and  that  it  left  the  land  bound 
in  the  hands  of  the  grantee.  Knowing  this,  he  is  chargeable  with 
knowledge  of  the  mortgagor's  equitable  rights,  and  meddled  with  them 
at  his  peril.  But  it  does  not  follow  that  the  vendor  was  thereb}'  wholly 
discharged.  The  grantee  stood  in  the  quasi  relation  of  principal 
debtor  only  in  respect  to  the  land  as  the  primary  fund,  and  to  the  ex- 
tent of  the  value  of  the  land.  If  that  value  was  less  than  the  mort- 
gage debt,  as  to  the  balance  he  owed  no  duty  or  obligation  whatever, 
and  as  to  that  the  mortgagor  stood  to  the  end,  as  he  was  at  the 
beginning,  the  sole  principal  debtor.  From  any  such  balance  he  was 
not  discharged,  and  as  to  that  no  right  of  his  was  in  any  manner  dis- 
turbed. The  measure  of  his  injury  was  his  right  of  subrogation,  and 
that  necessariby  was  bounded  b}r  the  value  of  the  land.  The  extension 
of  time,  therefore,  operated  to  discharge  him  only  to  the  extent  of  that 
value.  At  the  moment  of  the  extension  his  right  of  subrogation  was 
taken  away,  and  at  that  moment  he  was  discharged  to  the  extent  of 
the  value  of  the  land,  since  the  extension  barred  his  recourse  to  it,  and 
once  discharged  he  could  not  again  be  made  liable.  From  that  moment 
the  risk  of  future  depreciation  fell  upon  the  creditor  who  b}r  the  ex- 
tension practically  took  the  land  as  his  sole  security  to  the  extent  of  its 
then  value,  and  assumed  the  risk  of  getting  that  value  out  of  it  in  the 
future.     But  the  Special  Term  went  further  and  held  that  the  mort 

1  93  N.  Y.  232. 


SECT.  II.]  METZ   V.    TODD.  171 

gagor  was  absolutely  discharged  by  the  extension.  That  might  or 
might  not  be,  and  depended  upon  the  question  whether  the  value  of  the 
land  equalled  or  fell  below  the  debt.  For  conceding  the  general  rule 
that  the  surety  is  discharged  utterly  by  a  valid  extension  of  the  time  of 
payment,  and  that  the  mortgagor  stands  in  the  position  and  has  the 
rights  of  a  surety,  it  must  be  steadily  remembered  that  he  can  only  be 
discharged  so  far  as  he  is  surety  ;  that  he  holds  that  position  only  up 
to  the  value  of  the  land  ;  and  beyond  that  is  still  principal  debtor 
without  any  remaining  equities.   .    .  -1 

The  judgment  of  the  General  Term  should  be  reversed  and  that  of 
the  Special  Term  affirmed  with  costs. 

All  concur.  Judgment  accordingly* 


^?Se^TJb:.r 


MARY   METZ  v.   HELEN   G.   TODD  and  Others. 
In  the  Supreme  Court,  Michigan,  June  6,  1877. 

[Reported  in  36  Michigan  Reports,  473.] 

Appeal  in  Chancery  from  Calhoun  Circuit. 

E.  Baxter  and  J.  G.  Post,  for  complainants. 

Severens,  Boudeman  &  Turner,  for  defendants. 

Cooley,  Ch.  J.  This  is  a  foreclosure  suit.  The  mortgage  was  given 
by  defendants  Helen  G.  Todd  and  Alice  M.  Terry,  to  secure  the  pay- 
ment of  four  promissory  notes  made  by  third  persons,  and  which  the 
mortgagors  had  delivered  to  complainants  on  a  purchase  of  the  land 
mortgaged.  The  bill  avers  that  the  four  notes  were  delivered  to  the 
complainants  "  as  security  for  the  payment  of  the  purchase  price,"  and 
that  the  mortgage  was  taken  at  the  same  time  to  secure  the  payment 
of  the  note.s.  It  is  claimed  by  the  defence  that  the  notes  were  received 
in  payment  for  the  land,  and  that  the  purchasers  were  not  to  be  looked 
to  for  payment  except  upon  the  mortgage  and  according  to  its  condi- 
tions.    The  evidence  satisfies  us  that  this  defence  is  well  founded. 

It  is  also  claimed  on  the  part  of  the  defence  that  on  the  only  note 
now  remaining  unpaid,  and  which  was  made  by  one  Frink,  the  mort- 
gagees, for  a  consideration  paid  to  them,  and  without  the  knowledge  of 
the  mortgagors,  extended  the  time  of  payment.  The  mortgagors  then 
insist  that,  though  not  personally  at  any  time  liable  as  sureties,  3'et  as 
owners  of  the  mortgaged  land  the}-  occupied  that  position,  and  conse-~ 
quently  the  extension  granted  to  the  principal  debtor,  without  their 

1  The  Court  here  considered  the  evidence,  and  inferred  that  the  value  of  the  land 
equalled  the  amount  6f  the  mortgage  debt. —  Kd. 

-    lravers  v.  Dorr  (Minn.,  1895),  62  N.  W.  R.  269,  Accord. 

Shepherd  v.  May,  115  U.  S.  505  (semble) ;  Keller  v.  Ashford,  133  U.  S.  610,  625. 
(semble;  but  see  Union  Co.  v.  Harford,  143  U.  S.  187,  190) ;  Chilton  v.  Brooks,  72  Md 
554  (semble),  Contra.  —  Ed. 


172  FEAZEK  V.   JOKDAN.  [CHAP.  II. 

consent,  discharged  the  land  from  the  mortgage  lien.  That  the  claim 
is  well  founded  if  the  proof  establishes  the  extension,  we  think  is  un- 
doubted. Neimcewicz  v.  Gahn,1  and  Gahn  v.  Niemcewicz,2  Christner 
v.  Brown.3  We  also  find  the  facts  to  be  in  accordance  with  the  theory 
of  the  defence.  The  decree  must  be  affirmed,  ivith  costs. 

The  other  Justices  concurred.4 


J*%**&^     J£*~**<—  ^<strm 


FRAZER   v.   JORDAN. 

In  the  Queen's  Bench,  July  4,  1858. 

[Reported  in  8  Ellis  Sp  Blackburn,  303.] 

Coleridge,  J.,  now  delivered  the  judgment  of  the  Court. 

This  was  an  action  by  the  indorsee  against  the  drawer  of  a  bill  of 
exchange  :  and  the  defendant  pleaded  that  the  plaintiff,  without  the 
defendant's  consent,  had  entered  into  an  agreement  with  Messrs. 
Kerin  that  they  would  give  time  to  the  acceptor  in  consideration  of 
Messrs.  Kerin  promising  that  the}'  would  see  the  bill  paid. 

The  first  question  for  our  consideration,  on  the  special  case  stated 
for  our  decision,  was  whether  the  plea  was  proved.  This  was  a  ques- 
tion of  fact ;  and  we  intimated  our  opinion,  during  the  argument,  that 
that  plea  was  proved  b}-  the  facts  stated. 

The  remaining  question  on  which  we  took  time  to  consider  was, 
whether  a  binding  agreement,  for  a  good  consideration,  with  a  person 
who  is  no  party  to  a  bill  of  exchange,  to  give  time  to  the  acceptor^ 
without  the  consent  of  the  drawer,  discharges  the  drawer. 

It  was  said,  in  support  of  the  plea,  that  the  plaintiff  had  placed  him- 
self in  such  a  situation  as  that  he  could  not  sue  the  acceptor  without 
rendering  himself  liable  to  an  action  for  damages.  And  it  was  said 
that  the  case  fell  within  the  doctrine  laid  down  by  the  Court  of  Ex- 
chequer in  the  case  of  Moss  v.  Hall,5  where  Parke,  B.,  sa}'S  :  "  When- 
ever a  party's  hands  are  effectually  tied  up,  so  that  he  cannot  break 
such  an  engagement  without  being:  made  liable  for  a  breach  of  it,  the 
surety  is  discharged,  the  rule  being  that  there  must  be  either  a  new 
security  given  to  extend  the  time,  or  a  binding  agreement,  upon  a  suf- 
ficient consideration,  to  suspend  the  remedy."  It  was  said  that  the  case 
of  Ford  v.  Beech  6  had  established  that  a  contract  of  this  nature  with 
the  acceptor  to  suspend  proceeding  does  not  constitute  a  defence  to  an 
action,  but  only  gives  a  cross  action  for  breach  of  the  agreement  to 

1  3  Paige,  614.  2  11  Wend.  312.  3  16  Iowa,  130. 

4  Approved  in  Dedrick  v.  Blyker,  85  Mich.  475,  482. 

See  Blackley  v.  Kenney,  19  Ont.  R.  169;  18  Ont.  Ap.  135.  — Ed. 

5  5  Exch.  46,  50.  6  11  Q.  B.  852. 


SECT.  II. J  FKAZER   V.   JORDAN.  173 

give  time,  and  therefore  that  the  exoneration  of  the  surety  in  such  case 
does  not  depend  on  the  action  against  the  principal  debtor  being  barred 
by  the  agreement ;  and  that  the  real  reason  of  the  discharge  is  that  the 
party  has  subjected  himself  to  an  action  for  suing  in  breach  of  the 
agreement ;  and  that  this  extends  to  the  case  of  a  contract  with  a 
stranger  as  well  as  to  one  with  the  principal  debtor,  as  the  being  liable 
to  an  action  if  he  sues  the  debtor  will  render  the  creditor  less  likely  to 
sue  the  debtor  in  proper  time. 

There  certain!}-  were  authorities  from  which  it  has  been  often  sup- 
posed that  the  reason  of  the  discharge  of  the  surety,  by  an  agreement 
with  the  principal  debtor  to  give  time  to  mm,  arose  from  the  right  of 
action  against  the  acceptor  being  suspended  or  gone-  The  doctrine  so 
well  established,  that  a  parol  agreement,  on  good  consideration,  to 
give  time  to  a  bond  debtor,  does  not  discharge  The  bond  surety  at  law, 
because  a  parol  contract  cannot  affect  a  contract  under  seal,  seems 
founded  on  this  notion  ;  as  does  also  the  doctrine  of  its  being  neces- 
sary that  there  should  be  a  consideration  for  the  promise  to  make  it 
binding  in  point  of  law,  though  such  consideration  would  be  requisite 
as  well  to  found  an  action  for  damages  on  the  promise,  as  to  raise  a 
defence  to  the  action  on  the  original  cause  of  action.  Since  the  case 
of  Ford  v.  Beech,1  however,  we  must  take  it  for  granted  that  agree- 
njents  of  this  nature  operate  only  to  give  a  cross  action,  and  do  not 
prevent  an  action  on  the  original  cause  of  action. 

However  the  doctrine  arose,  we  must  consider"  it  quite  settled  that 
aji  agreement,  for  good  consideration,  with  the  principal  debtor,  so  far 
ties  up  the  hands  of  the  creditor  who  has  entered  into  such  an  agree- 
ment, as  that  the  surety  is  discharged ;  and  we  quite  agree  with  the 
doctrine  of  Lord  Wensleydale,  in  Moss  v.  Hall,2  that  this  remains  law, 
notwithstanding  the  argument  which  appears  to  have  been  raised  in 
that  case,  founded  on  Ford  v.  Beech.1  The  surety  has  a  right  at  any 
time  to  go  to  the  creditor  and  say,  "  I  suspect  the  principal  debtor  to 
be  insolvent ;  I  will  pay  you  ;  and  I  wish  you  to  sue  him."  See  the 
observations  of  Williams,  J.,  in  Strong  v.  Foster.3  If,  by  a  binding 
agreement  with  the  principal  debtor,  the  creditor  has  agreed  not  to  sue 
him  for  a  limited  time,  it  would  be  a  breach  of  faith  of  which  the  prin- 
cipal debtor  would  have  a  right  to  complain,  if  an  action  were  brought 
against  him  within  the  period.  And  this  is  held  to  discharge  the 
surety,  although  it  seems,  from  Ford  v.  Beech,4  that  he  could  still  do 
so  at  the  risk  of  an  action  by  the  principal  debtor  on  the  contract  to 
suspend  suing.  It  is,  however,  a  very  different  question  whether  this 
doctrine  is  to  be  extended  for  the  first  time  to  a  case  of  a  contract  with 
a  stranger,  of  which  the  debtor  is  ignorant,  to  which  he  is  not  privy, 
and  in  which  the  damages  to  the  stranger  for  breach  of  contract  may 
be  merely  nominal.  The  doctrine  contended  for  would  go  the  length 
of  establishing  that,   whenever  the   creditor  has  placed   himself  in  a 

i  11  Q.  B.  852.  2  5  Exch.  46. 

3  17  Com.  B.  201,  219.  4  11  Q.  B.  842,  852. 


0J2~7 


r 


174  FRAZER   V.    JORDAN.  j_CHAr.  II 

position  in  which  it  is  against  his  interest  to  sue  the  debtor,  he  has 
discharged  the  surety. 

We  think  that  the  doctrine  ought  not  to  be  extended  to  the  case  of  a 
contract  with  a  stranger.  The  principal  debtor,  having  given  no  con- 
sideration for  the  promise,  has  no  ground  to  complain  of  the  breach  of 
J^  it,  and  cannot  say  that  faith  has  been  broken  with  him.  There  is  no 
privity  of  contract  with  him  ;  and  we  see  nothing  on  which  any  right, 
either  at  law  or  in  equity  (see  Lord  Abinger's  observations  in  Lyon  v. 
Holt),1  for  him  to  insist  on  such  a  contract  can  be  founded.  The 
stranger  may  have  some  private  reason  of  his  own  to  wish  for  some 
indulgence  to  be  shown  ;  and,  if  he  has  given  a  good  consideration, 
may  be  entitled  to  damages,  —  nominal,  or  large  or  small,  according  to 
any  legal  interest  he  may  have  ;  but  surely  he  is  the  only  person  to 
take  advantage  of  his  contract. 

No  such  doctrine  as  that  there  can  be  a  discharge  in  such  case  arising 
from  a  contract  with  a  stranger  has  ever  yet  been  established.  In  all 
the  text-books  which  were  cited,  the  rule  is  laid  down  as  to  a  binding 
contract  with  the  acceptor  or  principal  debtor.  The  case  of  Moss  v. 
Hall,2  on  which  the  principal  reliance  was  placed  by  the  defendant,  was 
the  case  of  a  contract  with  the  acceptor ;  and  it  was  to  such  a  case 
that  the  observations  of  Lord  Wensleydale  were  addressed :  and  the 
onby  case  in  which  it  has  been  suggested  that  a  contract  with  a 
stranger  would  be  sufficient  is  a  strong  authorit}'  against  such  a  doc- 
trine. That  was  the  case  of  Lj'on  v.  Holt,8  which  was  an  action  by 
the  indorsee  of  a  bill  of  exchange,  alleged  in  the  declaration  to  have 
been  drawn  by  Hobson  on  Hjmes,  and  indorsed  bjT  the  drawer  to  the 
defendant,  and  b}'  him  to  Messrs.  Woosters,  and  by  them  to  the 
plaintiffs.  The  defendant  pleaded  that  the  indorsement  b}-  the  defend- 
ant was  not  directly  to  Woosters,  but  was  an  indorsement  b}-  the 
defendant  to  John  Holt  &  Co.  (persons  other  than  the  defendant),  and 
I13'  John  Holt  &  Co.  to  Woosters,  and  that  there  had  been  an  agree- 
ment between  the  plaintiffs  and  John  Holt  &  Co.  to  give  time  to  all 
the  parties  on  the  bills  in  question,  amongst  others,  and  a  giving  of 
time  in  consequence.  At  the  trial,  the  agreement  between  the  plaintiff 
and  John  Holt  &  Co.  to  give  time  to  all  the  parties  on  the  bill,  and  the 
giving  the  time,  was  proved :  but  it  was  not  proved  that  John  Holt  & 
Co.  were  parties  to  the  bill.  A  verdict  having  passed  for  the  defend- 
ants, and  a  rule  having  been  obtained  to  enter  a  verdict  for  the 
plaintiffs,  the  question  arose,  whether  it  was  a  material  allegation  that 
John  Holt  and  Co.,  the  persons  with  whom  the  agreement  was  made, 
were  parties  to  the  bill ;  and  it  was  suggested  that  it  was  sufficient  to 
show  a  contract  to  give  time  to  the  acceptor,  and  that  there  was  nothing 
in  the  authorities  to  show  that  the  contract  must  be  with  him.  The 
Court,  after  taking  time  to  consider,  held  that  the  plea  was  not  proved, 
and  ordered  the  verdict  to  be  entered  for  the  plaintiffs.     This  was  a 

1  5  M.  &  W.  253,  4.  *  5  Exch.  46.  3  5  M.  &  W.  250. 


SECT.  II.]  MILLER   V.    HATCH.  175 

decision  that  the  allegation,  that  the  person  with  whom  the  agreement 
to  give  time  to  prior  parties  on  the  bill  is  made  is  a  part}-  to  the  bill,  is 
a  material  part  of  the  plea.  If,  as  contended  in  the  present  case,  a 
contract  with  a  stranger  was  sufficient,  the  plea  would  have  been 
proved  by  proof  of  the  contract  with  Holt  &  Co.,  though  they  were 
strangers  to  the  bills. 

This  is  a  distinct  authority  in  favor  of  the  plaintiffs  ;  there  is  no  case 
or  doctrine  the  other  way  ;  and  the  text  writers  all  treat  the  agreement 
which  is  to  discharge  the  surety  as  one  made  with  the  principal 
debtor. 

We  are  not  inclined  to  extend  the  rule  for  the  first  time  to  a  con- 
tract with  a  stranger ;  but,  for  the  reasons  already  stated,  we  think 
that  the  plea  is  bad,  and  therefore  that  judgment  should  be  entered  for 
the  defendant.  Judgment  for  the  defendant.1 


MARY   E.   MILLER  v.   HENRY   HATCH   and  Another. 

In  the  Supreme  Judicial  Court,  Maine,  August  3,  1881. 

[Reported  in  72  Maine  Reports,  481.] 

Appleton,  C.  J.2  This  is  an  action  of  assumpsit  on  two  promissory 
notes,  dated  September  15,  1871,  signed  by  Farr,  Hatch  &  Co.  The 
defendant,  Henry  Hatch,  was  a  member  of  that  firm  at  the  time  the 
notes  were  given. 

April  18,  1872,  Hatch  sold  out  his  interest  in  the  firm  to  Jerome  L. 
Farr,  for  five  thousand  dollars.  On  August  3,  1872,  notice  was  given 
in  the  papers  of  the  dissolution  of  the  firm  of  Farr,  Hatch  &  Co., 
and  that  it  was  succeeded  by  the  firm  of  Warren  A.  Farr  &  Co., 
which  assumed  the  liabilities  of  the  firm  of  Farr,  Hatch  &  Co. 

In  December,  1872,  the  firm  of  Warren  A.  Farr  &  Co.  became 
insolvent.  The  defence  rests  on  the  ground  that  after  the  dissolution 
of  the  firm  of  Farr,  Hatch  &  Co.  they  stood  in  the  relation  of  sure- 
ties on  the  note,  and  they  were  discharged  by  reason  of  the  plaintiff's 
signing  with  others  an  agreement  under  seal  in  these  words  : 

"  We,  the  undersigned,  creditors  of  Warren  A.  Farr  &  Co.,  of  Bos- 
ton, in  the  Commonwealth  of  Massachusetts,  in  consideration  of  one 
dollar,  and  other  good  and  sufficient  considerations  to  us  severally  paid 
by  said  Warren  A.  Farr  &  Co.,  the  receipt  of  which  is  hereby  acknowl- 
edged, do  severalty  promise  and  agree  with  the  said  Warren  A.  Farr  & 

1  Clark  v.  Birley,  41  Ch.  D.  422,  Accord.  —  Ed. 

2  Only  the  opinion  of  the  Court  is  given.  —  Ed, 


176  MILLER   V.    HATCH.  |_CHAP.  IL 

Co.,  that  we  receive  in  full  satisfaction  and  discharge  of  our  respective 
claims  against  them,  the  amount  of  sixty  per  cent,  thereof  in  the  fol- 
lowing manner,  namely  :  Twenty-five  per  cent,  of  said  claims,  respec- 
tively, in  thirty  days  from  the  date  hereof,  and  the  remainder  in  sixty 
days  from  the  same  date  of  this  instrument. 

"  Witness  our  hands  and  seals  severally  adopting  the  seal  set  oppo- 
site the  first  signature  as  the  seal  of  each  of  us  respectively,  this 
thirty-first  day  of  December,  A.  D.  1872. 

"  M.  E.  Miller.     [Seal.]  " 

This  was  signed  by  over  forty  creditors  of  the  firm.  Nothing  was 
paid  the  plaintiff  under  this  contract. 

The  jury  found  specially  that  the  plaintiff  had  no  knowledge  of  the 
assumption  of  the  liabilities  of  the  firm  of  Farr,  Hatch  and  Compan}7 
by  that  of  Warren  A.  Farr  and  Companj-.  Much  of  the  argument  of 
the  learned  counsel  for  the  defendant,  is  devoted  to  proving  that  this 
finding  was  erroneous.  In  the  view  we  take  of  the  case,  it  is  imma- 
terial whether  she  knew  of  such  assumption  or  not,  inasmuch  as  she 
has  done  nothing  to  injuriously  affect  the  rights  of  Farr,  Hatch  and 
Company. 

Conceding,  for  the  purpose  of  argument,  that  after  the  dissolution  of 
the  firm  of  Farr,  Hatch  and  Compan}',  the  firm  were  to  be  regarded 
as  sureties,  the  plaintiff,  by  her  signature  to  the  contract  of  December 
31,  1872,  has  done  nothing  to  discharge  their  liability.  This  was  only 
an  offer  on  condition.  It  was  not  accepted  or  performed  by  the  firm 
to  which  it  was  made.  The  plaintiff  gave  no  delay.  She  might  have 
sued  at  any  time.  The  contract  was  no  present  discharge  of  the  plain- 
tiff's rights.  It  was  no  bar  to  an  instantaneous  suit  had  she  brought 
one.  The  agreement  was  purely  executory.  It  was  never  executed. 
Nothing  was  ever  paid.  The  onby  provision  for  a  future  discharge  was 
upon  the  pa^Tnent  of  the  sum  stipulated.  Until  that  condition  should 
be  performed,  the  plaintiff's  debt  remains  unaffected  by  the  executory 
agreement  for  a  discharge. 

The  authorities  are  in  entire  accord  with  this  view  of  the  case.  In 
Clifton  v.  Litchfield.1  it  was  held  that  an  executory  contract,  by  wa}r  of 
compromise  to  discharge  a  disputed,  unliquidated  claim,  by  the  giving 
of  the  debtor's  promissory  note,  for  a  sum  less  than  the  amount  actu- 
ally due,  was  not  a  bar  to  a  suit  upon  the  original  demand,  although 
the  note  has  been  tendered  the  creditor,  if  it  has  not  been  accepted. 
In  Blake  v.  Blake,2  the  agreement  was  under  seal.  "  The  agreement," 
observes  Wells,  J.,  "  to  accept  a  part  in  satisfaction  of  the  whole,  so 
long  as  it  remains  executory,  will  not  operate  either  as  pa}*ment,  satis- 
faction, or  discharge."  In  dishing  v.  Wyman,3  the  question  here  pre- 
sented was  fully  examined  and  considered,  and  it  was  then  held  that 
an  executory  agreement  constituted  no  bar  to  a  suit. 

1  106  Mass.  34.  2  110  Mass.  202.  3  44  Maine,  121. 


*~-?r 


(T 


L-  «'«'-»—»-« 


SECT.  II.] 


HULME    r.    COLES. 


177 


Upon  some  of  the  facts  contested  in  the  motion  for  a  new  trial,  there 
is  conflicting  evidence,  but  there  is  no  such  preponderance  as  would 
justify  or  require  our  interference. 

Motion  overruled.     Judgment  on  the  verdict? 


Walton,  Barrows,  Danfortii,  Peters,  and  Libbey,JJ.,  concurred. 


In  Chancer 


s'CERf,  Before  Sir  AcTHartT-V.  0?fjui5*2O,  W7.    ^  ' 


t*> 


[Reported  in  2  Simons,  12.]  ^^"  '^Le^C    ^^2—-p 


^p4<— 


A  motion  was  made,  in  this  cause,  for  an  injunction  to  restrain  the 
defendant,  the  administrator  of  Catherine  Coles,  deceased,  from  pro- 
ceeding in  an  action  which  he  had  commenced  against  the  plaintiff  for     .  S"*  *N  , 
recovering  money  due  on  a  bond  given  to  the  deceased,  in  which  the  Z£*^ 
plaintiff  had  joined,  as  surety,  with  one  Burckhardt.     The  facts  ad-""         a      a 
mitted  by  the  answer,  and  relied  upon   in  support  of  the  motion,  were  " 
that  in  June,  1817,  Catherine  Coles   had   commenced  an   action  upon  .  - 

the  bond  against  Burckhardt,  and  on  the  23d  of  that  month,  without 
the  plaintiff's  privity,  took  a  cognovit  from  him  for  the  amount  of  the 
debt,  with  a  stipulation  that  no  judgment  should  be  entered  up  or  exe- 
cution issued  until  the  1st  of  August  following.  The  plaintiff  insisted 
that  this  proceeding  was  a  giving  of  time  to  the  principal,  which  dis- 
charged him,  the  surety,  from  all  liability  under  the  bond. 

31r.  Shadicell  and  Mr.  Whitmarsh,  in  support  of  the  motion. 

Mr.  Sugden  and  Mr.  Campbell,  for  the  defendant. 

A  surety  is  never  discharged  by  the  delay  of  the  creditor  in  suing  1 
the  principal  debtor,  unless  the  creditor  makes  an  agreement  with  the/ 
principal  by  which  he  is  prevented  from  suing  him.  In  this  case  the 
creditor's  remedy  against  the  principal  was  never  lost,  nor  were  his 
hands  tied  for  a  moment ;  by  the  arrangement  the  remedies  of  the  surety 
were  not  diminished  or  attected  in  any  manner.  It  is  clear  that,  in  the 
usual  course,  judgment  could  not  have  been  obtained  in  the  action  until 


long  alter  the_lst  of  August,  and  therefore  the  period  for  getting_the 
benefit  of  the  action  has  been  shortened,  and  not  extended.  Prender- 
Samuell  v.  Howarth,  Dave}'   v.  Prendergrass,  Boultbee 


0 


gasT 


v.  Devey 

Stubbs.2 


1  Badnall  v.  Samuel,  3  Price,  521  ;  Vernon  v.  Turley,  1  M.  &  W.  316  ;  Mueller  v. 
Dobschuetz,  89  111.  176;  Sohier  v.  Loring,  6  Cush.  537,  544;  Harnsberger  v.  Geiger, 
3  Grat.  144,  Accord.  —  Ed. 

2  18  Ves.  20,  see  26. 

12 


178  PRENDEKGAST  V.    DEVEY.  [CHAP.  IL 

The  Vice  Chancellor.  The  principle  of  discharging  a  surety  by 
the  giving  of  time  b}-  the  creditor,  is  a  refinement  of  a  court  of  equity, 
and  I  will  not  refine  upon  it.  By  the  arrangement  complained  of,  time 
was  not  given,  but  the  remed}'  was  accelerated. 

Motion  refused.1 


PRENDERGAST  and  Another  v.  DEVEY  and  Others. 
In  Chancery,  Before  Sir  John  Leach,  V.  C,  December  7,  1821. 

[Reported  in  6  Maddoch,  124.] 

This  was  a  bill  b}'  sureties,  to  restrain  an  action  against  them  upon 
a  surety  bond,  and  to  have  the  bond  delivered  up,  upon  the  ground 
that  the  creditors  had  given  time  to  the  principal  debtors  without  the 
sureties'  consent. 

The  facts  appearing  in  the  pleadings,  and  by  a  further  statement 
agreed  upon  between  the  parties  at  the  request  of  the  Court,  were 
these  : 

In  September,  1818,  the  plaintiffs,  as  sureties  for  two  persons  of 
the  name  of  Prendergast,  coal  merchants,  became  bound  to  the  de- 
fendants, who  supplied  the  Prendergasts  with  coals  wholesale,  in  a 
penalty,  conditioned  to  be  void  if  the  plaintiff  should,  within  one  month 
after  demand  on  them,  pay  such  balance  or  sum  of  mone}'  not  exceed- 
ing £500  as  should  become  due  to  the  defendants  upon  settlement  of 
accounts  between  them  and  the  Prendergasts. 

In  June,  1819,  it  being  alleged  a  balance  of  £1,099  was  due  from 
the  Prendergasts  to  the  defendants,  the  latter,  without  communi- 
cating with  the  plaintiffs,  took  from  the  Prendergasts  a  warrant  of 
attorney  for  the  amount,  with  a  stay  of  execution  if  they  should  dis- 
charge the  debt  by  instalments  of  £100  a  month,  and  on  default,  exe- 
cution was  to  issue  for  the  whole. 

The  first  instalment  under  the  warrant  of  attorney  having  fallen  due 
on  the  21st  of  July,  and  not  being  paid,  the  defendants,  on  the  7th  of 
August  following,  made  a  demand  on  the  plaintiffs  according  to  the 
terms  of  the  bond,  and  in  the  succeeding  Michaelmas  Term  brought  the 
present  action,  which  the  bill  sought  to  restrain.2 

Mr.  Wilson  and  Mr.  Moots,  for  the  plaintiffs. 

Mr.  Hart  and  Mr.  Rose,  for  the  defendants. 

The  Vice  Chancellor  expressed  his  opinion  that  the  warrant  of 
attorney  certainly  gave  time,  which  might  have  discharged  the  sureties 

1  Price  v.  Edmunds,  10  B.  &  C.  578;  Suydam  v.  Vance,  2  McL.  99  ;  Fletcher  v. 
Gamble,  3  Ala.  335;  Barker  v.  McClure,  2  Blackf.  14;  Gardner  v.  Van  Norstrand,  13 
Wis.  543,  Accord.  —  Ed. 

2  The  statement  of  the  case  and  the  arguments  of  counsel  are  abridged.  —  Ed. 


SECT.  II.]  KIRBY   V.    LANDIS.  179 

if  they  had  been  affected  by  it ;  but  that  here  the  sureties'  liabilit}-  not 
arising  till  demand,  and  previous  to  the  demand  default  having  been 
actually  made  by  the  debtors,  so  that  execution  might  have  instantly 
issued  for  the  whole  debt,  the  agreement  made  by  the  warrant  of 
attorney  was  at  an  end,  and  the  defendants  were  no  waj'S  injured,  as 
there  was  nothing  to  interfere  with  their  immediate  recourse  to  the 
principal  debtors. 

The  plaintiff's  counsel  then  pressed  upon  the  Court,  that  as  the  time 
of  making  the  demand  was  entirely  in  the  option  of  the  creditors,  it 
was  unjust  the}'  should  be  permitted,  while  withholding  it,  to  deal  with 
the  debtors  as  they  thought  proper,  until  the  sureties'  recourse  to  the 
debtors  might  be  defeated  in  effect,  although  not  legallj'  gone  ;  but  his 
Honor  thought  the  terms  of  the  engagement,  though  singular  and  im- 
provident, bound  him  to  the  construction  he  had  put  upon  it,  and 
dismissed  the  bill. 

.__     „   ^     KIRBY  v.   LANDIS  and 
In  the  Supremk^Court,  Iowj  , 

s^^ErZ^I  ~\ll>i»irt<J  hcj,\J,,im  /;,r,„/s,  i;,o.|  A 

Action  upon  a  surrendered  promissory  note,  signed  b}*  all  the  defend- 
ants as  joint  makers.  The  defendants  S.  M.  and  W.  F.  Miller  were  in  y^^t-^-- 
fact  merely  sureties.  At  the  time  of  the  maturity  of  the  note  the 
principal,  Landis,  paid  a  part  and  applied  for  an  extension  on  the 
balance.  The  extension  was  granted  on  condition  that  Landis  would 
give  a  new  note  signed  by  the  same  persons.  Afterward  Landis  pre- 
sented a  note  for  the  balance  signed  by  himself,  and  purporting  to  be 
signed  by  the  other  makers  of  the  original  note,  S.  M.  Miller  and 
W.  F.  Miller.  Their  signatures,  however,  were  forged.  The  plaintiff, 
not  discovering  the  forgeiy,  accepted  the  new  note  and  surrendered 
the  old.  He  now  claims  the  right  to  recover  upon  the  latter  notwith- 
standing the  surrender,  it  having  been  procured  by  fraud.1 

Adams,  Ch.  J.  The  surrender  of  the  note  having  been  procured  by 
fraud,  we  think  that  the  plaintiff  should  be  allowed  to  recover  upon  it, 
not  only  against  the  principal  but  the  sureties,  unless  the  plaintiff,  by 
holding  the  substituted  note,  without  informing  the  sureties  of  the 
fraud  after  it  was  discovered,  had  waived  the  fraud,  or  unless  the  sure- 
ties were  prejudiced  by  the  surrender.  The  sureties  do  not  aver  a 
waiver  of  the  fraud,  but  the}'  do  aver,  in  substance,  we  think,  that 
they  were  prejudiced  by  the  surrender.  The  precise  language  of  the 
averment  is,  "  that  the  surrender  and  delivery  of  said  note  to  the  said 

1  The  statement  of  the  case  is  abridged.  —  Ed. 


/   $£> 


180  HUBBAED   V.    HAKT.  [CHAP.  II. 

Landis  at  or  before  its  maturity,  as  aforesaid,  lulled  these  defendants 
into  security,  and  led  them  to  believe  said  note  paid  by  said  Landis, 
and  being  so  misled  by  plaintiff's  acts  in  the  premises  they  took  no 
thought  or  action  as  to  their  indemnity  against  said  Landis."  They  do 
not  expressly  aver  that  they  had  knowledge  of  the  surrender,  but  we 
think  that  it  is  necessarily  to  be  implied  that  they  had  from  the  aver- 
ment that  the  surrender  lulled  them  into  security.  The  plaintiff  insists 
that  the  sureties  were  not  affected  except  so  far  as  they  might  be 
deemed  to  be  so  by  simple  forbearance  to  sue.  This  would  be  true  if 
they  had  no  knowledge  of  the  surrender,  but  in  such  case  it  would  not 
be  true,  as  averred,  that  they  were  lulled  into  security  by  the  surrender. 
If  the  plaintiff  had  told  them  that  the  note  had  been  paid  they  would 
certainty  have  been  justified,  in  the  absence  of  all  knowledge  to  the 
contrary,  in  assuming  the  plaintiff's  statement  to  be  true,  and  in  gov- 
erning themselves  accordingly.  The  surrender  of  the  note  was  equiva- 
lent to  a  declaration  that  it  had  been  paid  or  satisfied  in  some  way,  and 
if  the  fact  of  the  surrender  came  to  the  knowledge  of  the  sureties  it 
was  equivalent  to  a  declaration  made  to  them  that  the  note  had  been 
paid  or  satisfied  in  some  wa}\  "We  think,  therefore,  that  under 
the  averments  of  their  answer  they  must  be  deemed  to  have  been 
prejudiced.  It  is  true,  they  might  not  in  fact  have  protected  them- 
selves  if  the  note  had  not  been  surrendered.  But  it  was  not  incum- 
^    /?  benl  upon  the  til  co  aver  wtiat  tney  would  nave  done.     It  was  sufficient 

to  aver  that  they  might  have  protected  themselves  but  for  the  surren- 
der,  and  lost  the  op portunity  of  doing  so  by  re ason  of  it. 

In  our  opinion  the  answer  showed  a  good  defence,  and  the  plaintiff's 
demurrer  to  it  should  have  been  overruled.  Reversed. 


=V 


,  HUBBARI 


HUBBARD   v.    HART  and  Another. 
In  the  Supreme  Court,  Iowa,  June  14,  1887. 


[Reported  in  71  Iowa  Reports,  668.] 

Action  on  a  promissory  note  on  which  defendant  is  surety.  Verdict 
and  judgment  for  plaintiff",  and  defendant  appeals. 

Temple  &  Phelps,  for  appellant. 

R.  G.  .Phelps,  for  appellee. 

Reed,  J.  The  defences  pleaded  are  (1)  that  there  had  been  an 
extension  of  the  time  of  pa3rment  of  the  debt  by  a  contract  between 
plaintiff  and  the  principal  debtor,  without  the  knowledge  or  consent  of 
defendant.1 

1  Only  what  relates  to  this  plea  is  given.  —  Ed. 


SECT.  II.]  MOULTON   V.    POSTEN.  181 

I.  The  note  in  suit  was  given  on  the  eighteenth  of  August,  1882, 
and  became  due  in  six  months  from  that  date.  When  it  matured,  Hart, 
the  principal  maker,  desired  an  extension,  and  he  presented  to  plaintiff 
a  new  note,  signed  by  himself,  and  to  which  defendant's  name  was  also 
signed,  which  plaintiff  accepted,  and  he  surrendered  the  former  note. 
At  the  maturity  of  this  note,  Hart  again  presented  a  note  to  which 
defendant's  name  was  signed,  and  secured  a  second  extension.  But  it 
afterwards  transpired  that  he  had  forged  defendant's  signature  to  both 
of  these  instruments.  That  fact  was  not  discovered  by  plaintiff  until  he 
sought  to  collect  the  third  note  from  defendant  after  its  maturity.  As 
the  surrender  of  the  original  note  and  the  extensions  of  time  were  /4CL&' — */ 
obtained  byjraud,  the  noie__ffia§  not  extinguished  by  the  surrender*  "- — 
Nor  was  the  surety  discharged  by  the  extensions  of  _time.  Kirby  v. 
Landis.1 


MOULTON  v.  POSTEN. 

In  the  Supreme  Court,  Wisconsin,  April  19,  1881. 

[Reported  in  52  Wisconsin  Reports,  169.] 

Appeal  from  the  Circuit  Court  for  Fond  du  Lac  Count}7. 

Action  upon  the  joint  promissory  note  of  the  defendant  and  one  B.  C. 
Smith. 

Lyon,  J.2  The  learned  judge  of  the  Circuit  Court  ordered  judgment 
dismissing  the  action,  on  the  grounds,  (1)  that  the  plaintiff,  b}r  his 
agent,  extended  the  time  of  payment  of  the  note  at  the  request  of 
Smith,  the  maker,  for  whose  debt  it  was  given,  without  the  consent  of 
the  defendant  Posten,  and  with  knowledge  that  the  latter  signed  it  for 
the  accommodation  of  Smith. 

We  think  it  a  fair  deduction  from  the  testimony  of  both  witnesses 
that  Moulton  agreed,  in  terms,  in  July,  1873,  to  give  an  extension  until 
after  threshing,  that  is,  until  the  next  autumn  ;  and  we  must  consider 
the  case  as  though  the  fact  had  been  found  more  specifically-.  The  pre- 
cise question  is,  whether  an  action  could  have  been  maintained  on  the 
note  in  suit  before  the  time  of  the  alleged  extension  had  elapsed.  If  it 
could,  there  was  no  valid  extension,  and  the  surety  is  not  discharged. 
If  the  right  of  action  was  thereby  suspended,  he  is  discharged.  Had 
Smith  paid  money  for  the  extension,  it  would  have  bound  the  plaintiff, 
and  the  defendant  would  have  been  released  from  liability  on  the  note.* 

1  Bangs  v.  Strong,  10  Paige,  11,  Accord. 

See  also  Scholefiekl  v.  Templer,  4  De  G.  &  J.  429.  —  Ed. 

2  Only  the  opinion  of  the  Court  upon  the  effect  of  the  agreement  to  forbear  is 
given.  —  Ed. 

3  Vary  v.  Norton,  6  F.  R.  808 ;  Myers  v.  First  Bank,  78  111.  257  ;  Lemman  v.  Whit- 
man, 75  Ind.  318;  Kelly  v.  Gillespie,  12  Iowa,  56;  Kenningham  v.  Bedford,  1  B.  Mon. 


182  MOULTON    V.    POSTEN.  [CHAP.  II. 

This  is  expressly  ruled  in  the  late  case  of  Hamilton  v.  Prouty,1  where 
the  whole  subject  is  very  fully  discussed  and  the  authorities  collected, 
in  the  opinion  of  Mr.  Justice  Cassoday. 

It  seems  to  us  that  the  doctrine  of  that  case  is  applicable  here,  not- 
withstanding Smith  gave  his  note  for  the  premium  instead  of  paying  it 
in  money  as  was  there  done.  The  money  paid  in  that  case  and  the 
note  given  in  this  case  were  alike  in  excess  of  the  highest  legal  rate  of 
interest.  The  money  there  paid  could  have  been  recovered  back  by  the 
party  who  paid  it  if  sued  for  in  time.  So  here,  if  Smith  has  paid  his 
note  given  for  the  consideration  of  the  extension,  or  hereafter  pays  it, 
he  may  maintain  his  action  to  recover  back  the  money  paid  if  brought 
within  the  prescribed  time.  And  in  either  case  the  statutory  penalty 
could  also  be  recovered. 

It  was  held  in  Hamilton  v.  Prouty,  that  although  the  transaction  was 
usurious,  it  was  binding  upon  the  plaintiff,  who  received  the  money'  for 
the  extension,  and  he  would  not  be  allowed  to  assert  the  illegality  of  the 
transaction  and  maintain  an  action  on  the  note  before  the  agreed  period 
of  extension  expired.  No  good  reason  is  perceived  why  the  same  rule 
is  not  applicable  to  this  case.  The  agreement  for  extension  was  exe- 
cuted by  the  giving  of  a  note  for  the  consideration  of  it  as  effectually 
as  it  would  have  been  by  paying  the  same  in  money.  It  is  only  a  dif- 
ferent mode  of  execution.  Had  the  plaintiff  brought  an  action  on  the 
note  in  suit  before  the  time  of  extension  expired,  it  seems  to  us  that  the 
action  would  have  abated  on  proof  that  he  had  agreed  to  extend  and 
received  Smith's  note  for  the  consideration  of  the  extension.  He  could 
not  have  been  heard  to  allege  that  the  note  taken  for  the  extension 
was  usurious,  and  that  there  was  no  consideration  for  his  agreement 
to  extend.  The  right  to  make  that  allegation  was  in  Smith  alone.  We 
conclude  that  the  case  is  within  the  rule  of  Hamilton  v.  Prouty,  and 
hence  that  the  defendant  is  discharged  from  liability  on  the  note. 

By  the  Court.  Judgment  affirmed.2 

225 ;  Stillwell  v.  Aaron,  69  Mo.  539;  Wild  v.  Howe,  74  Mo.  551  ;  Bank  v.  Woodward, 
5  N.  H.  99;  Billington  v.  Wagoner,  33  N.  Y.  31  (virtually  overruling  dicta  in  Vilas 
v.  Jones,  1  N.  Y.  274,  286,  287) ;  Draper  v.  Trescott,  29  Barb.  401  ;  Nat.  Bank  v.  Place, 
15  Hun,  564;  Scott  v.  Harris,  76  N.  Ca.  205  (but  see  Bank  v.  Lineburger,  83  N.  Ca. 
454) ;  Osborne  v.  Low,  40  Ohio  St.  347 ;  Mann  v.  Brown,  71  Tex.  241 ;  Turrill  v. 
Boynton,  23  Vt.  142;  Austin  v.  Dorwin,  30  Vt.  38;  Armistead  v.  Ward,  2  Pat.  &  H. 
504 ;  Glenn  v.  Morgan,  23  W.  Va.  467  ;   Hamilton  v.  Prouty,  50  Wis.  592,  Accord. 

In  a  few  jurisdictions  the  statutes  against  usury  are  interpreted  as  making  the  usuri- 
ous payment  of  necessity  a  part  payment  of  the  debt ;  and  as  a  part  payment  of  a  debt 
is  not  a  valid  consideration  for  a  promise  by  the  creditor,  there  is  no  legal  agreement  to 
give  time,  and  therefore  the  surety  is  not  discharged.  Jenness  v.  Cutler,  12  Kas.  500; 
Polkinghorne  v.  Hendricks,  61  Miss.  366;  Nightingale  v.  Meginnis,  34  N.  J.  461; 
Hartman  v.  Danner,  74  Pa.  36 ;  Calvert  v.  Good,  95  Pa.  65  (compare  Grayson's  Ap. 
108  Pa.  581);  Cornwell  v.  Holly,  5  Rich.  47.  The  case  of  Howell  v.  Sevier,  1  Lea,  360, 
if  not  to  be  supported  on  this  ground,  must  be  deemed  erroneous.  —  Ed. 

1  50  Wis.  592. 

2  Scott  v.  Safford,  37  Ga.  384 ;  Corielie  v.  Allen,  13  Iowa,  289 ;  Fay  v.  Tower,  58 
Wis.  286,  Accord. 

Kyle  v.  Bostick,  10  Ala.  589;  Gilder  v.  Jeter,  11  Ala.  256;   Anderson  v.  Mannon, 


SECT.  II.]  MOULTON    V.    POSTEN.  183 

7  13.  Mon.  217;  Duncan  v.  Reed,  8  B.  Mou.  382;  Roberts  v.  Stewart,  31  Miss.  664 
(semble);  Wilson  v.  Langsford,  5  Humph.  320;  Smith  v.  Woodbury,  36  Vt.  303, 
Contra. 

The  cases  iu  the  preceding  paragraph  proceeded  upon  the  theory  that  a  note  for 
the  usurious  amount  was  to  be  treated  like  any  other  promise.  It  is  generally  held, 
where  there  are  merely  mutual  promises  to  give  time  and  to  pay  usury  (no  note  being 
given),  that  the  surety  is  not  discharged,  because  neither  promise  is  enforceable.  Cox 
v.  Mobile  Co.,  37  Ala.  320;  Galbraith  v.  Fullerton,  53  111.  126;  Silmeyer  v.  Schaffer, 
60  111.  479;  Braman  v.  Bowk,  1  Blackf.  392;  Tudor  v.  Goodloe,  1  B.  Mon.  322;  Pyke 
v.  Clerk,  3  B.  Mou.  2G2 ;  Scott  v.  Hall,  6  B.  Mon.  285;  Berry  v.  Pullen,  69  Mo.  101  ; 
Ives  v.  Bosley,  35  Md.  262  (semble);  Roberts  v.  Stewart,  31  Mi>s.  104;  Fernan  v. 
Doubleday,  3  Lans.  216;  Thayer  v.  King,  31  Hun,  43? ;  Payne  v.  Powell,  14  Tex. 
600 ;  Burgess  v.  Dewey,  33  Vt.  618 ;  Meiswinkle  v.  Jung,  30  Wis.  361.  (  But  see  Kiley 
v.  Gregg,  16  Wis.  666.) 

But  see  contra,  Stallings  v.  Johnson,  27  Ga.  564;  Parmelee  v.  Williams,  72  Ga. 
42;  Wheat  v.  Kendall,  6  N.  H.  504  ;  Wright  v.  Bartlett,  43  N.  II.  548,  551  ;  Draper 
v.  Trescott,  29  Barb.  401,  407  ;  Armistead  v.  Ward,  2  Pat.  &  H.  504,  514. 

On  the  same  principle  it  has  been  thought  that  a  promise  to  give  time  to  the  prin- 
cipal in  consideration  of  a  counter  promise,  not  enforceable  because  of  the  Statute  of 
Frauds,  would  not  discharge  a  surety.     Philpot  v.  Briant,  4  Bing.  717  ;  Agee  v.  Steele, 

8  Ala.  948;  Berry  v.  Pullen,  69  Me.  101,  104.  It  is  well  settled,  however,  that  the 
inability  of  one  of  the  parties  to  a  bilateral  contract  to  sue  the  other  because  of  the 
Statute  of  Frauds,  does  uot  affect  his  own  liability.  —  Ed. 


GILLESPIE   V.    TORRANCE. 


[chap,  il 


/°**  '  Defences^  based  upon  Principal  Debtor'' 8  Right  of  Set-off  or 

™ mnter-claim  against  the  Creditor.       _\ 


*— 3=rt  X-(L 


yiter-claim^wcmi 

GILLESPIE   and   Another   v.    TORRANCE. 
In  the  Court  of  Appeals,  New  York,  September,  1862.        '    * 


j^T"    [Reported  in  25  iVew  Jor^  Rejyorts,  306.] 

^Appeal  from  the  Superior  Court  of  the  city  of  New  York.  Action 
pon  a  promissor}'  note  against  the  indorser  only.  Defence,  that  the 
indorsement  was  for  the  accommodation  of  the  maker ;  that  the  note 
was  one  of  several  given  for  oak  timber  sold  to  the  maker  by  the  plain- 
tiffs ;  that  the  timber  was  a  raft  in  the  Hudson  river,  opposite  the  city 
of  New  York,  and  that,  on  making  the  sale,  the  plaintiffs  produced 
certificates  of  inspection  showing  that  there  were  29,441  feet  of  first 
quality  oak,  for  which  Van  Pelt,  the  maker  of  the  notes,  agreed  to  pay 
271  cents  per  foot,  and  5,523  feet  of  second  quality  or  refuse  oak,  for 
which  Van  Pelt  agreed  to  pay  13|  cents  per  foot ;  that,  by  the  usage 
of  the  timber  trade  in  New  York,  the  seller  is  deemed  to  warrant 
that  the  timber  sold  corresponds  in  quantity  and  quality  with  the  de- 
scription in  such  inspection  certificates  ;  that  Van  Pelt  gave  his  notes, 
indorsed  by  the  defendant,  for  various  sums,  amounting  in  the  aggre- 
gate to  $9,000,  the  price  of  the  timber  as  computed  from  the  inspection 
certificates,  and  all  of  which  notes  had  been  paid  except  the  one  in 
suit ;  that  after  the  deliver}'  of  the  timber  it  was  discovered  that  the 
inspection  certificates  were  erroneous  in  this,  that  of  the  timber  of  first 
quality  there  was  15,000  feet  less  than  the  certificates  stated,  and  an 
equal  excess  in  the  refuse  timber ;  that  if  the  prices  had  been  correctly 
computed  according  to  the  fact,  instead  of  being  computed  according 
to  the  certificate,  it  would  have  amounted  to  less  than  $5,000  ;  that  the 
plaintiffs  had,  therefore,  been  overpaid,  and  there  was  no  consideration 
for  the  note  in  suit.  On  the  trial,  the  judge,  under  exception  by  the 
defendant,  excluded  evidence  as  to  the  quantity  of  the  timber  of  the 
different  qualities  ;  declined  to  permit  an  amendment  of  the  answer 
alleging  an  express  warranty ;  and  excluded  evidence  of  the  usage  set 
up  in  the  answer,  making  a  sale  by  certificate  equivalent  to  a  war- 
ranty. The  other  facts  stated  in  the  answer  were  substantially 
proved  or  admitted.  The  plaintiffs  had  a  verdict  and  judgment, 
which  having  been  affirmed  at  general  term,  the  defendant  appealed 
to  this  court. 

Charles  A.  RapaMo,  for  the  appellant. 
William  Stanley,  for  the  respondents. 


SECT.  III.]  GILLESPIE    V.    TORRANCE.  185 

Selden,  J.  The  defence  in  this  case  is  not  founded  on  a  failure  of 
the  consideration  of  the  note,  otherwise  than  by  a  delect  in  the  quality 
ot  the  timber  for  which  it  was  given.  That  being  so,  if  there  was 
neither  warranty  nor  fraud  in  the  sale  of  the  timber,  the  defect  in  quality 
constitutes  no  defence.  Seixas  v.  Woods  ; 1  Sweet  v.  Colgate  ;'2  VvelsFT 
v.  Carter;3  Johnson  r~ Titus.4  The  answer  does  not  allege  fraud  in 
the  transaction,  and  unless  it  shows  a  warrant}-  of  the  qualit}-  of  the 
timber,  it  presents  no  defence  to  the  note,  either  partial  or  total.  The 
argument  or  tne  appellants  counsel,  to  maintain  the  position  that  the 
defence  rested  upon  a  failure  of  consideration,  and  not  upon  a  claim 
for  damages  on  a  breach  of  warranty,  is  very  ingenious  ;  but  the  answer 
and  the  proof  show  that  all  the  timber  contracted  to  be  delivered  to 
Van  Pelt,  and  for  which  the  notes  were  given,  was  in  fact  delivered, 
and  the  real  ground  of  complaint  is,  that  a  much  larger  proportion  of  it 
than  was  shown  by  the  inspector's  certificates,  upon  the  faith  of  which 
the  purchase  was  made,  proved  to  be  of  inferior  quality.  The  law 
being  well  established  that  such  defect  of  quality,  in  the  absence  of 
fraud  or  warranty,  constitutes  no  defence  to  the  note,  or  to  aivy  part 
of  it,  and  there  being  no  pretence  of  fraud,  it  follows  that  the  defence, 
if  there  is  an}-,  rests  upon  a  breach  of  warranty. 

The  question  then  arises,  whether  the  plaintiff,  an  accommodation 
indorser  upon  a  note  given  by  Van  Pelt  to  the  plaintiffs  for  the  timber, 
can  avail  himself  of  a  breach  of  the  contract  of  warranty  in  regard  to 
the  quality  of  the  timber,  made  by  the  plaintiffs  to  Van  Pelt,  on  the 
sale  to  him.  To  decide  this  question,  it  is  necessary  to  ascertain  the 
ground  upon  which  such  defences,  by  wa}-  of  recoupment,  as  they  were 
denominated  prior  to  the  adoption  of  the  Code,  now  partially,  if  not 
wholby,  merged  in  the  much  broader  term,  counter-claim,  were  admitted. 
If  we  regard  such  defences  as  resting  upon  a  failure  of  the  considera- 
tion of  the  contract  on  which  the  plaintiff's  action  is  founded,  then 
unquestionabby  the  defendant  could  avail  himself  of  the  breach  of  war- 
ranty in  This  case,  because  an  indorser  or  suret}'  may  always,  where  the 
contract  has  not  been  assigned,  show  a  failure,  partial  or  total,  of  con- 
sideration of  his  principal's  contract  which  he  is  called  upon  to  perform. 
But  if  such  defences  are  regarded  as  the  setting  off  of  distinct  causes  of; 
action,  one  against  the  other,  then  it  is  clear,  as  will  be  shown  hereafter, | 
that  this  defendant  could  not  avail  himself  of  such  defence. 

The  subject  of  the  precise  ground  on  which  a  defendant  is  allowed  to 
reduce  a  recovery  against  him,  in  an  action  upon  a  contract,  Iry  alleg- 
ing and  proving  fraud  or  breach  of  warranty  —  whether  the  contract, 
where  there  is  fraud,  is  regarded  as  destroyed,  and  the  recovery  had 
on  a  quantum  meruit,  or  whether  the  reduction  of  the  plaintiff's'  claim 
rests  upon  a  partial  failure  of  consideration,  or  upon  the  setting  off  of 
distinct  claims  against  each  other — has  often  been  discussed,  but 
without  an}-  general  concurrence  of  opinion  on  the  question.      Reab 

1  2  Caines,  48.  3  1  Wend.  185. 

2  20  John.  196.  4  2  Hill,  606. 


186 


GILLESPIE   V.   TORRANCE. 


[chap,  il 


n 


v.  McAllister ;  *  Batterman  v.  Pierce  ; 2  Ives  v.  Van  Epps  ; 3  Nichols 
v.  Dusenbury  ; 4  Van  Epps  v.  Harrison  ;  5  Barber  v.  Rose  ; 6  Baston  v. 
Butler;7  Withers  v.  Greene.8 

A  careful  examination  of  the  subject,  I  think,  must  lead  to  the  con- 
clusion, that  wherever  recoupment,  strictly  such,  is  allowed,  distinct 
causes  of  action  are  set  off  against  each  other.  This  would  seem  to 
follow  from  the  right  of  election,  which  all  the  cases  admit  the  defend- 
ant has,  to  set  up  his  claim  for  damages  by  way  of  defence,  or  to  resort 
to  a  cross-action  to  recover  them.  Ives  v.  Van  Epps;9  Batterman  v. 
Pierce;10  Britton  v.  Turner;11  Halsey  v.  Carter;12  Barber  v.  Rose;13 
Stever  v.  Lamoure.14 

In  many  cases  the  defendant's  damages  would  exceed  the  amount  of 
the  plaintiff's  claim,  which  shows  conclusively  that  such  damages  do 
not  rest  upon  a  mere  failure  of  consideration.  Where  there  is  fraud, 
j  the  party  deceived,  on  discovering  the  fraud,  may  rescind  the  contract ; 
but  it  ne  does  not  d6  that,  tne  contract  on  Ins  part  remains  entire,  not 
broken  and  not  modified,  and  he1  ls~  bollTrd  to  perform  it  fully  according"- 
he  has,  however,  arising  from  the  fraud,  a  distinct  cause 


f 


of  action,  the  amount  of  which  he  may  set  off  against  any  liability  on 
his  part  growing  out  of  the  transaction  in  which  the  fraud  was  perpe- 
trated.     As   was   said    by   Bronson,  J.,    in  Van   Epps  v.    Harrison : 


"  When  sued  for  the  price,  the  vendee  may  in  general  recoup  damages  ; 
but  while  he  retains  the  property  he  cannot  treat  the  contract  as  wholly 
void,  and  refuse  to  pay  anything.  By  retaining  the  property  he  affirms 
the  validity  of  the  contract,  and  can  be  entitled  to  nothing  more  than 
the  damages  which  he  has  sustained  by  reason  of  the  fraud."  The 
same  principle  is  applicable  to  cases  of  warrant}7,  except  that  the 
breach  of  warranty  gives  no  right  to  rescind,  unless  there  is  an  express 
contract  to  tnat  effect.  Street  v.  Blay ; 15  Voorhees  v.  Earl ; 16  Cary  v. 
^Gruman ; 17  Muller  v.  Eno  ; 18  Thornton  v.  Winn;19  Lattin  v.  Davis.20 
In  ordinary  cases  of  breach  of  warrant}',  therefore,  both  contracts 
remain  binding  to  their  full  extent,  and  where  recoupment  is  allowed, 
damages  for  a  breach  on  one  side  are  set  off  against  like  damages 
on  the  other  side.  The  "cross-claims  arising  out  of  the  same  trans- 
action compensate  one  another,  and  the  balance  only  is  recovered." 
8  Wend.  115  ;  22  id.  156  ;  3  Hill,  174;  2  Comst.  286.' 

It  has  always  been  optional,  as  is  suggested  above,  since  the  doctrine 


1  4  Wend.  90  et  seq.;  s.  C.  in  error,  8  id.  109. 


2  3  Hill,  171,  177. 

3  22  Wend.  155. 
*  2  Comst.  286. 

5  5  Hill,  66. 

6  Id.  78. 

7  7  East,  479. 

«  9  How.  U.  S.  213. 
9  22  Wend.  157. 

10  3  Hill,  171. 

11  6  N.  H.  481. 


12  l  Duer,  667. 

13  5  Hill,  81. 

i*  Lalor's  Supp.  352,  note  a. 

15  2  Barn.  &  Ad.  456. 

16  2  Hill,  288. 
"  4  Id.  625. 

18  14  N.  Y.  597. 

19  12  Wheat.  183. 
2°  Lalor's  Supp.  16. 


SECT.  III.] 


GILLESPIE    V.    TORRANCE. 


187 


of  recoupment  has  gained  a  foothold  in  the  courts,  with  a  party  who 
has  sustained  damages  by  fraud  or  breach  of  warranty  in  the  purchase 
of  goods,  when  sued  for  their  price,  to  set  off  or  recoup  such  damages 
in  that  action,  or  to  reserve  his  claim  for  a  cross-action  ;  and  when  he 
elected  to  recoup  he  could  not,  under  the  Revised  Statutes,  have  a  bal- 
ance certified  in  his  favor,  nor  could  he  maintain  a  subsequent  action 
for  such  balance.  Sickles  v.  Pattison  ;  1  Batterman  v.  Pierce  ; 2  Wilder 
v.  Case  ;3  Stever  v.  Lamoure  ;  4  Britton  v.  Turner.5 

Under  the  Code  of  Procedure,  doubtless  a  balance  might  be  recovered  : 
Code,  §§  150-274  ;  Ogden  v.  Coddington  ; 6  but  the  right  of  election 
to  set  up  a  counter-claim  in  defence,  or  to  bring  a  cross-action  for  it, 
still  exists  :  Halsey  v.  Carter;7  Welch  v.  Hazleton.8  Now  it  is  not 
easy  to  reconcile  with  these  established  principles,  the  right  of  the 
defendant  in  this  suit  to  avail  himself  of  the  claim  which  Van  Pelt 
may  have  against  the  plaintiffs  on  a  breach  of  warrant}'.  1.  Such 
damages  constitute  a  counter-claim,  and  not  a  mere  failure  of  con- 
sideration,  and  not  being  due  to  the  defendant,  cannot  be  claimed  by 
him.  Code,  §  150 ;  Lemon  v.  Trull.9  2.  Van  Pelt  has  a  right  of 
election  whether  the  damages  shall  be  claimed  by  way  of  recoupment 
in  the  suit  on  the  note,  or  reserved  for  a  cross-action.  The  defendant 
cannot  make  this  election  for  him.  3.  If  the  defendant  has  a  right  to 
set  up  the  counter-claim,  and  have  it  allowed,  in  this  action,  it  must 
bar  any  future  action  by  Van  Pelt  for  the  breach  of  warrant}- ;  and  as 
no  balance  could  be  found  in  defendant's  favor,  he  might  thus  bar  a 
large  claim  in  cancelling  a  small  one.  If  the  right  exists  in  this  case, 
it  would  equally  exist  if  the  note  was  but  $100  instead  of  $1,800. 
4.  Supposing  the  other  notes  given  for  the  timber  to  have  been  in- 
dorsed by  different  persons,  for  the  accommodation  of  Van  Pelt,  and 
all  to  remain  unpaid,  each  of  the  indorsers  would  have  the  same  rights 
as  the  defendant.  If  they  were  to  set  up  the  same  defence,  how  would 
the  conflicting  claims  be  reconciled? 

In  the  case  which  was  shown  on  the  trial,  there  would  seem  to  be  a 
strono-  equity  in  favor  of  the  defendant  to  have  the  note  cancelled  or 
reduced,  by  applying  towards  its  satisfaction  the  damages  which  appear 
to  be  due  to  Van  Pelt  for  the  breach  of  warranty.  It  is,  however,  an 
equity,  in  which  Van  Pelt  is  interested  to  as  great,  and  possibly  to  a 
greater,  extent  than  the  defendant,  and  cannot  be  disposed  of  without 
having  him  before  the  Court,  so  that  his  rights,  as  well  as  those  of 
the  defendant,  may  be  protected.  That  remedy  may  be  open  to  the 
defendant  still,  notwithstanding  the  judgment;  especially  if  the  in- 
solvency of  the  parties  renders  that  course  necessary  for  his  protec 


/^, 


1  14  Wend.  257. 

2  .3  Hill,  171. 

8  16  WeDd.  583. 

4  Lalor's  Supp.  352,  note  a. 

6  fi  N.  H.  481. 


6  2  E.  D.  Smith,  317. 

7  6  Duer,  667. 

8  14  How.  Pr.  97. 

9  13  How.  Pr.  248  ;  16  id.  576,  note. 


188  BECHERVAISE    V.    LEWIS.  [CHAP.  II. 

tion.1  14  Johns.  63  ;  17  id.  389  ;  2  Cow.  261  ;  2  Paige,  581  ;  6  Dana, 
32  ;  8  id.  164  ;  2  Story's  Eq.  Jur.  §§  1446  a,  1437.  My  conclusion  is, 
that  the  Court  below  was  right  in  holding  that  the  defendant  could  not 
set  up  the  breach  of  warranty  in  defence,  partial  or  total,  to  the  suit  on 
the  note  ;  and  as  the  warrant}*  presented  the  only  ground  on  which  there 
could  be  a  claim  of  defence  under  the  answer,  there  is  no  necessity  for 
considering  the  other  questions  presented  in  the  case. 

The  judgment  should  be  affirmed. 

All  the  judges  concurring,  Judgment  affirmed.2 


BECHERVAISE  v.    LEWIS. 
In  the  Common  Pleas,  May  22,   1872. 

[Reported  in  Law  Reports,  7  Common  Pleas,  372. J 

The  judgment  of  the  Court  (Willes,  Keating,  Montague  Smith,  and 
Brett,  JJ.)  was  delivered  by 

Willes,  J.3  The  declaration  is  upon  a  promissory  note  made  by 
the  defendant  payable  to  the  plaintiff.  The  second  plea,  for  a  defence 
on  equitable  grounds,  states  that  the  note  was  not  made  by  the 
defendant  alone,  but  was  a  joint  and  several  note  by  him  and  one 
Rowe;  that  it  was  made  for  and  on  account  and  in  payment  of  a  sum 
which  Rowe  had  agreed  to  pay  the  plaintiff  and  for  which  the  defend- 
ant was  not  liable  otherwise  than  as  surety  for  Rowe;  that  the  plain- 
tiff at  the  time  of  the  making  of  the  note  knew  that  the  defendant 
was  a  surety  only;  that  the  plaintiff,  after  the  making  of  the  note, 
became  indebted  to  Rowe  in  an  amount  equal  to  the  amount  of  the 
note  and  of  all  other  moneys  due  from  Rowe  to  the  plaintiff,  which 

1  Alcoy  Railway  v.  Greenhill,  41  Sol.  J.  330 ;  Scholze  v.  Steiner,  100  Ala.  148 ; 
Becker  v.  Northway,  44  Minn.  61  (set-off);  Brown  v.  Norcook,  17  N.  J.  Eq.  219 
(semble) ;  Morgan  v.  Smith,  7  Hun,  244,  245  (semble) ;  Jarratt  v.  Martin,  70  N.  Ca. 
459  ;  Clark  v.  Sullivan,  2  N.  Dak.  103  (semble)  ;  Hiner  v.  Newtou,  30  Wis.  640  (semble) ; 
McDonald  Co.  v.  Moran,  52  Wis.  203,  Accord.  —  Ed. 

2  Counter-claim.  Osborne  v.  Bryee,  23  F.  R.  171  ;  Stockton  Society  v.  Giddings, 
96  Cal.  84  (semble) ;  Lasher  v.  Williamson,  55  N.  Y.  619  ;  Newton  v.  Lee,  139  N.  Y. 
332  ;  Lewis  ;;.  McMillen,  41  Barb.  420;  Morgan  v.  Smith,  7  Hun,  244  ;  Henry  v.  Daley, 
17  Hun,  210 ;  Emery  v.  Baltz,  22  Hun,  434  ;  La  Farge  v.  Halsey,  1  Bosw.  171  ;  Phoenix 
Co.  v.  Rhea  (Tenn.  1897),  40  S.  W.  R.  482  (affirming  38  S.  W.*R.  1079),  Accord. 

Meyer  v.  Stookey,  3  111.  Ap.  336  (semble)  ;  Scroggin  v.  Holland,  16  Mo  419  ;  Ault- 
man  v.  Hefner,  67  Tex.  54  ;  Edmunds  v.  Harper,  31  Grat.  637  (statutory),  Contra. 

Set-off.     A  surety,  sued  alone,  cannot  reduce  the  plaintiff's  claim  bv  jeason  of  a 

r*  debt  due  from  the  latter  to  the  principal.     Beard  v.  Union  Co  ,  71  Ala.  60  (but  set-off 

allowed  by  statute  with  principal's  consent,  Scholze  v.  Steiner,  100  Ala.  1 48,  1 52 Jl 

Thallieimer  v.  Crow,  13  Colo.  397  ;  Glazier  v.  Douglass,  32  Conn.  393  (semble) ;  Graff  v. 

Kahn,  18  111.  Ap.485;  Baltimore  Co.  v.  Bitner,  15  W.  Va.  455. 

But  see  contra,  Booe  v.  Watson,  13  Ind.  387  (statutory)  ;  Sefton  v.  Hargett,  113 
Ind.  592  (statutory)  ;  Bronaugh  v.  Neal,  1  Rob.  La.  23.  —  Ed. 

3  Only  the  opinion  of  the  Court  is  given.  —  Ed. 


SECT.  III. J  BECIIERVAISE    V.   LEWIS.  189 

debt  remained  unsatisfied;  that  the  plaintiff  became  so  indebted  to 
Rowe  without  the  consent  of  the  defendant,  and  thereby  without  the 
defendant's  consent  prevented  himself  from  recovering  from  Rowe 
the  amount  of  the  note.  The  plea  then  goes  on  to  show  how  the 
plaintiff  became  indebted  to  Rowe,  viz.,  by  having  received  certain 
partnership  debts  which  he  had  sold  to  Rowe,  and  for  part  of  the  pur- 
chase-money for  which  the  note  in  question  was  given:  it  then  goes 
on  to  aver  that  the  defendant  joined  in  making  the  note  relying  on 
the  said  sale,  and  on  the  faith  and  in  the  expectation  and  in  con- 
sideration that  the  plaintiff  would  allow  Rowe  to  receive  the  debts, 
and  that  there  was  no  other  consideration  or  value  for  making  the 
note,  which  the  plaintiff  at  the  time  of  the  making  of  the  note  well 
knew. 

In  substance,  the  plea  is  a  special  plea  by  a  surety,  of  a  set-off  by 
the  principal,  arising  out  of  the  same  transaction  out  of  which  the 
liability  of  the  surety  on  tUe  note  arose.- 

A  surety  has  a  right,  as  against  the  creditor,  when  he  has  paid  the 
debt,  to  have  for  reimbursement  the  benefit  of  all  securities  which 
the  creditor  holds  against  the  principal.  This  alone  would  not  help 
the  defendant  here,  because  he  has  not,  nor  has  the  principal,  actually 
paid  the  creditor,  and  in  our  law  set-off  is  not  regarded  as  an  extinc- 
tion of  the  debt  between  the  parties. 

The  surety,  however,  has  another  right,  viz.,  that,  as  soon  as  his 
obligation  to  pay  is  become  absolute,  he  has  a  right  in  equity  to  be 
exonerated  by  his  principal. 

Thus  we  have  a  creditor  who  is  equally  liable  to  the  princiqaLas 
the  "principal _Jo  him,  and  against  whom  the  principal  has  a  good 
defence  in  law  and  equity,  and  a  surety  who  is  entitled  in  equityto 
call  upon  the  principal  to  exonerate  him. 

In  this  state  of  thing's,  we  are  bound  to  conclude  that  the  surety 
has  a  defence  in  equity  against  the  creditor;  and  we  are  justified  in 
doing  so  by  the  authority  of  the  civil  law  alluded  to  in  the  coursed 
of  the  argument,  to  be  found  in  Dig.  Lib,  xvi.  tit.  II.  section  4: 
"Verum  est,  quod  et  Neratio  placebat  et  Pomponius  ait,  ipso  jure  eo 
minus  fidejussorum  ex  omni  contractu  debere,  quod  ex  compensatione 
reus  retinere  potest.  Sicut  enim  cum  totum  peto  a  reo,  male  peto,  ita 
et  fidejussor  non  tenetur  ipso  jure  in  majorem  quantitatem,  quam  reus 
condemnari  potest." 

There  must,  therefore,  be  judgment  for  the  defendant  upon  the 
demurrer.  Judgment  for  the  defendants 

Attorneys  for  plaintiff:  Miller  &  Miller. 

Attorney  for  defendant:   T.  H.   Smith. 

l  Murphv  v.  Glass,  L.  R.  2  P.  0.  408,  Accord. 

See  also  Alcoy  Railway  v.  Greenhill,  1897,  Ch.,  41  Sol.  J.  330.  — Ed. 


190  MAHUKIN   V.   PEAKSON.  [CHAP.  II. 

MAHURIN   v.   PEARSON   AND   BELLOWS. 

Superior  Court  of  Judicature,  New  Hampshire,  July,  1837. 

[Reported  in  8  New  Hampshire  Reports,  539.] 

Assumpsit  on  a  note  for  $100,  dated  November  3,  1834,  payable  to 
the  plaintiff,  in  sixty  days,  with  interest.  The  defendant,  Bellows, 
signed  the  note  as  surety  for  Pearson.  The  defendants  pleaded  the 
general  issue,  with  notice  of  set-off  of  demands  in  favor  of  said 
Pearson.  The  plaintiff  objected  to  receive  said  set-off,  and  the  evi- 
dence offered  in  support  thereof,  on  the  ground  of  want  of  mutuality 
of  the  parties,  the  set-off  being  in  favor  of  one  of  the  defendants  only; 
whereupon  the  Court  rejected  the  set-off,  and  the  evidence  offered.1 

Parker,  J.  The  Court  erred  in  rejecting  the  set-off.  It  being 
shown  that  Bellows  is  a  mere  surety,  we  are  of  opinion  there  is 
sufficient  mutuality  in  a  debt  due  from  the  plaintiff  to  Pearson,  to 
authorize  it  to  be  allowed  in  set-off,  under  our  statute.  Woods  v. 
Carlisle;2  Bourne  v.  Bennett;3  Ex  parte  Hanson.4  The  cases  in 
Vesey  are  cited  without  disapprobation  by  Chancellor  Kent  (Dale 
v.  Cooke5);  although  he  held  as  a  general  principle  "  that  joint  and 
separate  debts  cannot  be  set  off  against  each  other  in  equity  any 
more  than  at  law." 

There  are  several  considerations  which  show  the  propriety  of 
allowing  the  set-off  in  this  case.  If  the  debt  from  the  plaintiff  to 
Pearson,  which  was  offered  in  set-off,  was  contracted  after  that  now 
in  suit,  it  very  probably  might  have  been  regarded  by  the  parties 
as  in  effect  a  payment  thus  far.  It  is  at  least  but  equitable  that  it 
should  so  operate,  whether  contracted  before  or  after.  The  rule  in 
equity  is,  that  if  a  creditor  have  security,  the  surety,  on  payment  by 
him,  is  entitled  to  be  substituted,  and  to  have  the  benefit  of  that 
security.  Hayes  v.  Ward;6  Law  v.  The  East  India  Company;7 
Evernghim  v.  Ensworth.8  If,  instead  of  having  security,  the  cred- 
itor owes  the  principal  part  of  the  amount,  and  the  principal  is 
willing  to  put  it  in  set-off,  it  is  equally  reasonable  that  the  surety 
should  have  the  benefit  of  the  credit  which  the  creditor  has  obtained 
of  the  principal.  And,  moreover,  it  will  tend  to  prevent  multiplicity 
of  actions;  for,  should  the  plaintiff  collect  his  debt  of  Bellows,  the 
latter  must  have  an  action  against  Pearson  to  recover  the  amount, 
and  Pearson  will  have  a  right  of  action  on  the  claim  now  offered  in 
set-off. 

1  The  arguments  of  counsel  are  omitted,  together  with  a  part  of  the  case  not  relating 
to  the  validity  of  the  plea  of  set-off.  —  Ed. 

2  6  N.  H.  R.  27.  6  8  Pick.  122 ;  4  Johns.  Ch.  R.  129. 

3  4  Bing.  423.  7  4  Ves.  829. 

4  12  Ves.  349  ;  18  Ves.  232,  s.  c.  8  7  Wend.  326. 

5  4  Johns  Ch.  R.  15. 


SECT.  III.  ]  MAHURIN   V.   PEARSON.  191 

Whether  anything  can  be  set  off  in  this  or  any  other  case  beyond 
the  balance  due  from  the  plaintiff,  on  an  adjustment  of  all  the  de- 
mands between  the  parties  which  are  not  comprehended  in  the  suit, 
is  a  question  not  settled  by  this  decision. 

New  trial  granted.1 

1  Set-off.  Harrison  v.  Henderson,  4  Ga.  198;  Livingston  v.  Marshall,  82  Ga. 
281  ;  Himrod  v.  Baugh,  85  111.  435  ;  Kngs  v.  Matson,  11  111.  Ap.  639  ;  Haves  v.  Cooper, 
14  111.  Ap.  490;  Weir  v.  Dustin,  32  111.  Ap.  388  ;  Bonekel  v.  Lofqnist,  46  111.  Ap.  442  ; 
Reeves  v.  Chambers,  67  Iowa,  81 ;  Spencer  v.  Almoney,  56  Md.  551  ;  Becker  v.  North- 
way,  44  Minn.  61  ;  St.  Paul  v.  Leek,  57  Minn.  87  ;  Raymond  v.  Green,  12  Neb.  215 
(semble);  Concord  v.  Pillsbury,  33  N.  H.  310;  Brewer  v.  Norcross,  17  N.  J.  Eq.  219 
(semble) ;  Wagner  v.  Stocking]  22  Ohio  St.  297  ;  Hollister  v.  Davis,  54  Pa.  508 ;  People's 
Bank  r.  Legrand,  103  Pa.  309,  316  (semble) ;  Guggenheim  v.  Rosenfeld,  9  Baxt.  (Tenn.) 
533  ;  Brundridge  v.  Whitcomb,  1  D.  Chip.  180;  Downer  v.  Dana,  17  Vt.  518  ;  Wartman 
v.  Yost,  22  Grat.  595  ;  Baltimore  Co.  v.  Bitner,  15  W.  Va.  455  (semble),  Accord. 

Woodruff  v.  State,  7  Ark.  333  (apparently  overruled  by  Leach  v.  Lambeth,  14 
Ark.  668);  Banks  v.  Pike,  15  Me.  268;  Walker  v.  Leighton,  11  Mass.  140;  Warren 
v.  Wells,  1  Met.  80 ;  Robbins  v.  Brooks,  42  Mich.  62 ;  Paine  v.  Lewis,  64  Miss.  96  ; 
Dart  v.  Sherwood,  7  Wis.  523,  Contra. 

Set-off  of  Judgments.  A  judgment  in  favor  of  a  principal  alone  may  be 
applied  to  offset  a  judgment  against  the  principal  and  surety.  Bourne  v.  Benett, 
4  Bing.  423 ;  Peirce  v.  Bent,  69  Me.  381  ;  Skinker  v.  Smith,  48  Mo.  Ap.  91. 

Counter-claim.  Where  a  surety,  made  a  co-defendant  with  the  principal,  is 
allowed  to  reduce  the  plaintiff's  claim  by  a  debt  due  from  the  latter  to  the  principal, 
he  is  allowed  the  same  privilege  as  to  a  counter-claim  of  the  principal  against  the 
plaintiff.  Waterman  v.  Clark,  76  111.  428 ;  Slayback  v.  Jones,  9  Ind.  470  (semble)  ; 
McHardy  v.  Wadsworth,  8'Mich.  349;  Edmunds  v.  Harper,  31  Grat.  637. 

In  New  York  if  principal  and  surety  are  co-defendants  in  an  action,  upon  a  claim 
upon  which  a  several  judgment  might  be  given  against  the  principal,  the  latter  may 
plead,  by  way  of  set-off  or  counter-claim,  a  demand  of  his  against  the  plaintiff,  and 
this  plea  will,  of  course,  enure  to  the  advantage  of  the  surety. 

Set-off.  Springer  v.  Dwyer,  50  N.  Y.  19;  Bathgate  v.  Haskin,  59  N.  Y.  533; 
Newell  v.  Salmons,  22  Barb.  647  ;  Parsons  v.  Nash,  8  How.  Pr.  454. 

Counter-claim.  Horton  v.  Dow,  10  N.  Y.  St.  Rep.  139;  Loring  v.  Morrison,  15 
N.  Y.  Ap.  Div.  498. 

In  Ex  parte  Hanson,  12  Ves.  346,  18  Yes.  232,  a  principal  who  was  sued  by  the 
assignees  of  a  bankrupt,  was  permitted  to  set  off  a  claim  due  from  the  bankrupt  to  him 
and  his  surety  jointly. 

In  Adams  v.  Varrell,  46  N.  H.  17,  a  creditor  sued  by  a  principal  was  allowed  to 
tet  off  a  claim  against  principal  and  surety.  —  Ed. 


x£**-«—     ^92**"  (/  PEARL   «TdEACON.        "'Z<—  '  [CHAPriT 

^JtOG&T^  ^£0  jfi  v^~ZZ£j  ^^__^    ^^^r 


ACTION   IV.  -  -_ 

Surrender  or  Loss  of  Securities  by  the  Creditor. 

PEARL   r.    DEACON. 

In  Chancery,  before  Sir  John  Romilly,  M.  R.,  June  9,   1857. 

{Reported  in  3  Jurist,  New  Series,  879. 2) 

In  November,  1853,  Mr.  Pearson,  a  publican,  borrowed  from  the 
defendants,  Messrs.  Reid  &  Co.,  who  were  his  landlords,  the  sum  of 
£250.  To  secure  the  repa}ment  of  this  sum  he  assigned  to  them 
a  pension  of  £18  a  }'ear,  and  gave  them  a  bill  of  sale  of  his  furniture, 
stock-in-trade,  and  effects.  As  a  further  security,  he  gave  the  Messrs. 
Reid  two  promissory  notes  of  £125  each,  in  one  of  which  the  plaintiff 
joined  as  surety.  Another  person  joined  as  suret}'  in  the  second  note. 
The  plaintiff  was  informed  at  the  time  he  became  surety  that  the  bill  of 
sale  of  Pearson's  furniture  and  effects  had  been  given  to  Messrs.  Reid. 
In  the  year  1856  Pearson  was  in  arrears  for  rent  (all  of  which  had  ac- 
crued since  November,  1853),  and  the  Messrs.  Reid  put  a  distress  into 
Pearson's  house,  and  seized  the  whole  of  the  furniture  which  was  com- 
prised in  their  bill  of  sale.  They  did  not  proceed  to  a  sale  under  the 
distress,  but  by  an  arrangement  with  Pearson  they  caused  a  valuation 
of  the  furniture  to  be  made,  and  agreed  to  take  the  amount  of  the  valu- 
ation (£116  12s.  Ad.)  in  part  satisfaction  of  the  arrears  of  rent.  The 
plaintiff  instituted  the  present  suit,  disputing  the  defendants'  right  to 
do  this,  and  insisting  that  the  value  of  the  furniture  ought  to  be  treated 
as  received  in  discharge  of  Pearson's  previous  debt,  and  that  the  plain- 
tiff ought  to  be  relieved,  to  the  extent  of  one  moietj'  of  the  value  of  the 
furniture,  from  his  obligations  as  surety  under  the  promissory  note. 

Palmer,  Q.  C,  and  Bevir,  for  the  plaintiff. 

Selwyn,  Q.  C,  and  W.  M.  HJllis,  for  the  defendants.2 

Sir  J.  Romilly,  M.  R.  At  present  I  concur  in  the  view  taken  by 
the  plaintiff  of  this  case.  I  wish,  however,  before  I  give  judgment,  to 
look  into  the  authorities,  which  I  had  to  consider  at  some  length  in  the 
case  of  Farebrother  v.  Wodehouse.3 

June  9.  Sir  J.  Romilly,  M.  R.  The  question  which  I  have  to 
decide  in  this  case  is,  whether,  the  furniture,  having  been  given  as  se- 
curity for  the  debt  for  which  the  plaintiff  was  liable  as  surety,  it  was  in 
the  power  of  the  creditor,  to  the  injury  of  the  surety,  to  seize  it  in  dis- 
charge of  another  debt.  I  am  of  the  opinion  that  it  was  not.  It 
is  said  that  this  does  not  come  within  the  scope  of  the  contract  between 

1  24  Beav.  186,  s.  c.  —  Ed. 

2  The  arguments  of  counsel  are  omitted.  — Ed. 
8  2  Jur.  n.  s.  1178. 


SECT.  IV.] 


PEARL   V.    DEACON. 


193 


the  surety  and  the  creditor ;  but  I  think  it  is  a  mistake  to  put  the 
rights  of  the  surety  merely  on  the  footing  of  contract.  In  Craythorne 
y.  Swinburne,1  Lord  Eldon  says  that  it  is  not  contract,  but  an  equity 
arising  out  of  the  relation  between  the  surety  and  the  creditor ;  and 
in  Mayhew  v.  Crickett,2  the  same  doctrine  was  laid  down.  Capel  v. 
Butler3  is  an  express  authorit}'  upon  this  point;  but  it  is  said  that  in 
that  case  there  is  the  recital  of  a  bond,  and  that  there  is  nothing 
analogous  in  the  present  case.  But  as  the  plaintiff  had  knowledge  of  the 
fact,  it  is  immaterial  whether  it  was  conveyed  in  writing  or  otherwise. 
The  observations  of  Sir  W.  P.  Wood,  V.  C,  in  Newton  v.  Chorlton 4  are 
also  in  point.  I  am  of  the  opinion  that  if  the  defendants  require 
payment  from  the  plaintiff  of  the  note,  the  plaintiff  is  entitled  to  say, 
"You  must  give  me  the  securities  which  3-011  hold  on  the  furniture  for 
this  debt."  What  the  defendants  have  done  has  been  to  apply  the 
proceeds  of  this  furniture  in  discharge  of  a  totally  distinct  debt,  con- 
trary to  the  original  arrangement,  of  which  the  suretj'  was  cognizant, 
and  by  which  he  became  liable.  What  the  defendants  have  received 
ought  to  be  apportioned  in  discharge  of  the  whole  debt  of  £250,  and 
the  plaintiff,  as  surety,  is  liable  only  for  a  moiety  of  the  balance. 
The  result  of  holding  otherwise  would  be  this:  if  A  advanced  £1,000 
on  mortgage,  and  ten  persons  became  sureties,  each  for  £100,  he 
might  release  or  transfer  the  mortgage  for  value,  and  then  sue  each 
of  the  ten  sureties  for  £100  each.  Such  a  A'iew  cannot  possibly  be 
sustained.  I  understand  there  is  no  dispute  as  to  the  A^alue  of  the 
furniture;  and  taking  it  at  £116  12s.  id.,  an  account  must  be  taken 
of  what  is  due  in  respect  of  the  £250,  the  value  of  the  furniture  to  go 
in  part  discharge,  and  the  plaintiff  to  be  held  liable  for  one-half  of  the 
balance,  with  interest.     The  plaintiff  must   have  his  costs  up  to  and 


including  the  hearing.5 


3  2  Sim.  &  S.  457. 


4  10  Hare,  646. 


1  14  Ves.  160.  2  2  Swanst.  185. 

5  Affirmed  on  appeal,  1  DeG.  &  J.  461. 

The  doctrine  of  the  principal  case  thaj^  a  creditor,  who  surrenders  a  security, 
thereby  reduces  jtrojanto  his  claimajtninst  Trie  surety,  nasiTeen  repeatedly  applied. 
Henderson  y.'Huey,Jf5  Ala.  av^trTOBard  v.  Pacl^S^'Ark.  80 ;  Stallings  v.  Hank,  59 
Ga.  701  ;  Rogers  v.  Trustees,  46  111.  428  ;  Kirkpatrick  v.  Howk,  80  111.  122  ;  Sample  v. 
Cochran,  82  Ind.  260,  84  Ind.  594 ;  Weik  r.  Pugh,  92  Ind.  382 ;  Port  v.  Robbins,  35 
Iowa,  208;  Middleton  v.  First  Bank,  40  Iowa,  29;  Lucas  Co.  v.  Roberts,  49  Iowa,  159  ; 
Heitz  v.  Atlee,  67  Iowa,  483 ;  Bank  of  Monroe  v.  Gifford,  79  Iowa,  300;  Armor  v. 
Amis,  4  La.  An.  192;  Barrow  v.  Shields,  13  La.  An.  57;  Union  Bank  v.  Cooley,  27 
La.  An.  202  ;  Cummings  v.  Little,  45  Me.  183 ;  Baker  v.  Briggs,  8  Pick.  122  ;  American 
Bank  v.  Baker,  4  Met.  164  ;  Guild  v.  Butler,  127  Mass.  386;  Willis  v.  Davis,  3  Minn. 
17  ;  Taylor  v.  Jeter,  23  Mo.  244  ;  N.  H.  Bank  v.  Colcord,  15  N.  II.  119  (semble) ;  Bixby 
v.  Barklie,  26  Hun,  275  ;  Underbill  v.  Palmer,  10  Daly,  478;  Brown  v.  Rathburn,  10 
Oreg.  1 58  ;  Whartou  v.  Duncan,  83  Pa.  40 ;  Clow  v.  Derby  Co.,  98  Pa.  432 ;  Otis  v. 
Von  Storch,  15  R.  I.  41  (semble) ;  Cator  v.  Berry,  14  Lea,  408  ;  Kiam  r.  Cummings, 
Tex.  Civ.  Ap.  1896,  36  S.  W.  R.  770;  Adams  v.  Dutton,  57  Vt.  515  [semble) ;  Loop  v. 
Summers,  3  Rand.  511  ;  Price  Bank  v.  McKenzie,  91  Wis.  658;  Plankinton  v.  Gor- 
man, 93  Wis.  560. 

But  see  contra,  Woodward  v.  Clegge,  8  Ala.  317. 

(//   The  surety's  liability  is  not  affected,  if  he  consents  to  the  surrender  of  securities 
. — js — 


fc* 


194  PLEDGE   V.    BUSS.  [CHAP.  It 


PLEDGE   v.    BUSS. 

In  Chancery,  before  Sir  W.  Page  Wood,  V.  C,  January 

24,  1860. 

[Reported  in  Johnson,  663.] 

Robert  Pledge,  a  retail  grocer,  the  brother  of  the  plaintiff,  was 
in  the  year  1850  indebted  to  the  defendant  Buss,  a  wholesale  dealer, 
from  whom  Robert  Pledge  was  in  the  habit  of  obtaiuing  goods;  and 

by  the  creditor.    Taylor  v.  Bank  of  N.  S.  Wales,  11  App.  Cas.  596  ;  Grisard  v.  Hanson, 
50  Ark.  2-29;  Brown  v.  Abbott,  110  111.  162;  Pence  v.  Gale,  20  Minn.  257. 

( t-\  Nor,  if  the  creditor  takes  an  equivalent  security  in  exchange  for  the  one  given  up. 
Thomas  v.  Cleveland,  33  Mo.  126  ;  Lafayette  Co.  v.  Hixon,  69  Mo.  581.  But  see  N.Ti. 
Bank  v.  Colcord,  15  N.  H.  119,  and  Neff's  App.,  9  W.  &  S.  36. 

(J)      Nor,  if    the  creditor   surrenders  a   disputed   claim  as   a   reasonable  compromise. 

Be  dwell  v.  uepliart,  67^  Iowa,  44. 
(t/\  Nor,  if  the  security  surrendered  could  not  be  made  to  realize  anything  for  the  credit- 
or's benefit ;  e.  g.,  an  execution  upon  exempt  property,  a  lapsed  life-insurance  policy,  and 
ihe  like.  Hard  wick  v.  Wright,  35  Beav.  133;  Kaiubow  v.  Juggins,  5  Q.  B.  Div.  422 ; 
Lilly  v.  Roberts,  58  Ga.  363 ;  Green  v.  Blunt,  59  Iowa,  79 ;  Blydenburgh  v.  Bingham, 
38  N.  Y.  371.  But  the  creditor  must  establish  the  worthlessuess  to  him  of  the 
security  relinquished,  moss  v.  .rettiugill,  3  Minn.  217  ;  Dunn  v.  Parsons,  infra,  T99 
The  Court  seems  to  have  gone  too  far  in  Coram.  Bankw.  Western  Bank,  11  Ohio,  444. 

(•?  J  Nor,  if  the  creditor  of  a  bankrupt  exercises  his  option  to  surrender  the  security  and 
prove  lor  the  whole  amount  ot  the  debt.     Rainbow  v.  Juggins,  5  Q.  B.  Div.  422" 

(■C )  Nor,  if  a  judgment  creditor  by  suing  on  the  judgment  and  getting  a  new  judgmeut 
waives  the  lien  of  the  first  judgment,  and  so  lets  in  intermediate  judgments  iiTTavor 
of  other  persons.  Perry  v.  Saunders,  36  Iowa,  427. 
(Tj  iNor  if  the  property  surrendered  was  subject  to  a  prior  mortgage  in  favor  of  the 
surety.  Stringfellow  v.  Williams,  6  Dana,  236  ;  Glass  v.  Thompson,  9  B.  Mon.  235. 
See  Thomas  v.  Wason,  8  Colo.  Ap.  452. 

In  Missouri  the  release  of  a  part  of  the  security  does  not  reduce  the  liability  of  the 
surety,  if  the  part  retained  is  ample  to  secure  the  full  payment  of  the  debt.  Saline  Co. 
!;."~MuTeV65'Mo.  63.   ' 

Misconduct  of  Creditor  in  deali^  wit*?  Ppopfptv  held  as  Security. 
If  the  creditor  misappropriates  o~ sells  at  a  sacrifice,  or  otherwise  prejudices  the 
surety  by  his  misconduct  in  dealing  with  the  property  which  he  received  as  security, 
tjie  surety's  liability  is  reduced  by  the  amount  *oT[  the  damage  caused  by  such  mis- 
conduct. Allen  v.  Donald,  23  h\  K.  573  ;  Robeson  v.  Koberts,  20  lnd.  l"55 ;  NevTEng- 
land  Co.  v.  Randall,  42  La.  An.  260 ;  McMullen  v.  Hinkle,  39  Miss.  142 ;  Holliday  v. 
Brown,  33  Neb.  657 ;  City  Bank  v.  Young,  43  N.  H.  457 ;  Hutchinson  v.  Woodwell, 
107  Pa.  509. 

In  several  of  the  cases  just  cited  the  principal  debtor  was  in  collusion  with  the 
creditor.  If  the  creditor,  in  violation  of  his  duty  to  the  principal  debtor,  misappropri- 
ates or  wastes  the  security,  his  claim  against  the  principal  debtor  is  reduced  in  pro- 
portion to  the  extent  of  the  misappropriation  or  misuse.  And  this  defence  of  the 
principal  debtor  enures  to  the  advantage  of  the  surety.  In  other  words,  the  surety's  re- 
lief  is  the  same  as  in  the  cases  cited  in  the_nreceding  paragraph,  but  fui  an  independ- 
ent reason.  This  reason  applied  in  the  "following  cases :  Phares  v.'  Harbour,  4y~Ill. 
370;  Nichols  r.  Burch,  128  lnd.  324  ;  Clopton  v.  Spratt,  52  Miss.  251  ;  Vose  r.  Florida 
Co.,  50  N.  Y.  369 ;  Everly  v.  Rice,  20  Pa.  297  ;  Sitgreaves  v.  Farmers'  Bank,  49  Pa 
359. —  Ed. 


SECT.  IV.]  PLEDGE    V.    BUSS.  1 95 

on  the  18th  of  June,  1850,  R.  Pledge  executed  a  mortgage  to  Buss  to 
secure  the  then  existing  debt  and  future  advances. 

In  October,  1850,  the  debt  had  increased,  and  the  plaintiff,  as 
surety,  joined  his  brother  in  a  promissory  note   to  Buss  for  £200. 

In  1854,  R.  Pledge  became  bankrupt,  being  then  considerably 
indebted  to  Buss;  and  by  a  deed  dated  the  1st  of  August,  1857, 
between  the  assignees  of  R.  Pledge  and  the  defendant,  the  equity 
of  redemption  in  the  mortgaged  premises  was  conveyed  to  the 
defendant,  and  in  consideration  thereof  the  defendant  released  the 
assignees  and  the  estate  of  R.  Pledge  from  all  claim.  The  plaintiff  , 
was  not  consulted  in  this  transaction,  or  informed  of  it  at  the  time. 
A  dividend  of  6d.  in  the  pound  had  been  previously  declared  on 
R.  Pledge's  estate,  but  no  proof  had  been  made  in  respect  of  the 
debt  to  Buss. 

In  April,  1858,  the  defendant  commenced  an  action  on  the  note 
against  the  plaintiff,  and  this  bill  was  filed  praying  a  declaration  that 
the  plaintiff's  liability  as  surety  was  avoided  by  the  misrepresenta- 
tion,1^)!', if  not,  then  that  the  plaintiff  was  discharged  in  equity  by 
the  execution  of  the  deed  of  1857. 

Mr.  Bolt,  Q.  C,  and  Mr.  E.  F.  Smith,  for  the  plaintiff,  cited 
Bonser  v .  Cox;2  Lord  Harberton  v.  Bennett.3 

Mr.  James,  Q.  C,  and  Mr.  Bevir,  for  the  defendant:  — 

With  respect  to  the  deed  of  1857,  this  was  not  such  a  dealing  as 
would  discharge  a  surety.  A  surety  is  discharged  if  time  is  given 
or  the  nature  of  the  debt  is  varied.  A  surety  also  has  a  right,  on 
paying  the  debt,  to  the  benefit  of  all  securities  held  by  the  creditor; 
but  this  equity  is  quite  distinct  from  that  which  arises  out  of  a  varia- 
tion of  the  debt.  This  deed  does  not  release  the  debtor  or  alter  the 
nature  of  the  debt;  it  merely  releases  all  claim  to  prove  against  the 
estate,  and  cannot  discharge  the  surety  even  if  it  gives  him  some 
right  to  compensation.  Harberton  v.  Bennett,  as  reported,  is  founded 
on  no  intelligible  principle.  The  surety  might  have  paid  the  debt 
and  proved  himself;  and  at  the  most  the  only  damage  which  he  can 
have  suffered  is  the  loss  of  the  sixpenny  dividend,  the  amount  of  which 
we  are  willing  to  allow  him;  and  we  admit  his  right  on  paying  the 
debt  to  have  a  charge  upon  the  mortgaged  premises.  [They  cited 
Browne  v.  Carr.*] 

Vice-Chancellor  Sir  W.  Page  Wood:  — 

The  other  point  of  the  case  was  very  ingeniously  argued;  but  the 
law  is  now  well  established,  that  a  person  having  a  mortgage  for  a 
guaranteed  debt  is  bound  to  hold  it  for  the  benefit  of  the  surety,  so 
as  to  enable  him,  on  paying  the  debt  which  he  has  guaranteed,  to 
take  the  security  in  its  original  condition  unimpaired.  In  this  case 
the  principal  debtor  having  become  bankrupt,  the  creditor,  instead 
of  going  in  under  the  bankruptcy  as  he  might  have  done,  and  appty- 

1  So  much  of  the  case  as  relates  to  this  point  is  omitted.  —  Ed. 

2  4  Beav.  379.  3  Beatt.  386.  *  2  Kuss.  600;  s.  c.  7  Bing.  508. 


196  PLEDGE    V.   BUSS.  [CHAP.  IL 

ing  to  have  the  security  realized  and  to  be  admitted  to  prove  for  the 
balance,  in  effect  purchased  the  equity  of  redemption  (no  doubt  on  ad- 
vantageous terms),  the  price  being  the  surrender  of  his  right  of  proof. 

The  consequences  of  this  were  twofold :  In  the  first  place  the  surety 
could  not  get  the  security  with  the  same  title  under  which  the  creditor 
held  it,  which  dated  from  1850.  This  might  be  a  matter  of  no  small 
importance,  having  regard  to  the  possibility  of  intervening  judg- 
ments or  other  charges.  All  that  the  creditor  can  now  give  to  the 
surety  is  a  security  taking  priority  from  the  present  time.  The  right 
of  the  surety  was  to  have  the  same  security  in  exactly  the  same 
plight  and  condition  in  which  it  stood  in  the  creditor's  hands.  This 
he  cannot  now  get. 

Again,  the  surety  has  been  deprived  of  the  benefit  of  proof  against 
the  bankrupt's  estate.  Mr.  James  relied  on  authorities  which  decided 
that  a  creditor  did  not  release  a  surety  by  signing  the  debtor's  cer- 
tificate, and  argued  that  the  surety  might  have  paid  the  debt  and 
gone  in  and  proved  himself. 

The  decisions  as  to  the  effect  of  signing  a  bankrupt's  certificate 
do  not  apply,  because  a  debtor  in  giving  his  signature  in  a  proper 
case  is  merely  performing  a  duty ;  and  if  the  surety  does  not  obtain 
a  voice  in  the  matter  himself,  it  is  his  own  fault.  But  here  no  proof 
was  made  by  the  creditor  against  the  principal  debtor;  and  the  estate 
was  as  a  matter  of  bargain  released  from  proof ;  and  this  was  done 
without  giving  any  notice  to  the  surety  of  what,  was  contemplated. 
But,  apart  from  this,  the  alteration  which  has  been  made  in  the  nature 
of  the  security  is  a  sufficient  ground  for  my  decision. 

The  case  before  Lord  Manners  is  quite  reconcilable  with  the  gen- 
eral principle.  The  plaintiff  there  came  into  equity  upon  a  mortgage 
granted  by  a  surety.  The  answer  was  not  that  the  mortgage  was 
bad,  as  Mr.  James  put  it,  but  that  it  was  a  security  for  the  perform- 
ance of  certain  covenants,  and  that  those  covenants  had  been  released; 
and  consequently,  that,  if  the  surety  paid  the  claim,  and  sought  to 
use  the  name  of  the  creditor  in  enforcing  those  covenants,  he  would 
be  met  by  the  answer  that  the  covenants  were  gone.  It  was  on  that 
ground  that  the  bill  was  dismissed. 

I  refer  to  the  case  of  Newton  v.  Chorlton,1  before  myself,  for  the 
purpose  of  saying,  that,  although  it  has  not  been  overruled,  the  Lords 
Justices  have  in  another  case  intimated  that  they  do  not  concur  with 
the  view  which  I  then  took.  I  am  as  much  bound  to  submit  to  their 
opinion,  as  if  the  decision  had  been  reversed  on  appeal  before  them. 
That  was  a  case  where  a  creditor  after  the  contract  of  suretyship  had 
obtained  a  security  for  the  debt,  which  he  afterwards  parted  with, 
and  I  considered  that,  in  the  absence  of  any  authority,  I  could  not 
hold  that  the  same  principle  applied  to  after-taken  securities  which 
prevails  with  respect  to  those  which  exist  at  the  date  of  the  contract 

1  10  Hare.  646. 


SECT.  IV.]  WRIGHT   V.    KNEPPER.  197 

of  suretyship,  the  full  and  unimpaired  benefit  of  which  the  surety  is 
entitled  to  have  preserved  for  him.  But  the  Lords  Justices  have 
since  held  that  the  rights  of  a  surety  extend  to  this,  that  he  is  entitled 
to  have  every  after-taken  security  kept  intact  for  his  benefit.1 

The  present  is  a  much  stronger  case,  because  the  security  was  taken 
at  the  time  when  the  debt  was  contracted ;  but  even  if  it  had  been 
otherwise,  I  should  not  think  myself  at  liberty  to  follow  Newton  v. 
Chorlton,  after  the  intimation  of  the  opinion  of  the  Lords  Justices. 
For  the  present  purpose,  it  is  enough  to  say  that  I  cannot  enter  into 
the  question  whether  the  security  which  the  surety  might  now  get, 
would  or  would  not  be  as  beneficial  as  the  original  security.  He  can- 
not have  the  same  title  or  the  same  estate  which  formed  the  security 
in  1850,  and  the  effect  of  this  alteration  in  the  security  is,  that  the 
surety  is  discharged.'2 


WRIGHT,    for   Use   of   ENSLEY,    v.    KNEPPER   and  Others. 
In  the  Supreme  Court,  Pennsylvania,  September  Term,  1845. 

[Reported  in  1  Barr,  361.] 

Error  to  the  Court  of  Common  Pleas  of  Alleghany  county. 

In  the  Court  below  this  was  a  scire  facias  to  revive  judgment,  &c, 
in  which  Pmoch  Wright,  for  the  use  of  Michael  Ensley,  the  plaintiff  in 
error,  was  the  plaintiff,  and  William  W.  Knepper,  Leopold  Sahl,  and 
William  Leckey,  were  the  defendants. 

The  facts  of  the  case  are  these  :  — 

Enoch  Wright  obtained  an  amicable  judgment  by  confession,  against 
the  defendants  for  $618.84,  which,  on  the  7th  of  July,  1841,  was 
entered  of  record  in  Alleghany  county,  and  became  a  lien  on  a  lot  of 
ground  situate  in  Alleghany  city,  and  owned  by  Leopold  Sahl. 

On  the  16th  of  December,  1842,  Leopold  Sahl,  for  the  consideration 
of  $460,  conveyed  this  lot  to  Michael  Ensley. 

On  the  17th  of  June,  1844,  Enoch  Wright,  for  a  bona  fide  consid- 
eration, assigned  the  judgment  to  Michael  Ensley,  without  recourse, 
and  subject  to  a  credit  of  $200,  paid  26th  July,  1841,  and  a  further 
credit  of  interest  on  the  whole  amount  to  April  1,  1841. 

It  was  proved  on  the  part  of  Wm.  Leckey  (who  alone  made  defence  to 
the  scire  facias),  that  he  was  only  a  surety,  and  Leopold  Sahl  the  principal. 

1  Campbell  v.  Rothwell,  47  L.  J.  C.  L.  144;  Holland  v.  Johnson,  51  Ind.  340; 
Freaner  v.  Yingling,  37  Md.  491  ;  Willis  v.  Davis,  3  Minn.  17,  Accord.  —  Ed. 

2  In  Hereford  v.  Buss,  1  Bob.  (La.)  212,  one  who  had  a  vendor's  lien  upon  ten 
slaves,  repurchased  nine  of  them  from  the  vendee.  This  repurchase,  it  was  decided, 
discharged  the  surety  on  the  note  of  the  original  buyer  for  the  purchase  price. 

The  effect  upon  the  rights  of  a  surety  of  a  purchase  by  a  second  creditor  of  the 
principal  debtor's  interest  in  the  property  pledged,  was  considered  in  Cullum  v. 
Emanuel,  1  Ala.  23,  29  ;  McMullen  v.  Hinkle,  39  Miss.  142 ;  Wheelwright  v.  Depeys- 
ter,  4  Edw.  Ch.  232.  —  Ed. 


198  WRIGHT    V.    KNEPPER.  [CHAP.  rf. 

The  counsel  of  Wm.  Lecke}-  asked  the  Court  to  instruct  the  jury  :  — 

That  if  they  believed  Win.  Leckey  to  have  been  the  surety  of  Leo- 
pold Sahl  in  this  case,  that  Michael  Ensley  being  the  owner  of  the 
judgment,  and  the  owner  of  the  lot  which  was  bound  by  it ;  the  judg- 
ment is  extinguished  (so  far  as  Lecke}-  is  concerned)  to  the  extent  of 
the  value  of  the  lot  at  the  time  that  Ensley  became  the  owner  of  the 
judgment,  and  Win.  Lecke}'  is  entitled  to  be  credited  to  that  extent. 

That  if  the  plaintiff  in  a  judgment  becomes  the  owner  of  the  land 
on  which  the  judgment  is  a  lien,  the  lien  thereby  becomes  extinct  by 
operation  of  law.  That  the  assignee  of  the  judgment  in  this  case 
having  received  a  transfer  of  the  same,  after  he  had  purchased  the 
property  upon  which  the  same  was  a  lien,  the  judgment  must  be  con- 
sidered as  satisfied  to  the  extent  of  the  value  of  the  property. 

The  President  charged  the  jury  in  accordance  with  the  defendant's 
points;  and  further,  if  Wm.  Lecke}7  was  a  suret}',  the  matters  urged 
by  defendants  constitute  a  good  defence  to  the  extent  of  the  value  of 
the  lot. 

To  this  charge  the  counsel  of  the  plaintiff  excepted. 

The  jury  found  a  verdict  for  the  defendant. 

The  plaintiff  thereupon  took  this  writ  of  error,  and  assigned  for 
error  in  this  Court  the  directions  of  the  Court  below  upon  the  points 
submitted  by  the  counsel  of  the  defendant. 

Woods,  for  plaintiff  in  error. 

Washington,  contra,  cited  7  Watts,  20  ;  5  Rawle,  57 ;  1  Watts  & 
Serg.  156. 

The  opinion  of  the  Court  was  delivered  by  Rogers,  J. 

The  judgment  on  which  suit  was  brought  was  a  lien  on  a  lot  now 
owned  by  Michael  Ensley.  Ensle}-  became  the  purchaser  of  the  judg- 
ment subsequently,  and  now  seeks  to  enforce  payment  by  means  of  a 
scire  facias  against  William  Lecke^y,  the  suret}'.  This  raises  the  ques- 
tion, whether  the  purchaser  of  a  lot  bound  by  a  judgment  against  three 
persons,  in  which  one  of  the  debtors  is  a  suret}-,  by  purchasing  and 
taking  an  assignment  of  the  judgment,  discharges  the  surety  pro  tanto. 
We  shall  best  arrive  at  a  correct  conclusion,  by  considering  the  situa- 
tion of  the  surety  before  the  assignment.  If  the  creditor  levies  his 
debt  by  sale  of  the  premises  on  which  the  judgment  is  a  lien,  the 
suret}*  is  discharged  from  the  debt.  And  this,  so  far  as  the  surety  is 
concerned,  would  be  the  duty  of  the  creditor,  a  duty  which  would  be 
j,  ^,  v  enforced  by  a  Court  of  Equity,  who  would  compel  him  in  the  first 
place  to  go  against  the  land.  But  although  we  have  no  such  power  in 
this  State,  yet  we  have  adopted  to  the  fullest  extent  the  principle,  that 
equity  considers  that  as  done  which  ought  to  be  done.  Again,  if  the 
creditor  levies  the  debt  from  the  surety,  the  latter  has  a  right  to  be 
substituted  to  all  the  securities  of  the  principal,  and  by  this  means  to 
an  indemnit}'  against  the  sale  of  the  real  propert}'  bound  by  the  judg- 
ment. Nor  has  the  purchaser  any  just  right  to  complain,  as  he  had 
constructive,  if  not  actual  notice  of  the  lien,  and  of  course  purchased 


SECT.  IV.] 


DUNN   V.    PARSONS. 


199 


subject  to  it.  He  takes  the  property  incumbered  with  the  same  equi- 
ties as  the  original  owner,  and  as  regards  him  it  is  settled  ;  the  surety 
upon  payment  of  the  debt  is  entitled  to  substitution  against  the 
principal.  In  Thorn  v.  Ilartman,1  the  general  principle  is  ruled, 
that  if  the  plaintiffs  in  the  judgment  become  the  owners  of  the 
land  upon  which  the  judgment  is  a  lien,  the  lien  becomes  extinct  by 
operation  of  law.  Of  the  benefit  of  this  principle  to  the  extent  of  the 
value  of  the  land,  the  suret}-  cannot  be  deprived.  But  by  purchasing 
the  judgment  and  obtaining  control  of  it,  the  plaintiff  seeks  to  levy 
the  debt  from  the  surety,  and  thereby  exempt  the  lot,  of  which  he  has 
reluctantly  become  the  owner,  from  the  lien  of  the  judgment.  The 
writ  was  issued  against  all  the  defendants,  but  issue  is  joined,  and  the 
trial  had  with  the  surety  alone  ;  and  as  the  jury  have  found  the  value 
of  the  lot  to  be  equal  to  the  amount  of  the  judgment,  we  are  of  opinion 
the  assignee  is  not  entitled  to  have  his  judgment  revived.  A  Court  of 
Chancery  would  restrain  him  from  proceeding  on  his  judgment,  and 
of  course,  according  to  our  practice,  it  is  equitable  defence  to  a  scire 
facias.  Judgment  affirmed.2  TT 


J& 


''  A.    DUNN,    Appellant,    v.    C.    PARSONSL  RESPbNDEjsT.           -^ — »>n 
In  the' Supreme  Court.  Newtork,  March  Term,   1886.  * -*^- 

Smith,  P.  J.     The  plaintiff  was  sued  as  indorser  of  a  promissory 

note  made  by  J.  Getz  &  Co.  The  defence  litigated  was,  that  ther^*«-J*r "^ 
creditor  had  voluntarily  released  certain  real  estate  belonging  to  the  ^pU^^"^ 
makers  from  the  lien  of  a  judgment  which  he  had  obtained  against 
them  on  said  note  before  suing  the  indorser.  The  real  estate  con-  X^£- 
sisted  of  three  parcels,  one  of  six  and  T8„%  acres  of  land  in  the  city 
of  Buffalo,  and  two  in  the  town  of  Tonawanda,  containing  eighty-  VC"*-*-6^* 
three  and  -f^5  acres  and  141  and  ^fe  acres  of  land,  respectively.  The"^-^^  /^, 
claim  in  suit  was  for  $5,000,  and  interest  from  June,  1872.  At  the 
trial  evidence  was  given  on  the  part  of  the  plaintiff  tending  to  show 
that  the  premises  released  were  incumbered  by  prior  liens  to  the 
extent  of  The  full  value  of  the  premises.  The  defendant  gave  evi- 
dence tending  to  show  that  the  premises  released  were  of  sufficient 


value  to  pay  the  judgment  and  the  prior  incumbrance  in  full. 

The  defendant's  counsel  moved  the  Court  to  direct  a  verdict  for  the 
defendant.  The  plaintiff's  counsel  objected,  and  asked  the  Court 
to  submit  to  the  jury  the  question  whether  said  releases,  or  either 
of  them,  had  in  any  manner  injured  the  defendant  or  impaired  his 
security;  and  if  so,  to  what  extent.  The  judge  declined  to  submit 
said  question  to  the  jury,  and  directed  the  jury  to  render  a  verdict 


/^) 

3-b* 


1  7  Watts,  20. 


2  Johnson  v.  Young,  20  W.  Va.  614,  Accord.  — Ed. 


200  DUNN   V.   PARSONS.  [CHAP.  IL 

for  the  defendant,  to  which  refusal  and  direction  the  plaintiff's  coun- 
sel duly  excepted.  Upon  those  exceptions  arises  the  only  question 
in  the  case. 

The  defendant  was  an  accommodation  indorser,  and  consequently 
was  a  mere  surety  for  the  makers  of  the  note.  And  the  holder  of  the 
note  having  obtained  a  judgment  upon  it,  which  became  a  lien  upon 
the  real  estate  of  the  makers,  or  one  of  them,  the  defendant,  as 
surety,  was  entitled  to  regard  the  judgment  and  its  lien  as  security 
for  the  principal  debt,  and  to  be  subrogated  in  the  place  of  the  cred- 
itor in  respect  to  the  judgment  and  its  lien,  in  case  he  paid  the  debt. 
The  creditor  having  voluntarily  released  the  lien  of  the  judgment 
upon  the  real  property  of  the  principal  debtor,  it  is  now  contended 
on  the  part  of  the  defendant,  as  it  was  at  the  trial,  that  he  is  abso- 
lutely discharged  from  liability,  without  reference  to  the  question 
whether  he  was  actually  damnified  by  the  release,  or,  if  damnified, 
to  what  extent.  And  it  is  claimed  that  there  is  a  distinction  in  this 
respect  between  cases  where  the  release  is  the  voluntary  act  of  the 
creditor  and  those  in  which  it  is  the  result  of  mere  laches  on  his  part. 

The  case  of  Vose  v.  The  Florida  Railroad  Company  1  is  an  author- 
ity adverse  to  that  contention.  It  was  held  in  that  case  that  a  sale 
by  a  creditor  of  collateral  securities,  placed  in  his  hands  by  the 
principal  debtor,  in  violation  of  a  stipulation  for  a  particular  notice 
of  sale  contained  in  the  contract  under  which  they  were  pledged, 
does  not,  per  se,  discharge  a  surety,  in  toto,  who  is  liable  for  the 
debt,  but  by  such  sale  the  creditor  makes  the  securities  his  own  to 
the  extent  of  discharging  the  surety  to  an  amount  equal  to  their 
value.  AndreAv.s,  J.,  speaking  for  all  the  members  of  the 'Court 
who  voted  in  the  case,  said:  "The  act  of  the  creditor  did  not 
change  the  contract  upon  which  Yulee  was  surety,  and  the  rights  of 
all  parties  will  be  fully  protected  if  it  shall  be  held  that  the  debt  was 
discharged  to  the  extent  of  the  value  of  the  bonds  sold  in  contraven- 
tion of  the  contract.  It  is  not  difficult  to  measure  the  loss  actually 
sustained  by  the  conversion  or  misapplication  by  the  creditor  of  the 
securities  in  his  hands.  It  would  be  contrary  to  equity  to  discharge 
the  surety  in  toto,  in  consequence  of  a  release  by  the  creditor  of  a 
security  witUout^reference  to  ttsralue. "—  And  he  cited  the  follow- 
ing authorities  confirming  this  view:  Story's  Equity  Jurisprudence, 
§326;  Capel  v.  Butler;  Law  v.  East  India  Company;2  Payne  v. 
Commercial  Bank  of  Natchez; 3  Neff's  Appeal.4 

The  learned  counsel  for  the  respondent  places  his  contention  upon 
another  ground,  also,  that  even  where  a  surety  would  ordinarily  be 
discharged  pro  tanto  only,  yet,  if  the  act  of  the  creditor  has  ren- 
dered it  impossible  to  estimate  correctly  what  would  be  the  value  of 
the  security  affected,  through  the  time  it  could  be  kept  alive,  the 
surety  becomes  absolutely  discharged.     He  cites  the  case  of  Fielding 

1  50  N.  Y.  369.  3  6  Sm.  &  Marsh.  24. 

2  4  Ves.  833.  *  9  W.  &  S.  36. 


SECT.  IV.]  DUNN    V.    PARSONS.  201 

v.  Waterhouse.1     That  was  not  the  case  of  a  discharge  of  a  particular 

piece  of  property  from  the  lien  of  a  judgment,  but  the  judgment  itself 

was  discharged,  and  the  decision  proceeded  on  the  idea  that  it  was 

impossible  to  say  what  would  have  been  its  value  if  it  had  been  kept 

alive.     Here,  however,  the  value  of  the  real   estate  discharged   was 

capable  of  being  ascertained.     We  think,  therefore,  the  direction  to 

render  a  verdict  for  the  defendant  cannot  be  sustained,  and  that  there 

must  be  a  new  trial.     For  the  purposes  of  the  new  trial  we  hold  that 

it  is  incumbent  on  the  plaintiff  to  show  clearly  that  the  property   re-     yl    J£^^- 

leased   could  not  have   been   made  available  at  all,  or  not  beyond  a  fl^ty"^  I 

certain  amount,  to  the  payment  of  the  judgment  on  the  note  by  reason 

oj  the  prior  Tncuni  Prances,  and  to  the  extent  of  the  value  of  the  part 

released,  the  suret}'  is  discharged.2     Holt  v.  Bodey.8 

Judgment  reversed,  and  new  trial  ordered,  costs  to  abide  event. 

Barker  and  Bradley,  JJ.,  concurred;  Haigiit,  J.,  not  sitting. 

Judgment  reversed,  and  new  trial  ordered,  costs  to  abide  event.4 

i  40  N.  Y.  Supr.  Ct.  424. 

2  Neff's  Ap.,  9  W.  &  S.  36,  43-44 ;  Holt  v.  Bodey,  18  Pa.  207,  Accord.  —  Ed. 

3  18  Pa.  St.  207. 

4  If  a  creditor,  having  obtained,  by  legal  process,  a  lien  upon  the  property  of  the    ^/p     rt 
principal  debtor,  relinquishes  it,  his  claim  against  the  surety  is  thereby  reduced  to  the  ^^_I  / 

nvTmTrot    tho    1 1  o  n    rriron    nn  f 


extent  ol  tne  lien  given  up. 

Judgment  Lien.  TTones  v.  Hawkins,  60  Pa.  52  ;  First  Bank  v.  Parsons,  42  W.  Va.  137  ; 
Mellish  v.TJreen,  5  Grant  Ch.  655. 

Execution  Lien.  Mayhew  v.  Crickett,  2  Sw.  185  ;  Wils.  Ch.  418,  s.  c. ;  State  Bank 
v.  Edwards,  275  Ala.  512  ;  Winston  v.  Yeargin,  50  Ala.  340;  Morley  v.  Dickinson,  12 
Cal.  561;  Mulford  v.  Estudillo,  23  Cal.  94;  Thomas  v.  Wason,  8  Colo.  Ap.  452; 
Houston  v.  Hurley,  2  Del.  Ch.  247 ;  Curan  v.  Colbert,  3  Ga.  239  ;  Brown  v.  Biggins, 
3  Ga.  405  ;  Lumsden  v.  Leonard,  55  Ga.  374  ;  Fleming  v.  Odurn,  59  Ga.  362  ;  Bawson 
v.  Gregory,  59  Ga.  733  ;  Briuton  v.  Gerry,  7  111.  Ap.  238 ;  Sterne  v.  Vincennes  Bank, 
79  Ind.  549  ;  Sherraden  v.  Parker,  24  Iowa,  28  ;  Green  v.  Blunt,  59  Iowa,  79 ;  Alex- 
ander v.  Bank,  7  J.  J.  Marsh.  580;  Comstock  v.  Creon,  1  Rob.  La.  528;  Springer  v. 
Toothaker,  43  Me.  381  ;  Chipman  v.  Todd,  60  Me.  282,  284 ;  Moss  v.  Pettingill, 
3  Minn.  217;  Davis  v.  Mikell,  Freem.  Ch.  (Miss.)  548;  Brown  v.  Kidd,  34  Miss.  291  ; 
Ferguson  v.  Turner,  7  Mo.  497  ;  Mo.  Bank  v.  Watson,  24  Mo.  333  ;  Priest  v.  Watson, 
75  Mo.  110;  Bronson  v.  McCormick  Co.  (Neb.  1897),  72  N.  W.  R.  312;  Cooper  v. 
Wilcox,  2  Dev.  &  B.  Eq.  90;  Nelson  v.  Williams,  2  Dev.  &  B.  Eq.  118;  Smithy. 
McLeod,  3  Ired.  Eq.  390;  Dixon  v.  Ewing,  3  Ohio,  280;  Day  v.  Ramey,  40  Oh.  St. 
446;  Commw.  v.  Miller,  8  S.  &  R.  452  ;  Commw.  v.  Haas,  16  S.  &  R.  252;  Bank  v. 
Fordyce,  9  Pa.  275  ;  Holt  v.  Bodey,  18  Pa.  207  ;  Templeton  v.  Shapley,  107  Pa.  370; 
Finley  v.  King,  1  Head,  123  ;  Watson  v.  Read,  1  Tenn.  Ch.  196  ;  Parker  v.  Nations,  33 
Tex.  210;  Jenkins  v.  McNeese,  34  Tex.  189;  Baird  v.  Rice,  1  Call,  18;  Shannon  v. 
McMullin,  25  Grat.  211  (semble);  Johnson  v.  Young,  20  W.  Va.  614;  McKenzie  t\ 
Wiley,  27  W.  Va.  658  ;  Hyde  v.  Rogers,  59  Wis.  154  ;  Spencer  v.  Thompson,  6  Ir.  C. 
L.  R,  537. 

Attachment  Lien.  Maquoketa  v.  Willey,  35  Iowa,  323;  Mo.  Bank  v.  Matson.  24 
Mor333;  Spring  v.  George,  50  Hun,  227  ;  Twiggs  v.  Augusta  Bank,  26  S.  Ca.  612 ; 
Ashby  v.  Smith,  9  Leigh,  164. 

But  see  contra.  Glazier  v.  Douglass,  32  Conn.  393,  400  (semble)  ;  Concord  Bank  v. 
Rogers,   16  N.  H.  9  ;  Baker  v.  Davis,  22  N.  H.  37;  Barney  v.  Clark,  46  N.  H.  514;  f 

Morrison  v.   Citizens'  Bank,  65  N.  H.  253;   Montpelier  Bank  v.  Dixon,  4  Vt.  587;  ^ 

Baker  v.  Marshall,  16  Vt.  522. 

Suspension  of  Seizure  of  Goods  after  Execution  issued.     In  most  jurisdictions  a  judg- 


^>w* 


iO 


202  FULLER   V.    TOMLIN^fN.  [CHAP.  H 

^*£-  A^lZZljULLER   a*d  Another  v.  TOMLINSON   BROTHERS. 

-^L«^tiL  iNiiiE&uPREMECt)  ukt7k)wa7  J  u^e  TERM ,   1882. 

[Reported  in  58  Iowa  Reports,  111.] 

This  action  was  brought  against  the  defendants  as  guarantors  of  certain 
promissory  notes.  The  defendants  for  answer  averred  that  the  notes 
were  given  for  the  purchase  price  of  property  belonging  to  the  plaintiffs  ; 
that  they  contained  conditions  and  stipulations,  in  substance,  that  the 
propert}'  sold,  and  for  which  the  notes  were  given,  should  remain  the 
property  of  the  plaintiffs  until  the  notes  were  fully  paid  ;  that  the  plain- 
tiffs should  have  the  power  at  anjT  time  even  before  maturity  of  the 
notes  to  sell  the  property  at  private  sale,  giving  the  makers  credit  for 
the  net  proceeds  realized ;  that  at  the  time  the  notes  were  turned  over 
by  the  defendants  to  the  plaintiffs,  and  guaranteed  by  the  defendants, 
the  makers  of  the  notes  still  held  possession  of  the  property  for  which 
the  notes  were  given  ;  that  it  was  of  great  value  and  formed  good 
security  for  the  notes  ;  that  the  plaintiffs  neglected  and  refused  to  take 
possession  of  the  property,  and  sell  the  same,  and  apply  the  proceeds 
in  payment  of  the  notes  ;  that  the  plaintiffs  had  the  exclusive  right  to 
control  the  security ;  that  the  makers  of  the  notes  have  become  insol- 
vent, and  the  notes  have  become  uncollectible  through  the  negligence 
of  the  plaintiffs  in  not  availing  themselves  of  the  securities. 

To  the  answer  the  plaintiffs  demurred,  and  the  Court  sustained  the 
demurrer.     The  defendants  appeal.1 

D.   W.  Poindexter,  for  appellants. 

Cleland  &  Eaton,  for  appellees. 

Adams,  J.  The  defendants  claim  that  the  plaintiffs  had  what  was 
equivalent  to  a  lien  upon  the  machines  for  which  the  notes  were  given. 
This  the  plaintiffs  deny.  But  for  the  purposes  of  the  opinion  this  ma}' 
be  conceded.     The  first  question  presented  then  is,  whether  the  failure 

ment  creditor  does  not  acquire  a  lien  upon  the  chattels  of  his  debtor  until  thev  are 
seized  under  the  writ  of  execution.  Accordingly  a  judgment  creditor  does  not  lose  any 
right  against  the  surety,  if  the  officer,  by  his  direction,  tails  to  seize  the  goods  of  the 
principal  debtor,  or  returns  the  execution  without  any  levy.  Such  voluntary  maul- 
gence,  without  a  binding  agreement  to  Hold  back  or  abandon  the  execution,  is  no  more 
prejudicial  to  the  creditor  than  voluntary  forbearance  to  begin  an  action  against  the 
debtor.  Summerhill  v.  Tapp,  52  Ala.  227  ;  Crawford  v.  Gaulden,  33  Ga.  173  ;  Jerauld 
v.  Tippet,  62  Ind.  122;  Union  Bank  v.  Govan,  18  Miss.  333  ;  Smith  v.  Erwin,  77  N.  Yl 
466  ;  Thornton  v.  Thornton,  63  N.  Ca.  211  ;  Farmers'  Bank  v.  Raynolds,  13  Ohio,  85  ; 
Morrison  v.  Hartman,  14  Pa.  55 ;  McNeilly  v.  Cooksey,  2  Lea,  39;  Humphrey  v.  Hitt, 
6  Grat.  509 ;  Knight  v.  Charter,  22  W.  Va.  422. 

In  a  few  jurisdictions  the  execution  is  a  lien  as  soon  as  the  writ  is  delivered  to  the 

officer",  and  111  these  States  tne  return  of  the  execution  without  levy,  being  a  discharge 

jfr'the  lien,  has  the  same  effect  upon  the  creditor's  right  against  the  surety  as  the  sur- 

ender  of   any  other  security.      Sterne  v.   Vincennes  Bank,  79  Ind.   549 ;    Sterne  v. 

McKinney,  79  Ind.  578  ;   Dills  v.  Cecil,  4  Bush,  579 ;   Ferguson  v.  Turner,  7  Mo. 

497.  — Ed. 

1  The  statement  of  the  case  has  been  slightly  abridged.  —  Ed. 


^Vrenc 


SECT.  IV.]  FULLER   V.   TOMLINSON.  203 

of  the  plaintiffs  to  take  possession  of  the  machines,  and  subject  them  to 
the  payment  of  their  debt,  until  it  was  too  late  to  do  so,  constitutes  afty 
defence.  In  support  of  the  defendants'  proposition,  that  it  does,  our 
attention  is  called  to  the  u  familiar  doctrine,  that  the  surrender  of  any 
security  by  a  creditor,  held  at  the  time  a  third  person  becomes  surety  for, 
or  guarantor  of,  the  debt  will  effect  a  pro  tanto  discharge  of  the  surety 
or  guarantor."  2  Daniel  on  Negotiable  Instruments,  sec.  1789  ;  1  Par- 
sons on  Bills  and  Notes,  242.  Where  such  a  surety  or  guarantor  pays 
a  debt,  he  is  entitled  to  be  subrogated  to  all  the  securities  which  the 
creditor  had  in  his  hands.  A  surrender  of  securities,  therefore,  is  a 
direct  impairment  of  the  surety's  or  guarantor's  rights.  But  the  case 
before  us  is  not  one  of  the  surrender  of  securities.  The  plaintiffs  are 
charged  simply  with  negligence,  and  in  our  opinion  the  dcfendants*~posi- 
tion  is  not  tenable.  It  may  be  conceded  that  if  the  plaintiffs  had  taken 
the  machines  into  their  possession,  and  while  charged  with  responsi- 
bility for  their  proper  custody  and  disposition,  they  had  negligently 
allowed  the  machines  to  become  impaired  or  destroyed,  such  negligence 
would  have  had  the  effect  to  discharge  the  defendants  pro  tanto. 
Day  v.  Elmore.1  But  such  case  is  not  before  us.  We  have  a  case 
where  the  holder  of  paper,  who  has  a  lien  upon  personal  property  for 
security,  but  is  charged  with  no  responsibility  for  its  custody  or  care, 
fails  to  enforce  his  lien  and  the  security  is  lost.  We  have  seen  no  case 
which  goes  to  the  extent  of  holding  that  such  failure  can  be  set  up  in 
defence  by  a  surety  or  guarantor,  nor  do  we  think  that  such  is  the  law. 
If  the  surety  or  guarantor  apprehends  that  the  security  will  be  lost,  it 
is  his  privilege  to  pay  the  debt  and  entorce  the  lien  himself! 

In  our  opinion  the  demurrer  to  the  defendant's  answer  was  properly 
sustained.  Affirmed:2 

1  4  Wis.  214.  ^     ' 

2  The  surety  is  not,  in  general,  relieved  by  the  creditor's  loss  of  collateral  security  /feints' — 1 
by  his  mere  inactivity;  e.  g(i,\by  failure  to  loreclose  a  mortgage  or  to  take  possession-  (/  —       ",-f 
Grisward  v.  Hinson,  50  Ark.  229;  Freaner  v.  Yingling,  37  Md.  491  ;  Clopton  v  Spratb  (l 
52  Miss.  251  ;  Sheldon  v.  Williams,  11   Neb.  272;  Schroeppell  v.  Shaw,  3  N.  Y.  446; 

Howe  Co.  v.  Farrington,  82  N.  Y.  121  ;  Day  v.  Elmore,  4  Wis.  190. 

(  it  By  suffering  a  judgment  lien  to  expire.  U.  S.  v.  Simpson,  3  Pen.  &  W.  439  ;  Mun- 
dorffV  Singer" 5  Watts,  172  ;   Kindt's  App.,  102  Pa.  441. 

( 7  j  By  making  no  effort  to  protect  a  second  mortgage  from  being  cut  off  by  a  fore- 
closure ot  the  first  mortgage.  Vance  v.  English.  78  Ind.  80  ;  Wasson  ;;.  Hodshire,  108 
Ind.  26.   " 

(*/)  By  a  failure  to  sell  a  depreciating  security.  Brick  ?>.  Freehold  Co.,  37  N.  J.  307; 
Cherry  v.  Miller,  7  Lea,  305.  But  see  Harrison  Works  v.  Templeton,  82  Tex  443. 
—  Ed. 


*&t? 


204  CAPEL  V.    BUTLER.  [CHAP.  U 

CAPEL  v.   BUTLER. 
In  Chancery,  before  Sir  John  Leach,  M.  R. ,  December  17,  1825. 

[Reported  in  2  Simons  §•  Stuart,  457.] 

One  White  and  the  plaintiff,  by  their  bond  in  writing  became  jointly 
and  severally  bound  to  Butler  in  the  penalty  of  £3,000  for  securing 
the  due  payment  of  an  annuity.  White  covenanted  with  Butler  to  pay 
him  the  annuity  during  the  lives  of  himself  and  three  other  persons ; 
and  he  demised  to  Pruen  certain  hereditaments  for  the  remainder  of 
a  term  of  1,000  years;  and  he  also  assigned  to  Pruen  two  trows  or 
vessels  called  "The  William  of  Gloucester"  and  "The  Endeavour," 
and  likewise  a  policy  of  assurance  upon  the  life  of  White,  upon  trust, 
upon  default  in  payment  of  the  annuity,  to  sell  all  or  any  of  the  trust 
premises,  to  pay  out  of  the  proceeds  the  arrears  of  the  annuity,  to 
invest  the  surplus  in  his  name,  and,  out  of  the  j'earby  proceeds  thereof, 
to  keep  down  the  annuity,  and  subject  thereto  to  stand  possessed  of  the 
capital  in  trust  for  White.  The  annuity  was  to  cease  if  at  any  time 
White  should  pay  Butler  all  arrears  thereof  and  also  £1,500  as  the 
consideration  for  its  repurchase. 

On  the  9th  of  April,  1821,  a  commission  of  bankrupt  issued  against 
White,  under  which  he  was  found  a  bankrupt;  and  the  plaintiff  and 
one  Payne  were  chosen  his  assignees. 

The  annuit}'  being  in  arrear,  Butler  brought  an  action  against  the 
plaintiff  on  the  bond. 

The  bill,  after  stating  these  facts,  alleged  that  the  plaintiff  had  dis- 
covered, since  White's  bankruptcy,  that  Butler  and  Pruen  had  neg- 
lected to  perfect  the  assignment  of  the  trows  or  vessels  according  to 
the  forms  and  in  the  mode  required  by  the  several  acts  of  Parlia- 
ment for  the  registry  of  ships  or  vessels,  and  the  transfer  of  prop- 
erty therein ;  and  that  White  had  disposed  of  the  trows  or  vessels 
and  applied  the  proceeds  to  his  own  use,  whereby  the  security  for 
the  regular  payment  of  the  annuity  had  been  very  much  diminished; 
that  the  rents  of  the  leasehold  premises  were  not  sufficient  to  an- 
swer the  growing  payments  of  the  annuity,  whereas  the  earnings  of 
the  vessels,  together  with  the  rents,  were,  when  the  plaintiff  entered 
into  the  bond,  and  would  still  be,  if  the  vessels  had  not  been  sold, 
sufficient  for  that  purpose. 

The  bill  pra}*ed  for  an  injunction  to  restrain  the  action;  that  the 
bond  might  be  declared  void  in  respect  of  the  defendants  not  having 
rendered  the  assignment  of  the  trows  an  effective  assignment ;  and 
that  the  plaintiff  might  be  decreed  to  be  entitled  to  repurchase  the 
annuity  on  payment  of  the  £1,500,  and  £35  (being  one  quarter  of  a 
year  of  the  said  annuity)  less  the  value  of  the  trows  or  vessels.1 

1  The  statement  of  the  case  is  abridged  and  the  argument  of  the  plaintiff  is 
omitted.  —  Ed. 


SECT.  IV.]  CAPEL   V.   BUTLER.  205 

Butler  and  Pruen  admitted,  in  their  answer,  that  the}-  did  not  cause 
any  indorsement  or  memorandum  of  the  assignment  of  the  trows  or 
vessels  to  be  entered  on  the  register  of  the  trows  or  vessels,  by  reason 
of  the  counsel,  who  prepared  the  securities  for  the  annuity,  having 
advised  them  that  no  such  memorandum  or  indorsement  was  necessary, 
and  that  the  trows  were  not  within  the  Registry  Act,  because,  amongst 
other  reasons,  they  were  not  employed,  as  he  considered,  for  any 
purpose  beyond  inland  navigation  on  a  river,  the  trows  only  trading 
between  Bristol  and  Gloucester,  on  the  rivers  Severn  and  Avon  ;  and 
they  submitted  that  the  plaintiff:  had  notice  of  the  nature  of  the  assign- 
ment or  conveyance  which  White  had  executed  to  them  of  the  trows 
or  vessels,  and  that  the  same  were  only  secured  or  assigned  to  them 
by  the  indenture  of  July,  1820,  and  not  by  a  bargain  and  sale  and 
indorsement  on  the  registry  of  the  trows  or  vessels,  inasmuch  as  the 
bond  executed  by  the  plaintiff  referred  to,  and  in  part  recited,  the 
indenture  of  assignment  of  July,   1820. 

Mr.  .Fonblanque  and  Mr.  Horn  Illy,  for  the  plaintiffs. 

Mr.  /Sitffden  and  Mr.  Lynch,  for  the  defendants,  Butler  and  Pruen. 
Securities  have  failed  before,  but  such  an  equit}'  as  the  present  one 
has  never  been  claimed  till  now.  There  is  no  such  rule  as  that  the 
grantee  of  an  annuity  is  bound  to  see  that  all  the  securities  for  it  are  valid. 
The  circumstance  of  there  being  a  suretj-  relieves  the  grantee  from 
the  necessity  of  ascertaining  whether  the  securities  are  good  or  not. 
The  contract  is  between  the  grantee  and  the  parties  who  are  to  give 
him  the  securities.  The  latter  are  all  grantors  ;  the  former,  the  grantee. 
Suppose  the  title  to  the  leaseholds  were  bad,  and  the  equity  contended 
for  by  the  plaintiff  were  to  prevail,  the  very  instant  that  the  necessity 
for  a  surety  arose,  he  would  say  he  was  discharged.  If  he  had  intended 
to  rely  on  the  securities,  he  was  bound  to  see  that  they  were  valid. 
A  surety  is  entitled  to  stand  in  the  place  of  the  creditor ;  but  here  he 
asks  to  be  placed  in  a  better  situation.  How  can  it  be  said  that  the 
defendants  did  not  use  due  diligence,  when  it  appears  that  they  took 
the  opinion  of  counsel,  who  advised  them  that  the  assignment  was 
valid?  It  has  often  been  decided  that,  where  a  solicitor  acts  under 
the  advice  of  counsel,  he  is  discharged  from  all  responsibility.  This 
has  often  been  held  when  actions  have  been  brought  against  solicitors 
for  the  defects  in  the  memorials  of  annuities.  Under  these  circum- 
stances it  is  impossible  to  say  the  loss  is  to  fall  upon  the  defendants. 

The  Vice-Chancellor  was  of  opinion  that  the  plaintiff,  as  surety,  was 
entitled  to  take  advantage  of  the  proviso  for  redemption  ;  and  that, 
the  value  of  the  two  vessels  being  lost  to  him,  by  the  neglect  of  the 
defendant  Butler,  he  was  entitled  to  deduct  that  value  from  the  stipu 
lated  price  of  redemption.1 

i  Watson  v.  Alcock,  1  Sm.  &  G.  319,  4  D.,  M.  &  G.  242  ;  Strange  v.  Fooks,  4  Giff. 
408  (failure  to  notify  trustee  of  the  principal's  assignment  of  the  trust) ;  Wulff 
v.  Jay,  L.  R.  7  Q.  B.  756  ;  Sullivan  v.  State,  59  Ark.  47  ;  Toomer  v.  Dickerson, 
37  Ga.  428;  Nance  v.  Winship  Co.  (Georgia,  1895),  21  S.  E.  R.  901 ;  State  Bank  v. 
Bartle,   114  Mo.  276;  Burr  v.  Boyer,  2  Neb.  265;  Schroeppell  v.  Shaw,  3  N.  Y.  446, 


206 


COATES   V.   COATES. 


[CHAP,  il 


COATES   v.   COATES. 
In  Chancery,  before  Sir  John  Romilly,  M.  R.,  January  14,  1864. 

[Reported  in  33  Beavan,  249.] 

In  1836,  the  testator,  Benjamin  Coates,  lent  John  Green  £1,000 
on  the  joint  promissory  note  of  John  Green  and  William  Green,  pay- 
able six  months  after  date,  but  William  Green  joined  in  the  note  as 
surety  only.  The  testator  afterwards,  in  1838,  lent  John  Green  a 
further  sum  of  £1,000  on  his  several  promissory  notes. 

In  1839,  John  Green  deposited  with  the  testator  a  policy  of  assur- 
ance for  £2,000  upon  his  own  life  as  a  further  security  for  both  debts. 

The  testator  died  in  1843.  In  1845  John  Green  became  bankrupt, 
and  in  184G  the  testator's  two  executrixes  surrendered  the  polkry  to  the 
Rock  Office  in  consideration  of  £97  10*.  William  Green  stated  "that 
he  was  no  party  to  the  surrender  of  such  policy,  and  did  not  consent 
thereto,  and  was  not  consulted  upon  the  subject  previous  to  such  sur- 
render." The  executrixes  proved  against  the  estate  of  John  Green  in 
the  bankruptcy  for  £1,500,  the  balance  due  on  the  two  notes,  and  they 
afterwards  received  a  dividend  of  £97  upon  their  proof.1 

The  Master  op  the  Rolls.  I  think  that  the  surrender  of  the  policy 
cannot  be  treated  as  a  discharge  of  the  surety.  John  Green  was  a 
bankrupt,  and  it  was  not  probable  that  he  would  keep  up  the  policy, 
from  which  he  could  derive  no  benefit,  and  the  executrixes  were  not 
bound  to  do  so.  To  keep  it  up  would  have  been  a  mere  speculation 
on  their  part,  which  might  or  might  not  have  turned  out  beneficial, 
and  if  it  had  turned  out  unfavorable,  might  have  been  complained  of 
by  the  suret}\  They  realized  what  they  could  by  surrendering  it  to 
the  office,  and  whether  the  policy  was  surrendered  before  or  after  the 
proof  in  bankruptcy,  I  think  it  did  not  release  the  surety.  It  was  the 
duty  of  the  creditor  to  sell  and  to  realize  the  security  ;  by  so  doing,  he 
alone  could  make  the  estate  of  the  principal  debtor  available  for  the 
payment  of  a  dividend  on  the  debt  for  which  the  surety  was  liable, 
and  consequently  the  benefit  of  which  dividend  is  obtained  by  the 
surety  in  further  discharge  of  his  debt. 

457  (semble) ;  Teaff  v.  Ross,  1  Ohio  St.  469  (compare  Coombs  v.  Parke,  17  Ohio,  289); 
Allentown  Bank  v.  Troxler,  174  Pa.  497  (semble),  Accord. 

Philbrooks  v.  McEwen,  29  Ind.  347  ;  New  York  Bank  v.  Jones,  9  Daly,  248,  250- 
251  (semble) ;  Hampton  v.  Levy,  1  McC.  Ch.  107;  Lang  v.  Brevard,  3  Strob.  Eq.  59, 
Contra. 

See  Jephsou  v.  Maunsell,  10  Ir.  Eq.  R.  38,  132;  Pickens  v.  Finney,  20  Miss.  468. 

If  a  creditor  holds  collateral  security  in  the  form  of  a  chose  in  action,  anH  "<\"-h'- 
gently  fails  to  collect  it,  the  surety  is  discharged  to  the  extent  of  the  loss  due  to  the 
creditor's  negligence,     i'enuell  v.  McGowan,  58  Miss.  261  ;  City  Bank  v.  Young,  43 
N.  IT.  4U7,  482  (failure  to  give  notice  of  dishonor  to  an  indorser)  ;  Kemmerer  v.  Wil 
Bon,  31  Pa.  110;  Shippen  v.  Clapp,  36  Pa.  89.  —  Ed. 

1  The  arguments  of  counsel  are  omitted  and  also  so  much  of  the  case  as  does  not 
relate  to  suretyship.  —  Ed. 


6ECT.  IV.]  POLAK    V.   EVERETT.  207 

Upon  the  authority  of  Pearl  v.  Deacon,  which  was  affirmed,  1  must 
also  hold  that  £97  10s.,  which  was  the  produce  of  a  collateral  security 
for  both  debts,  ought  to  be  set  off  ratably  against  the  amount  due 
on  the  two  notes,  on  one  of  which  William  Green  was  liable  as 
surety. 

The  result  will  be  that  one-half  of  the  £1,500,  or  £750,  will  be  the 
amount  due  from  William  Green,  and  from  this  must  be  deducted  one- 
half  of  the  £97  received  for  dividends,  and  one-half  of  the  £97  10s. 
received  in  respect  of  the  produce  of  the  policy.  This  will  leave  a  sum 
of  £652  15s.,  as  the  balance  of  the  debt  due  from  William  Green,  to 
be  deducted  from  his  legacy  of  £1,000,  and  will  leave  £347  5s.  due  to 
him.1 


POLAK   and   Another   v.   EVERETT. 
In  the  Court  of  Appeal,  February  10,  May  2,  1876. 

[Reported  in  Law  Reports,  1   Queen's  Bench  Division,  669.] 

This  was  an  action  on  a  guarantee  entered  into  under  the  following 
circumstances :  — 

The  plaintiffs  are  wine  merchants  carrying  on  business  in  the  city  of 
London,  and  the  defendant  is  a  discount  broker  in  business  in  the  same 
city. 

In  1873,  one  Etienne  Nazarkiewich  had  arranged  to  dispose  of  his 
business  as  a  wine  merchant  to  a  limited  liability  company,  to  be  called 
E.  Nazarkiewich  &  Co.  (Limited). 

At  that  time  he  was  indebted  to  the  plaintiffs  in  a  sum  of  £8,400  ;  and 
on  the  20th  of  December,  1873,  it  was  agreed  between  them  that  that 
amount  should  be  liquidated  in  the  following  manner:  £2,400  was  to  be 
paid  by  Nazarkiewich  to  the  plaintiffs  on  or  before  the  15th  of  February, 
1874  ;  and  £6,000  was  to  be  paid  in  fully  paid-up  shares  or  share  war- 
rants in  "  E.  Nazarkiewich  &  Co."  within  three  days  after  the  first  allot- 
ment of  shares  in  that  company,  which  Nazarkiewich  was  to  redeem  at 
par  within  twelve  calendar  months  from  the  1st  of  January,  1874;  and 
the  redemption  was  to  be  guaranteed  by  the  defendant. 

It  was  also  agreed  that  the  book-debts  of  Nazarkiewich  should  be 
collected  by  one  Vispe  on  behalf  of  Messrs.  Tampier,  of  Bordeaux,  and 
the  plaintiffs,  to  be  equally  divided  between  them  as  collected  ;  the 
amount  paid  to  the  plaintiffs  being  applied  towards  the  redemption  of 
the  £6,000  of  shares. 

On  the  same  day  the  defendant  signed  a  written  guarantee  to  the 
plaintiffs  for  the  fulfilment  by  Nazarkiewich  of  the  above  agreement 
"  so  far  only  as  concerns  the  full  redemption  of  the  shares  and  share 

*  See  Rainbow  v.  Juggiu,  5  Q.  B.  Div.  422,  424,  per  Bramwell,  L.  J.  —  Ed. 


208  POLAK   V.    EVERETT.  [CHAP.  II. 

warrants  therein  mentioned  of  the  value  of  £6,000  on  or  before  the  1st 
day  of  January,  1875." 

The  first  allotment  of  shares  in  "  E.  Nazarkiewich  &  Co."  took 
place  on  the  18th  of  February,  1874,  but  the  £6,000  worth  of  shares 
was  not  transferred  by  Nazarkiewich  to  the  plaintiffs  within  three  days 
after  that  event. 

In  May  and  June,  1874,  negotiations  were  carried  on  between  the 
plaintiffs,  Nazarkiewich,  and  a  Mr.  Asser,  one  of  the  directors  of  E. 
Nazarkiewich  &  Co.,  for  the  repurchase  b}r  Nazarkiewich  of  the  plaintiffs' 
share  of  his  book-debts,  and  the  transfer  of  them  by  him  over  to  the 
company,  and  on  the  1st  of  July,  1874,  the  plaintiffs  gave  a  receipt  to 
Nazarkiewich  for  fifteen  fully  paid-up  shares  in  the  company  of  £250 
each,  four  acceptances  for  £250  each  of  the  company  dated  the  26th 
of  June,  1874,  at  thirty  days,  four  months,  six  months,  and  nine 
months  respectively,  and  £190  in  cash,  "  in  part  discharge  of  our  claim 
of  £6,000,  and  provided  the  above  bills  are  paid  at  maturity,  we  agree 
to  release  our  charge  or  interest  in  the  book-debts  of  Mr.  Nazarkiewich." 

The  defendant  was  the  chairman  of  the  company,  but  he  did  not 
agree  to  the  repurchase  and  transfer  to  the  company  of  Nazarkiewich's 
book-debts. 

The  declaration  in  the  first  count  set  out  the  agreement  of  the  20th 
of  December,  1873,  between  the  plaintiffs  and  Nazarkiewich,  and  the 
guarantee  of  the  defendant  to  the  plaintiffs  of  the  same  date,  and 
averred  that  Nazarkiewich  had  caused  shares  in  the  company  to  the 
nominal  value  of  £3,750  to  be  issued  to  the  plaintiffs,  and  that  they 
had  not  been  redeemed. 

The  defendant  pleaded,  seventhly,  upon  equitable  grounds,  that 
the  defendant  was  discharged  b}'  the  agreement  between  the  plaintiffs 
and  Nazarkiewich  for  the  transfer  by  the  plaintiffs  of  their  interest  in 
his  book-debts  to  the  company ;  and,  eighthly,  upon  equitable  grounds, 
that  the  defendant  was  discharged  by  the  material  variation  without 
his  knowledge  of  the  terms  of  the  agreement  set  out  in  the  declaration. 

Issue,  and  demurrer  and  joinder  to  the  seventh  and  eighth  pleas. 

At  the  trial  before  Denman,  J.,  the  facts  above  set  out  were  proved, 
and  a  verdict  for  the  plaintiffs  was  taken  bj-  consent  for  the  damages 
in  the  declaration,  with  leave  to  the  defendant  to  move  to  enter  it  for 
him,  or  to  reduce  the  damages  to  such  sum  as  the  Court  might 
direct ;  the  Court  to  draw  all  necessary  inferences  of  fact.1 

Mclnti/re,  Q.  C,  and  J.  C.  Mathew,  in  support  of  the  motion,  were 
stopped. 

Philbrick,  Q.  C,  and  R.  E.  Webster  showed  cause. 

Blackburn,  J.  We  think  that  the  defendant  is  entitled  to  judg- 
ment, on  the  ground  that  what  has  taken  place  has  discharged  him 
as  a  surety. 

1  The  statement  of  the  case  is  taken  from  24  W.  R.  365.  The  argument  for 
the  plaintiffs  and  the  concurring  opinions  of  Mellor  and  Quain,  JJ.,  are  omitted 
—  Ed. 


SECT.  IV.]  l'OLAK    V.    EVERETT.  209 

Now,  first,  upon  the  leave  reserved,  with  power  for  the  Court 
to  draw  inferences  of  fact,  we  must  take  it  to  be  the  fact  that  though 
the  defendant  was  well  aware  of  this  release  being  executed,  he  was 
not  an  assenting  party  to  it.  Then  it  is  argued  that  knowledge  on  the 
part  of  the  surety  that  there  is  going  to  be  a  release  of  a  part  of  the 
security  is  enough  without  assent.     I  cannot  see  any  authority  for  that. 

In  Pickard  v.  Sears  1  it  was  held  that  he  who  stands  by  and  sees 
another  alter  his  position  on  the  faith  of  a  fact  which  he  can  contradict, 
cannot  afterwards  take  advantage  of  that  alteration.  But  the  rule  was 
corrected  in  Freeman  v.  Cooke,2  where  it  was  said  that  if  a  man  stands 
by  and  allows  another  to  act  without  objecting,  when,  from  the  usage 
of  trade  or  otherwise,  there  is  a  duty  to  speak,  his  silence  would  pre- 
clude him  as  much  as  if  he  proposed  the  act  himself.  But  to  say  that 
a  person,  who,  being  a  surety,  becomes  aware  that  the  creditor  is  going 
to  give  time  or  do  something  else  which,  if  done  without  his  assent, 
ma}'  discharge  him,  is  bound  to  warn  the  creditor  against  doing  it,  is 
a  thing  for  which  no  authority  whatever  has  been  cited.  That  brings 
us  to  the  question  whether  what  was  done  in  this  case  did,  upon  the 
established  principles  of  equity,  discharge  the  surety. 

It  has  been  established  for  a  very  long  time,  beginning  with  Rees  v. 
Berrington  3  to  the  present  day,  without  a  single  case  going  to  the 
contrary,  that  on  the  principles  of  equity  a  surety  is  discharged  when 
the  creditor,  without  his  assent,  gives  time  to  the  principal  debtor, 
because  by  so  doing  he  deprives  the  surety  of  part  of  the  right  he 
would  have  had  from  the  mere  fact  of  entering  into  the  suretyship, 
namely,  to  use  the  name  of  the  creditor  to  sue  the  principal  debtor ; 
and  if  this  right  be  suspended  for  a  day  or  an  hour,  not  injuring  the 
surety  to  the  value  of  one  farthing,  and  even  positively  benefiting  him, 
nevertheless,  by  the  principles  of  equity,  it  is  established  that  this 
discharges  the  surety  altogether.  The  reason  given  for  this,  as  stated 
in  Samuell  v.  Howarth,  by  Lord  Eldon,  is  because  the  creditor,  by  so 
giving  time  to  the  principal,  has  put  it  out  of  the  power  of  the  surety 
to  consider  whether  he  will  have  recourse  to  his  remedy  against  the 
principal  or  not,  and  because  he  in  fact  cannot  have  the  same  remedy 
against  the  principal  as  he  would  have  had  under  the  original  contract. 
And  he  adds  :  "  The  creditor  has  no  right,  it  is  against  the  faith  of  his 
contract,  to  give  time  to  the  principal,  even  though  manifestly  for  the 
benefit  of  the  surety,  without  the  consent  of  the  surety."  The  principle 
being,  as  I  understand  it,  that  as  it  is  very  undesirable  that  there 
should  be  any  dispute  or  controversy  about  whether  it  is  for  his  benefit 
or  not,  there  shall  be  the  broad  principle,  that  if  the  creditor  does 
intentionally  violate  any  rights  the  surety  had  when  he  entered  into  the 
suretyship,  even  though  the  damage  be  nominal  only,  he  shall  forfeit 
the  whole  remedy.  Whether  that  was  a  good  or  a  just  principle 
originally,  is  a  matter  which  it  is  far  too  late  to  think  about  now.     I 

»  6  Ad.  &  E.  469,  474.  2  2  Ex.  654.  3  2  Ves.  540. 

14 


210  POLAK  V.    EVERETT.  JCHAP.  U 

must  own  I  have  had  considerable  doubts  about  the  justice  of  that  prin- 
ciple, but  from  the  time  of  Rees  v.  Berrington  1  it  has  been  undisputed 
law,  and  nothing  but  the  legislature  can  interfere  to  alter  it. 

Now,  in  the  present  case  the  interference  with  the  rights  of  the 
surety  is  not  by  giving  time  to  the  debtor,  but  it  is  equally  as  great  an 
interference.  The  surety  at  the  time  he  entered  into  the  suretyship 
had  a  right  to  have  these  book-debts  appropriated  to  reduce  the  prin- 
cipal debt,  and  that  right  he  has  been  deprived  of  by  the  act  of  the 
creditor  in  releasing  the  book-debts  to  the  person  collecting  them. 
That  equitable  right  has  been  taken  away  by  his  wilful  act,  and  in 
Mayhew  v.  Criekett,2  upon  this  very  question,  Lord  Eldon  says: 
"  When  one  surety  has  been  discharged  the  co-surety  is  entitled  to  say 
to  the  creditor  asserting  a  claim  against  him,  You  have  discharged  the 
surety  from  whom  I  ought  to  have  compelled  contribution,  either  in  my 
own  name  in  equity,  or  using  your  name  at  law."  Lord  Eldon  is 
speaking  here  of  withdrawing  execution  on  a  judgment;  the  precise 
amount  does  not  appear,  and  it  was  possibly  very  small ;  but  it  was 
held  that  the  creditor  having  done  this  did  discharge  the  surety,  on 
a  view  which,  according  to  Lord  Eldon,  is  obvious  in  law  and  equity. 

Now,  admitting  this  to  be  so,  it  has  been  argued  by  counsel  for  the 
plaintiffs  that  there  is  a  distinction  to  be  taken  to  this  extent,  as  I 
understand  their  argument.  The  debt  here  secured  —  for  it  is  really 
the  same  thing  as  if  the  debt  were  secured  —  is  £6,000.  Half  of  the 
book-debts  only  were  pledged  as  an  equitable  security  for  this  amount, 
and  the)*  were  a  secnrit)'  for  every  portion  of  the  £6,000,  but  if  they 
paid  20^.  in  the  pound  the}'  would  only  produce  £4,000,  so  that  there 
would  be  some  £2,000  which  would  still  remain  for  which  the  surety 
would  have  been  liable  ;  and  the  argument  is  that  the  interference  with 
the  rights  of  the  suret}-  in  respect  to  a  matter  which,  though  a  security 
for  the  whole  debt,  is  of  less  value  than  the  whole  debt,  does  not  come 
within  the  principle  and  the  authorities.  As  far  as  the  authorities  go, 
none  were  cited  in  which  that  distinction  was  taken.  There  does  not 
seem  to  be  the  least  authority  for  it  on  principle,  once  concede  the 
rule  that  where  the  creditor  wilfully  interferes  with  the  rights  of  the 
surety  and  alters  the  equitable  rights  which  he  had  acquired,  alters 
them,  even  though  it  maybe  for  the  surety's  benefit,  —  without  the 
surety's  assent,  the  surety  is  discharged.  And  it  seems  to  me  the  prin- 
ciple must  equally  apply  if  he  alters  the  surety's  privilege  of  coming  upon 
a  security,  being  a  security  for  the  whole  undivided  debt,  although  of  less 
value,  as  if  he  had  altered  a  security  of  equal  value  with  the  whole  debt. 
There  are  two  or  three  distinctions  to  be  taken  notice  of.  For  instance, 
there  is  Wulrf  v.  Jay,8  —  and  that  case  was  perfectly  rightly  decided,  — 
where  a  person  is  a  creditor  with  a  pledge  or  surety  he  is  in  equity 
bound  to  account  not  only  for  the  money  he  has  actually  made  out  of 
the  pledge,  but  also  for  the  moneys  he  might,  ought,  and  should  have 
made  out  of  the  pledge,  and  he  must  allow  for  that  whether  he  made 

1  2  Ves.  540.  2  2  Sw.  185,  193.  3  Law  Rep.  7  Q.  B.  756. 


SECT.  IV.J  WILBUR    V.    WILLIAMS.  211 

them  or  not,  and  if  by  laches  he  has  diminished  the  value  of  the  pledge 
he  is  bound  to  allow  for  the  sum  he  ought  to  have  made.  But  his  laches 
does  not  discharge  the  surety,  for  it  does  not  come  within  the  principle 
which  applies  where  the  surety's  rights  have  been  changed  or  varied.  1  lis 
rights  remain  as  before.  The  case  seems  to  be  like  the  case  where  the 
creditor  does  not  choose  to  sue  the  debtor.  That  does  not  discharge  the 
surety,  for  the  surety's  right  remains  untouched.  So  in  the  case  where 
there  is  a  failure  to  make  the  most  he  could  of  the  pledge,  that  does  not 
in  the  slightest  degree  discharge  the  surety,  though  the  amount  which 
ought  to  have  been  recovered  by  making  a  proper  use  of  it  is  to  be 
allowed  in  reduction  of  the  debt.  In  the  present  case  it  is  not  a  ques- 
tion of  laches,  or  not  making  the  best  of  the  pledge  that  could  be  made, 
but  it  is  a  case  of  preventing  the  surety  having  any  recourse  against 
these  book-debts  at  all.  There  are  other  cases,  but  I  do  not  think  it  is 
necessary  to  go  into  them.  There  is  a  distinction  made  in  equitj'  be- 
tween those  rights  of  the  surety  which  he  acquired  at  the  time  when  he 
entered  into  the  suretyship,  such  as  securities  the  creditor  then  held, 
and  other  rights,  and  he  has  a  right  to  all  those  ;  and  Mayhew  v. 
Crickett l  establishes,  if  that  security  is  destroyed,  the  debt  is  gone. 
There  are  other  cases  which  turn  upon  this.  After  the  security  is  es- 
tablished, the  surety  has  a.right  to  have  the  benefit  of  new  securities  ; 
but  those  not  being  a  part  of  the  original  right,  it  is  a  different  question 
whether  the  dealing  with  those  would  discharge  the  suret}-.  The  present 
case  does  not  come  within  that  principle.  Taking  it  as  it  stands  here, 
it  seems  to  me  that  the  defence  is  made  out,  and  consequently  that  the 
defendant  should  have  judgment. 

On  appeal, 

The  Court  (Jessel,  M.  R.,  Kelly,  C.  B.,  Mellish,  L.  J.,  and  Den- 
man,  J.)  had  no  doubt  that  the  view  taken  by  the  Queen's  Bench 
Division  was  correct,  and  affirmed  the  judgment  for  the  same  reasons. 

Judgment  affirmed. 


JOB   WILBUR   v.   H.   W.   WILLIAMS. 

In  the  Supreme  Court,  Rhode  Island,  June  16,  1888. 

[Reported  in  16  Rhode  Island  Reports,  242.] 

Defendant's  petition  for  a  new  trial. 

Per  Curiam.  This  is  assumpsit  on  a  check  for  eight}'  dollars  drawn 
by  the  defendant  on  the  Traders'  National  Bank  in  favor  of  H.  J. 
Robinson,  and  by  him  indorsed  to  the  plaintiff.  The  action  was  begun 
in  the  District  Court,  taken  by  appeal  to  the  Court  of  Common  Pleas, 
where,  upon  trial  by  the  Court,  jury  trial  being  waived,  judgment  was 
entered  for  the  plaintiff.  The  case  comes  before  us  on  petition  for  new 
trial  on  the  ground  that  the  judgment  was  against  the  evidence. 

1  2  Sw.  193. 


212  WILBUR   V.    WILLIAMS.  [CHAP.  II. 

The  facts  as  they  appeared  in  evidence  were  as  follows,  viz. :  the 
understanding  between  the  plaintiff  and  Robinson,  when  the  plaintiff 
took  the  check,  was  that  he  should  keep  it  for  fifteen  days.  He  did  so 
keep  it,  and  then  presented  it  to  the  bank,  which  refused  to  pay  it.  He 
thereupon  gave  notice  to  the  defendant  and  demanded  payment  from 
him.  The  bank  then  was,  and  still  is,  solvent.  Robinson  had  ab- 
sconded the  day  before  the  check  was  presented,  leaving  many  ques- 
tionable transactions  behind.  Robinson,  when  he  ran  away,  had 
household  furniture  worth  about  twenty-five  hundred  dollars,  on  which 
the  plaintiff  held  an  unrecorded  mortgage  as  security  for  Robinson's 
general  indebtedness  to  him,  including  said  check,  which  he  had 
recorded  immediately  afterwards.  The  check  had  been  given  by  the 
defendant  to  Robinson  for  his  accommodation,  on  his  representation 
that  he  had  a  friend  who  would  put  it  in  his  drawer  as  cash,  and  that 
in  a  day  or  so  he,  Robinson,  would  redeem  it.  Robinson  told  the 
defendant,  a  day  or  two  afterwards,  that  he  had  taken  the  check  up 
and  destroyed  it. 

The  defendant  claims  that  he  was  discharged  b}T  the  delay  to  present 
the  check  for  payment.  He  does  not  claim  to  be  discharged  by  reason 
of  any  failure  of  the  bank,  but  on  the  ground  that,  if  the  check  had 
been  immediately  presented,  and  he  had  had  notice  of  the  non-payment, 
he  could  have  secured  himself  b}r  paying  the  plaintiff  and  attaching  the 
furniture,  the  mortgage  upon  which  was  then  unrecorded,  or  by  arrest- 
ing Robinson.  It  is,  however,  entirely  uncertain  whether,  if  the  check 
had  been  earlier  presented  and  payment  refused,  the  plaintiff  would  not 
have  had  the  mortgage  earlier  recorded,  or  whether,  in  such  event, 
Robinson  would  not  earlier  have  run  away,  and  so  avoided  arrest.  If 
the  defendant  was  entitled  to  claim  discharge  on  the  ground  of  delay, 
for  these  reasons  we  think  the  question  whether  he  was  injured  by  the 
dela}T  must  be  regarded  as  purely  a  question  of  fact,  and  we  are  not 
satisfied  that  the  judgment  was  against  the  evidence  on  that  point. 

It  also  appeared  in  evidence  that,  after  the  present  action  was  begun, 
the  plaintiff  transferred  his  mortgage  on  Robinson's  furniture,  for  two 
hundred  twenty-five  or  two  hundred  fifty  dollars,  to  Robinson's  father, 
the  plaintiff  never  having  previously  had  possession  of  the  mortgaged 
property.  The  defendant  claims  that,  as  accommodation  drawer  of  the 
check,  he  was  entitled  to  the  privileges  of  a  surety,  the  circumstances 
in  which  the  plaintiff  received  the  check  being  such  as  to  give  him 
notice  of  his  relation  to  the  drawee,  and  that  he  is  therefore  discharged 
by  the  transfer  of  the  mortgage,  under  the  decision  of  this  Court  in 
Otis  v.  Von  Storch  ; x  but  in  Otis  v.  Von  Storch  the  Court  held  that  a 
surety  will  be  discharged  if  the  creditor  surrenders  or  releases  a  security 
for  the  debts  taken  from  the  principal  debtor  to  such  debtor.  That  is 
not  this  case,  for  here  there  was  no  surrender  of  the  securit}*  to  the 
principal  debtor,  but  only  a  transfer  of  it  to  a  third  person.     Such  a 

1  15  R.  I.  41,  42. 


SECT.  IV.]  NEWCOMB   V.   RAYNOR.  213 

transfer  will  not  discharge  a  surety.1  Wheatley  v.  Bastow ; 2  De 
Colyar  on  Guaranties,  440,  441.  Such  a  transfer  of  a  mortgage  oper- 
ates also  as  a  transfer  of  the  debt  secured  b}T  it.  Jones  v.  Huggeford  ;  8 
Campbell  v.  Birch.4  And  the  question  might  arise,  whether,  after  such 
a  transfer,  the  plaintiff  would  be  entitled  to  continue  to  prosecute  the 
action.  There  was,  however,  no  evidence  to  show  that  he  was  prose- 
cuting it  in  fraud  or  against  the  will  of  the  assignee.  In  the  absence 
of  such  testimony  the  assignor  is  allowed  to  go  on.  Alsop  v.  Caines  ;5 
Raymond  v.  Johnson  ; fi  Gardner  v.  Smith.7  If  it  be  the  fact  that  the 
plaintiff  is  prosecuting  the  suit  for  himself,  in  violation  of  the  rights  of 
his  assignee,  the  matter  can  be  brought  before  the  Court  below  by 
motion  for  a  stay  of  execution,  or  other  appropriate  proceeding. 

Petition  dismissed  with  costs. 

Simon  S.  Lapham,  for  plaintiff. 

William  H.  Siceetland,  for  defendant. 


NEWCOMB  v.  RAYNOR  and  Others. 

In  the  Supreme  Court,  New  York,  May,  1839. 
[Reported  in  21  Wendell,  108.] 

Release  of  parties.  The  plaintiff  declared  in  assumpsit  on  the 
money  counts  against  Richard  Raynor,  Willett  Raynor,  and  Josiah 
Wright,  attaching  to  the  declaration  a  copy  of  a  promissory  note,  with 
notice  that  the  same  would  be  given  in  evidence  under  the  money 
counts  according  to  the  statute.  The  note,  of  which  a  copy  was 
given,  purported  to  be  made  by  Richard  Raynor  for  $500,  payable  to 
Charles  Goings  or  order,  and  indorsed  by  the  payee,  and  by  Willett 
Raynor  and  Josiah  Wright.  The  defendants  pleaded  the  general  issue, 
and  the  cause  was  noticed  for  trial.  At  the  circuit  Willett  Raynor  and 
Josiah  Wright  interposed  a  plea  of  puis  darrein  continuance,  that  on, 
&c. ,  at,  &c,  the  plaintiff  b}-  a  release  under  seal  discharged  Charles 
Goings  from  all  liability  as  indorser  of  the  note.  Wherefore  they 
prayed  judgment  if  the  plaintiff  ought  further  to  have  or  maintain  his 
action,  &c.     To  this  plea  the  plaintiff  demurred. 

B.  Davis  Nbxon,  for  the  plaintiff. 

M.  T.  Reynolds,  for  the  defendants. 

By  the  Court,  Nelson,  C.  J.  I  am  of  the  opinion  the  plea  consti- 
tutes a  good  bar  to  the  action.  As  between  the  first  and  subsequent 
indorsers,  the  former  must  be  regarded  in  the  light  of  principal ;  he 
Btands  behind  them  upon  the  paper,  and  is  bound  to  take  it  up,  in  case 

1  Wheatley  v.  Bastow,  7  De  G.,  M.  &  G.  261,  Accord.  —  Ed. 

2  7  De  G.,  M.  &G.  261,  279,  280. 

8  3  Mete.  515.  5  10  Johns.  Rep.  400.  »  5  Heisk.  (Tenn.)  256. 

«  60  N.  Y.  214.  6  11  Johns.  Rep.  488. 


^ieML~u*^    'U-^<L 


PHELPS   V.   BORLAND. 


^ 


[chap,  il 


v*^ 


5 


of  default  of  the  maker.  A  discbarge  of  him,  therefore,  by  the  holder 
(regarding  the  relative  position  of  tbe  parties),  on  general  principles, 
operates  to  release  them. 

It  is  said  their  rights  are  not  prejudiced,  as  they  may  still  resort  to 
an  action  against  him  if  subjected  to  the  payment  of  tbe  note,  as  the 
release  leaves  the  implied  contract  existing  between  tbe  first  and  sub- 
sequent indorsers  unimpaired.  Conceding  this  to  be  so,  to  permit  a 
recovery  against  the  defendants  would  but  lead  to  an  unnecessary  cir- 
cuity of  action.  The  plea  shows  a  discharge  for  a  presumed  good  con- 
sideration (as  it  is  under  seal)  of  the  first  indorser,  and  it  cannot  be 
doubted,  as  the  case  stands,  that  if  the  defendants  should  be  obliged  to 
call  upon  him,  the  plaintiff  would  be  bound  to  take  his  place.  The 
case,  therefore,  comes  within  the  familiar  rule,  that  a  release  of  the 
principal  operates  to  discharge  the  surety. 

It  is  further  said,  that  Goings  may  not  have  been  legally  charged  as 
an  indorser.  If  this  were  so,  the  plaintiff  should  have  replied  the  fact, 
as  we  will  not  presume  it  in  the  face  of  the  acts  of  both  him  and  the 
plaintiff  to  the  contrary.  The  release  would  not  have  been  necessary 
on  such  a  supposition. 

Judgment  for  defendants  on  demurrer ;  leave  to  amend  on  usual 
terms.1 

and  Others  v.  BORLAND,  Respondent.2  ^ 

Court  of  Appeals,  IVEw  «ork,  NovemberT^!^.  Gf 

{Reported  in  \03New  YorkkefxHtylQfo]         *^*  "**/ie^ 


'J 


Finch/J.3  The  defendant,  a  citizen  of  this  country,  drew  a  bill  of 
exchange  to  bis  own  order  at  sixty  da3s'  sight  upon  Johnston  &  Co., 
who  were  English  merchants  residing  in  Liverpool.  The  defendant 
sold  it  to  the  plaintiffs,  who  were  American  bankers,  residing  in  New 
York.  The  bill  was  duly  accepted  by  Johnston  &  Co.,  payable  in  Lon- 
don, who  thereby,  as  to  the  plaintiffs,  became  the  principal  debtors,  the 
drawer  being  contingently  liable  upon  their  default  and  holding  the 
position  of  a  surety  for  the  payment  of  their  debt.  The  bill  \^as  pro- 
tested for  non-payment  at  its  maturity,  Johnston  &  Co.  having  failed 
and  being  unable  to  meet  their  liabilities,  and  the  holders  now  sue  the 
drawer  to  recover  its  amount.  The  latter  defends  upon  the  ground 
that,  as  surety,  he  was  entitled,  upon  payment  of  the  bill,  to  be  subro- 
gated to  the  rights  of  the  holder,  and  that  the  latter  had  so  destroyed 


1  English  v.  Darley,  supra,  152,  per  Lord  Eldon ;  Curry  ».  Bank,  8  Port.  (Ala.) 
360 ;  Brown  v.  Williams,  4  Wend.  360 ;  Farmers'  Bank  v.  Blair,  44  Barb.  641,  654 
[semble)  ;  Deck  v.  Works,  22  Hun,  266,  272  (semble),  Accord.  —  Ed. 

2  This  case  should  have  been  inserted  in  Section  II.  of  this  chapter.  — Ed. 
8  Only  the  opinion  of  the  Court  is  given.  — Ed. 


6ECT.  IV.  J  PHELPS    V.    BORLAND.  215 

or  materially  impaired  those  rights  as  to  have  lost  all  remedy  against 
the  drawer.  The  fact  relied  on  as  the  cause  and  basis  of  this  result  is, 
that  the  acceptors  were  discharged  in  bankruptcy  upon  a  compromise 
by  the  English  courts,  and  that  the  plaintiffs,  who  were  originally  not 
parties  to  the  proceeding,  became  so  afterward  voluntarily,  and  proved 
their  claim  and  accepted  the  composition  decreed,  whereby  the  judg- 
ment became  binding  upon  them  in  this  country  as  well  as  in  England, 
and  so  the  acceptor  was  wholly  discharged  and  his  right  of  subrogation 
as  surety  rendered  valueless.  The  answer  made  to  this  contention  is, 
that  the  foreign  discharge  in  bankruptcy  was  operative  against  the 
holders  in  this  country,  even  although  the}*  had  never  become  parties 
to  the  proceeding,  and  so  the  release  of  the  acceptor  flowed  from  no 
act  of  theirs,  and  consequently  they  had  not  invaded  or  affected  the 
drawer's  rights.1  .  .    . 

It  follows,  therefore,  in  the  present  case  that  the  foreign  discharge 
would  IkfYi'  been,  in  and  of  itself,  no  defence  against  the  American 
holder  of  tITe  bill.  If  property  of  the  bankrupt  should  be  found  in  our 
jurisdiction,  the  plaintiffs  were  at  liberty  to  proceed  against  it  by  at- 
tachment and  collect  their  debt  out  of  such  property,  and  the  foreign 
bankruptcy  proceedings  would  neither  prevent  nor  stand  in  the  way,  for 
the  sufficient  reason  that  their  only  force  in  our  jurisdiction  comes  from 
our  consent,  and  we  have  chosen  thus  to  limit  that  consent.  The  right 
remaining  to  the  plaintiffs  was  a  valuable  right.  It  charged  with  the 
payment  of  the  protested  bill  any  present  or  future  acquisitions  of  the 
acceptors  which  might  come  into  our  jurisdiction,  and  might  result  in 
the  collection  of  the  whole  debt,  or  a  compromise  settlement  induced  by 
the  desire  or  interest  of  the  debtors  to  have  access  to  our  markets,  and 
freedom  to  resume  their  business  among  us.  To  that  right,  thus  val- 
uable  and  material,  it  was  the  privilege  of  the  surety  to  succeed,  by  way 
of  sTTbTUgrttion,  whenever  he  'should  pay  the  debt,  and  the  plaintiffs 
could  not  deprive  him  of  it  or  impair  and  destroy  it.  except  at  the  peril 
of  releasing  him  from  his  liability.  Just  that  was  what  the  plaintiffs 
dicT  Tempted  by  the  compromise  offered,  they  sought  to  obtain  the 
defendant's  consent  to  its  acceptance  by  him.  That  consent  was  with- 
held, but  they,  acting  upon  their  own  conceptions  of  what  was  most  for 
their  interest,  voluntarily  submitted  themselves  and  their  rights  as 
creditors  to  the  foreign  jurisdiction,  proved  their  debt,  and  accepted 
the  compromise  decreed.  The  condition  of  the  dividend  was  a  release 
of  the  debtor.  They  could  not  take  the  compromise  and  avoid  the  con-/ 
dition,  and  so  by  their  act  they  discharged  the  acceptors  entireryjind 
everywneTe.  That  such  is  the  effect  of  their  voluntarj-  submission  to 
the  foreign  jurisdiction  is  inevitable  on  principle,  and  has  been  often 
decided.      Gardner  v.  Oliver   Lee   &   Co.'s  Bank ; 2   Clay  v.  Smith.3 

1  The  Court  here  discussed  May  v.  Breed,  7  Cush.  15,  In  re  Waite,  99  N.  Y.  433, 
and  Baldwin  v.  Hale,  1  Wall.  223,  and  decided  that  a  foreign  discharge  is  uo  bar  to  an 
American  creditor  who  has  never  become  a  party  to  the  bankruptcy  proceedings.  —  Ed. 

2  11  Barb.  558.  3  3  Peters  (U.  S.),  411. 


216  PHELPS   V.    BORLAND.  [CHAP.  LL 

The  unavoidable  consequence  follows.  The  creditor  having  by  his  own 
voluntary  act  released  the  debtor  from  all  remaining  liability,  his  slirety 
is  discharged.     The  Courts  below  so  held,  and  we  think  correctly.1 

The  judgment  should  be  affirmed,  with  costs. 

All  concur,  except  Earl,  J.,  dissenting,  and  Ruger,  C.  J.,  not 
voting.  Judgment  affirmed.2 

1  The  Court  decided  further  that  the  indorser  had  not  consented  to  the  proof  by 
the  holder  against  the  bankrupt.  —  Ed. 

2  Gardner  v.  Lee's  Bank,  11  Barb.  558;  Third  Bank  v.  Hastings,  134  N.  Y.  501,  505 
(semble),  Accord. 

A  creditor  who  received  a  fraudulent  preference,  with  knowledge  of  his  debtor's  in- 
solvency, was  obliged,  under  the  Bankrupt  Act,  to  surrender  the  payment  and  also  to 
forfeit  his  right  to  prove  against  the  bankrupt  principal.  The  loss  of  this  right  to  prove 
against  the  principal  entailed  the  loss  of  his  claim  against  the  surety.  Bartholow"v. 
Bean,  IS  Wall.  G35  (semble)',  In  re  Ayers,  6  Biss.  48;  Northern  Bank  v.  Cooke,  13 
Bush,  340;  Jefferson  Bank  v.  Streeter,  106  N.  Y.  186  (semble). 

But  see,  contra,  Watson  v.  Pogue,  42  Iowa,  582 ;  Harner  v.  Batdorf,  35  Ohio  St. 
113.  — Ed. 


•S    3 


SECT.  V.]  CLARK   V.   SICKLER.  217 


SECTION   V. 

Creditor's  Failure  to  use  Money  within  his  Control  in  Lawful 

Payment  of  his  Claim. 

CLARK,   Administrator,  Respondent,   v.  J.  G.   SICKLER, 

Appellant. 

In  the  Court  of  Appeals,  New  York,  February  22,  1876. 

[Reported  in  64  New  York  Reports,  231.] 

Church,  C.  J.1  This  action  is  upon  a  promissory  note  made  by 
one  Mott,  as  the  principal  debtor,  and  by  the  defendant's  intestate 
as  his  surety.  The  referee  found  that  Mott,  the  principal  debtor, 
some  time  after  the  note  was  due,  went  to  the  holder  with  the  money 
to  pay  it,  which  the  latter  (by  his  wife  acting  for  him  with  authority) 
declined  to  receive,  giving  as  a  reason  that  he  had  no  use  for  the 
money,  and  requested  that  Mott  would  keep  it.  It  is  also  found  that 
Mott  was  then  solvent,  and  afterwards  became  insolvent,  and  the 
question  is,  whether  the  surety  is  discharged.  As  a  matter  of  abstract 
equit}T,  the  argument  is  plausible,  at  least,  that  inasmuch  as  the  note 
was  not  paid  by  reason  of  the  request  of  the  holder,  the  latter  ought 
not  to  enforce  it  against  the  surety  after  the  principal  debtor  had 
become  insolvent.  The  general  rule  applicable  to  the  relation  of 
creditor  and  surety  is  stated  by  Judge  Story  as  follows:  "  If  a  cred- 
itor does  any  act  injurious  to  the  surety,  or  inconsistent  with  his 
rights,  or  if  he  omits  to  do  any  act,  when  required  by  the  surety, 
Which  his  duty  enjoins  him  to  do,  and  the  omission  proves  injurious 
to  the  surety,  the  latter  will  be  discharged,  and  he  may  set  up  such 
conduct  as  a  defence  to  any  suit  brought  against  him."  1  Story's 
Equity,  §§  325,  326,  and  cases  cited  in  note.  The  current  of  authority, 
which  I  think  is  quite  harmonious,  establishes  that  the  act  which  will 
discharge  a  surety  must  be  legally  injurious  or  inconsistent  with  his 
legal  rights.  An  agreement  with  the  principal  debtor  extending  the 
time  of  payment,  or  in  any  manner  changing  the  contract  made  by 
the  surety,  will  have  that  effect.  So  the  release  of  a  security  held 
by  the  creditor  and  the  like.  The  facts  found  by  the  referee  do  not 
present  a  case  within  the  rule.  The  contract  was  not  changed.  The 
time  was  not  extended  by  any  binding  agreement.  An  action  might 
have  been  brought  immediately  after  the  transaction  in  respect  to  the 
payment,  and  the  circumstances  which  took  place  would  not  have 
constituted  a  defence.     It  is  well  settled  that  mere  indulgence  will 

i  Only  the  opinion  of  the  Court  is  given.  —  Ed. 


218  CLARK   V.   SICKLEE.  [CHAP.  II. 

not  discharge  a  surety.  45  Barb.  214;  3  N.  Y.  446;  15  J.  R. 
433.  The  holder  preferred  not  to  collect  the  note,  and  gave  indul- 
gence, but  not  a  stipulated  extension.  The  other  principle  referred 
to  is,  that  the  surety  may  be  discharged  from  an  omission  of  duty  on 
the  part  of  the  creditor,  but  the  surety  must  intervene  and  request 
the  performance  of  the  duty.  It  has  been  established,  accordingly, 
that  if  a  surety  request  the  creditor  to  sue,  and  the  latter  neglects 
to  do  so,  the  surety  will  be  discharged  if  the  neglect  has  produced 
injury.  25  N.  Y.  552.  Here  there  was  no  request.  The  surety 
did  nothing.  He  was  not  prevented  from  demanding  prosecution  by 
the  creditor,  nor  from  paying  the  note  and  prosecuting  the  principal 
himself. 

We  are  now  asked  to  go  a  step  further  and  hold  that  if  a  note  is 
not  paid  because  the  creditor  prefers  to  give  indulgence  rather  than 
receive  payment,  the  surety  is  discharged  if  the  principal  debtor 
happens  to  become  insolvent.  We  have  not  been  referred  to  any 
authority  for  such  a  precedent.  The  case  of  Lewis  v.  Van  Dusen  l 
was  upon  a  guaranty  of  collection.  It  does  not  appear  distinctly 
upon  what  ground  the  Court  placed  its  decision ;  but  the  question  of 
diligence  was  necessarily  involved,  besides  the  refusal  to  accept  the 
mouey  when  offered,  and  there  was  a  neglect  to  prosecute  for  two 
years,  during  which^  the  guarantor  became  insolvent.  The  decision 
was  clearly  right  without  the  fact  of  the  offer  to  pay,  and  that  cir- 
cumstance only  aggravated  the  laches.  In  the  case  cited  from  46 
Vermont  258  there  was  a  tender  of  the  money  due,  which  was  held 
to  discharge  the  surety,  although  not  accepted.  On  the  other  side, 
the  recent  case  in  this  Court  of  the  Second  National  Bank  of  Oswego 
v.  Poucher,'2  decided  that  where  a  debtor  owing  two  demands  offered 
to  pay  one  of  them,  and  was  induced  by  the  creditor  to  pay  the  other, 
the  indorsers  upon  the  demand  not  paid  were  not  discharged.  The 
circumstances  which  will  discharge  a  surety  are  well  defined  by 
repeated  adjudications,  viz.,  the  doing  an  act  which  is  legally  inju- 
rious to  the  surety,  or  which  impairs  his  legal  rights,  or  the  omission 
to  perform  a  duty  when  required  by  a  surety,  which  omission  results 
in  injury  to  the  surety.  Indulgence  to  a  debtor  is  not  sufficient,  and 
the  distinction  is  not  apparent  between  indulgence,  with  the  expressed 
consent  or  even  request  of  the  creditor,  and  mere  silent  delay,  pro- 
vided the  contract  is  not  changed  or  impaired.  It  is  a  common 
occurrence  for  debtors  to  ask  indulgence  without  an}T  specified  time, 
and  creditors  would  constantly  be  in  danger  of  losing  their  debts  by 
mere  negative  acquiescence.  The  facts  presented  in  this  case  rarely 
occur.  It  is  not  often  that  the  debtor  omits  to  pay  at  the  request  of 
the  creditor,  but  if  we  enlarge  the  grounds  for  discharging  a  surety 
in  such  a  case,  we  shall  establish  a  precedent  which  may  prove  highly 
injurious  in  unsettling  and  weakening   the    obligations  of  written 

i  25  Mich.  351.  2  56  N.  Y.  348. 


6ECT.  V.]  NATIONAL   BANK    OF   NEWBURG   V.    SMITH.  219 

instruments.  It  is  better  to  adhere  to  established  general  rules  than 
to  attempt  to  work  out  equity  in  exceptional  cases. 

It  is  quite  evident  that  the  creditor  had  no  idea  of  discharging  the 
surety.  He  did  not  prevent  the  payment  of  the  note.  lie  did  not 
refuse  to  receive  the  money.  He  only  expressed  a  desire  that  it 
should  not  be  paid.  There  was  no  tender  or  attempt  to  tender  the 
money.1  The  contract  was  not  changed.  The  surety  did  not  inter- 
vene and  request  any  action  on  the  part  of  the  creditor;  and  although 
loss  has  occurred  in  consequence  of  the  indulgence,  it  cannot  be 
atlirmed  that  the  creditor  did  any  act  impairing  the  legal  rights  of 
the  surety,  nor  did  the  latter  take  any  action  to  relieve  himself  from 
liability. 

The  judgment  must  be  affirmed. 

All  concur.  Judgment  affirmed.* 


THE  NATIONAL  BANK  OF  NEWBURG  v.   D.   SMITH. 

In  the  Court  of  Appeals,  New  York,  May  23,  1876. 
[Reported  in  66  New  York  Reports,  271.] 

Appeal  from  judgment  of  the  General  Term  of  the  Supreme  Court  in 
the  second  judicial  department  affirming  a  judgment  in  favor  of  plaintiff, 
entered  upon  a  decision  of  the  Court  on  trial  without  a  jury. 

This  action  was  upon  a  promissory  note  made  by  one  Thomas  George, 
indorsed  by  defendant  and  discounted  b}-  plaintiff. 

The  note  was  for  $500  ;  it  fell  due  February  17, 1874  ;  was  not  paid  ; 
was  duly  protested,  and  notice  served  on  defendant.  When  the  note 
fell  due,  George  had  ten  dollars  and  forty-three  cents  on  deposit  in  the 
olaintiff' s  bank.  He  deposited  $500  March  2,  1874,  which  was  credited 
to  him  ;  no  directions  were  given  as  to  the  application  thereof.  The 
note  was  not  charged  to  his  account,  it  being  the  practice  not  to  so 
charge  unless  an  account  is  good  for  the  note  at  the  time  it  falls  due. 

1  Tender  of  Payment  by  Principal  and  Refusal  by  Creditor.  If  the  creditor  refuses 
to  receive  payment  when  tendered  by  the  principal  obligor,  the  surety  is  released. 
Bartholow  v.  Bean,  18  Wall.  635,  642  (semble) ;  Curiae  v.  Packard,  29  Cal.  194  ;  Bonner 
v.  Nelson,  57  Ga.  433,  437  ;  Spurgeon  v.  Smith,  114  Ind.  453  ;  Fisher  v.  Stockebrand, 
26Kas.  565;  Sears  v.  Van  Dusen,  25  Mich.  351  (semble);  Johnson  v.  Ivey,  4  Cold.  608  ; 
Watson  e.  Reed,  1  Tenn.  Ch.  196,  198 ;  Joslyn  v.  Eastman,  46  Vt.  258. 

See,  however,  State  v.  Alden,  12  Ohio,  59,  where  the  principal  was  a  public  officer. 

Tender  by  Surety.  The  surety  is  discharged  if  his  own  tender  of  payment  is  refused 
by  the  creditor.  Hayes  v.  Joseph,  26  Cal.  535  ;  Sharp  v.  Miller,  57  Cal.  415  ;  O'Con- 
nor v.  Morse,  112  Cal.  31.  — Ed. 

2  Second  Bank  v.  Boucher,  56  N.  Y.  348,  Accord. 

Sailly  v.  Elmore,  2  Paige,  497  (semble) ;  Spurgeon  v.  Smith,  114  Ind.  453  (semble); 
Johnson  v.  Mills,  10  Cush.  503,  Contra. 

Compare  White  v.  Life  Ass'n,  63  Ala.  419 ;  Life  Ass'n  v.  Neville,  72  Ala 
517.  — Ed. 


220  NATIONAL    BANK   OF   NEWBUKG   V.    SMITH.  [CHAP.  II. 

On  March  4,  1874,  another  note  made  by  George,  payable  at  plain- 
tiff's bank,  and  falling  due  on  that  da}r,  was  presented  for  payment, 
was  paid  by  plaintiff,  and  charged  up  in  George's  account.1 

Per  Curiam.  When  the  note  in  suit  was  protested  and  the  liability 
of  the  defendant  as  indorser  fixed,  there  were  no  funds  appropriated  for 
the  payment  of  the  same.  The  general  deposit  of  mone}-  afterwards 
without  regard  to  the  note  did  not,  of  itself,  operate  as  a  payment.  On 
the  contrary,  as  there  was  no  agreement  that  the  money  deposited  was 
to  be  appropriated  for  such  a  purpose,  the  act  itself  indicates  that  there 
was  no  intention  b}'  the  depositor  or  the  plaintiff  to  apply  it  upon  the 
note.  The  subsequent  disposition  of  the  money,  without  any  objection, 
confirms  the  inference  that  there  was  no  design  thus  to  appropriate  it. 
If  such  had  been  the  intention  no  reason  exists  why  a  check  should  not 
have  been  given  for  the  amount  of  the  note  in  suit  and  the  note  taken 
up,  or  at  least  a  charge  made  for  the  same  upon  the  maker's  account. 
In  the  absence  of  an}'  express  directions  or  an  agreement  to  that  effect, 
it  was  optional  with  the  bank  whether  it  should  apply  the  money  or  not 
upon  the  note  in  suit,  and  it  was  under  no  positive  legal  obligation  to 
do  so.  Marsh  v.  Oneida  Central  Bank  ; 2  Pitts  v.  Congdon  ; 3  Beardsley 
v.  Warner.4 

The  question  is  not  presented  whether  the  rights  of  the  parties  would 
have  been  changed  if  the  maker  of  the  note  had  to  his  credit  on  account 
sufficient  to  meet  the  note  when  it  matured,  and  the  authorities  cited  on 
this  subject,  therefore,  have  no  application. 

The  note  having  been  duly  protested  and  no  act  done  by  the  plaintiff, 
which  discharged  the  liability  of  the  indorser,  the  judgment  must  be 
affirmed. 

All  concur.  Judgment  affirmed.5 

1  The  arguments  of  counsel  are  omitted.  —  Ed. 

2  34  Barb.  298.  3  2  Comsfc.  352.  4  6  Wend.  611. 

6  Strong  v.  Foster,  17  C.  B.  201 ;  Vose  v.  German  Bank,  83  111.  599;  Second  Bank 
v.  Hill,  76  Ind.  223 ;  Martin  v.  Mechanics'  Bank,  6  Har.  &  J.  235 ;  Nat.  Bank  v.  Feck, 
127  Mass.  298;  People's  Bank  v.  Le  Grand,  103  Pa.  309;  First  Bank  v.  Shreiner,  110 
Pa.  188  ;  Bank  v.  Peltz,  176  Pa.  513,  Accord. 

White  v.  Life  Association,  63  Ala.  419,  430  (semble) ;  Dawson  v.  Peal  Estate  Bank, 
5  Ark.  283,  297-299  (semble) ;  McDowell  v.  Bank,  1  Harringt.  369,  Contra. 

Nor,  as  a  general  rule,  has  the  surety  any  defence,  in  the  case  suggested  by  the 
Court,  that  is,  where  the  principal  debtor  had  to  his  credit,  as  depositor  with  the  bank, 
enough  to  meet  his  debt  when  it  matured.  Strong  v.  Foster,  17  C  B.  201,  213,  224; 
Nat.  Bank  v.  Peck,  127  Mass.  298.  In  Strong  v.  Foster,  Willes,  J.,  said:  "This  is 
the  first  time,  I  believe,  that  it  has  ever  been  suggested,  that  when  a  note  given  under 
circumstances  like  these  falls  due,  and  there  is  a  balance  in  favor  of  the  customer  at  the 
time,  that  balance  must  of  necessity  be  applied  to  the  discharge  of  the  note." 

If,  however,  the  principal  makes  a  note  payable  at  his  bank,  and  the  balance  in  his 
favor,  when  the  note  matures,  is  large  enough  to  pay  it,  an  indorser  or  other  surety 
will  be  discharged,  if  the  bank  does  not  honor  the  note.  For  the  bank  is  bound  to  pay 
such  notes,  just  as  it  is  bound  to  honor  its  customer's  checks.  Home  Bank  v.  Newton, 
8  111.  Ap.  563,  565;  Commercial  Bank  v.  Henninger,  105  Pa.  496;  German  Bank  v 
Foreman,  138  Pa.  474  ;  Mechanics'  Bank  v.  Seitz,  150  Pa.  632,  637  ;  Bank  v.  Peltz,  176 
Pa,  513,  518.  —  Ed. 


SECT.  VI. J  PAIN   V.   PACKARD.  221 


SECTION   VI. 

Failure  of  the  Creditor  to  Sue  the  Debtor  at  the  Surety's  Request* 

PAIN   v.   PACKARD    &   MUNSON. 
In  the  Supreme  Court,  New  York,  May,  1815. 
[Reported  in  13  Johnson,  174.] 

This  was  an  action  of  assumpsit,  on  a  promissory  note  made  by 
Packard  &  Munson,  in  which  Packard  alone  was  arrested,  the  other 
defendant  being  returned  not  found.  The  defendant,  Packard,  pleaded, 
1.  Non-assumpsit.  2.  That  he  signed  the  note,  which  was  for  $100, 
payable  on  demand,  as  surety  for  Munson ;  that  he  urged  the 
plaintiff  to  proceed  immediate!}-  in  collecting  the  money  due  on  the 
note  from  Munson,  who  was  then  solvent ;  and  that,  if  the  plaintiff 
had  then  proceeded  immediately  to  take  measures  to  collect  the  money 
of  Munson,  he  might  have  obtained  payment  from  him ;  but  the 
plaintiff  neglected  to  proceed  against  Munson,  until  he  became  insol- 
vent, absconded,  and  went  away  out  of  the  State,  whereby  the  plaintiff 
was  unable  to  collect  the  mone}'  of  Munson. 

There  was  a  demurrer  to  the  second  plea,  and  a  joinder  in  demurrer, 
which  was  submitted  to  the  Court  without  argument. 

Per  Curiam.  The  facts  set  forth  in  the  plea  are  admitted  b}*  the 
demurrer.  The  principles  laid  down  in  the  case  of  The  People  v. 
Jansen  1  will  warrant  and  support  this  plea.  We  there  sa}-,  a  mere 
delay  in  calling  on  the  principal  will  not  discharge  the  surety.  The 
same  principle  was  fully  and  explicity  laid  down  by  the  Court  in  the 
case  of  Tallmadge  v.  Brush.2  But  this  is  not  such  a  case.  Here  is  a 
special  request,  by  the  suret}-,  to  proceed  to  collect  the  money  from  the 
principal ;  and  an  averment  of  a  loss  of  the  money,  as  against  the 
principal,  in  consequence  of  such  neglect.3  The  averments  and  facts 
stated  in  the  plea  are  not  repugnant,  or  contradictor}-,  to  the  terms  of 
the  note.  The  suit  here  is  by  the  payee  against  the  makers.  The 
fact  of  Packard  having  been  security  only,  is  fairly  to  be  presumed  to 
have  been  known  to  the  plaintiff.  He  was,  in  law  and  equity,  there- 
fore, bound  to  use  due  diligence  against  the  principal,  in  order  to 
exonerate  the  surety.  This  he  has  not  done.  There  can  be  no  sub- 
stantial objections   against  such  a  plea.     It  may  be  said,  the  surety 

1  7  Johns.  Rep.  336.  2  Not  reported. 

8  This  averment  is  material.  Herrick  v.  Borst,  4  Hill,  650 ;  Huffman  v.  Hulbert, 
13  Wend.  377  ;  Field  v.  Cutler,  4  Lans.  195  ;  Merritt  v.  Lincoln,  21  Barb.  249  ;  Marsh  v. 
Dnnkel,  25  Hun,  167  :  Hunt  v,  Purdy,  82  N.  Y.  486;  Bingham  v.  Meers,  4  N.  Dak. 
437  (statutory)  ;  YVeiler  v.  Hocn,  25  Pa.  525. —Ed. 


222  PAIN   V.    PACKAKD.  [CHAP.  II. 

might  have  paid  the  note  and  prosecuted  the  principal ;  but  although 
he  might  have  done  so,  he  was  not  bound  to  do  it.  If  he  had  a  right 
to  expedite  the  plaintiff  in  proceeding  against  the  principal,  and 
chose  to  rest  on  that,  he  might  do  so.  In  the  case  of  the  Trent  Nav. 
Co.  v.  Harle}' 1  the  plea  was  similar  to  the  present,  and  not  de- 
murred to.  The  defendant  must,  accordingly,  have  judgment  upon 
the  demurrer.  Judgment  for  the  defendant? 

1  10  East,  34. 

2  Bruce  v.  Edwards,  1  Stew.  (Ala.)  11 ;  Herbert  v.  Hobbs,  3  Stew.  (Ala.)  9;  Good- 
man v.  Griffin,  3  Stew.  (Ala.)  160;  Strader  v.  Houghton,  9  Port.  (Ala.)  334  ;  Darby 
v.  Berney  Bank,  97  Ala.  643  (semble) ;  Howie  v.  Edwards,  97  Ala.  649;  Hempstead  v. 
Watkins,  6  Ark.  317  ;  Thompson  v.  Robinson,  34  Ark.  44  ;  Martin  v.  Skehan,  2  Colo. 
614  ;  King  v.  Baldwin,  17  Johns.  384  (reversing  s.  c.  2  Johns.  Ch.  554) ;  Manchester 
Co.  v.  Sweeting,  10  Wend.  163;  Kemsen  v.  Beekman,  25  N.  Y.  552;  Black  River 
Bank  i?.  Page,  44  N.  Y.  453;  Colgrove  v.  Tallman,  67  N.  Y.  95;  Wheeler  v.  Benedict, 
36  Hun,  478  (semble);  Hancock  v.  Bryant,  2  Yerg.  476;  Thompson  v.  Watson,  10 
Yerg.  362  ;  Hopkins  v.  Spurlock,  2  Heisk.  152,  Accord. 

In  a  few  jurisdictions  the  doctrine  of  Pain  v.  Packard  is  adopted  with  the  qualifi- 
cation that  the  request  to  the  creditor  to  sue  the  principal  debtor  must  be  accompanied 
by  a  statement  that  the  surety  will  not  continue  liable  unless  his  request  is  complied 
with.  Cope  v.  Smith,  8  S.  &  R.  110;  Lichtentbaler  v.  Thompson,  13  S.  &  R.  157; 
Wetzel  v.  Sponsler,  18  Pa.  460;  Conrad  v.  Eoy,  68  Pa.  381  (semble);  Campbell  v. 
Sherman,  151  Pa.  70 ;  Jackson  v.  Huey,  10  Lea,  184. 

In  others  the  request  must  be  accompanied  by  an  offer  to  indemnify  the  creditor  for 
the  expenses  of  the  suit.  Huey  v.  Pinney,  5  Minn.  310;  Benedict  v.  Olson,  37  Minn. 
431  ;  Dillon  v.  Russell,  5  Neb.  484. 

Wherever  Pain  v.  Packard  is  followed,  either  with  or  without  the  qualifications 
mentioned  in  the  paragraphs  preceding,  the  request  will  go  for  nothing  if  made  before 
the  maturity  of  the  debt.  Hellen  v.  Crawford,  44  Pa.  105 ;  Scales  v.  Cox,  106  Ind.  261 ; 
Fidler  v.  Hershey,  90  Pa.  363,  366;  Hunt  v.  Purdy,  82  N.  Y.  486  (semble). 

Nor  will  the  request  to  sue  have  any  legal  effect,  either  at  common  law  or  under 
statutes,  if  the  principal  and  all  his  property  are  beyond  the  jurisdiction  of  the  cred- 
itor. Davis  r.  Hatcher,  1  Woods,  C.  C.  456  ;  Conklin  v.  Conklin,  54  Ind.  289 ;  Phillips 
v.  Rilev,  27  Mo.  386  ;  Warner  v.  Beardsley,  8  Wend.  194  (semble)  ;  Alcorn  v.  Commw., 
66  Pa.  172;  Seattle  Co.  v.  Haley,  6  Wash.  302.  But  see  Hayward  v.  Fullerton,  75 
Iowa,  371  (turning  on  the  peculiar  phraseology  of  a  statute),  and  Meriden  Co.  v. 
Flory,  44  Ohio  St.  430  (creditor  and  surety  resident  in  one  State,  and  debtor  in  another 
State). 

But  in  most  of  the  States  the  Courts  have  repudiated  the  doctrine  of  Pain  v.  Pack- 
ard. Executors  of  Dennis  v.  Rider,  2  McL.  451  ;  Hartman  v.  Burlingame,  9  Cal. 
557  (semble)  ;  Dane  v.  Cordnan,  24  Cal.  157;  Bull  v.  Allen,  19  Conn.  101  ;  Wilds  v. 
Attix,  4  Del.  Ch.  253 ;  Howard  v.  Brown,  3  Ga.  523  ;  Taylor  v.  Beck,  13  111.  376 ; 
Carr  v.  Howard,  8  Blackf.  190;  Halstead  v.  Brown,  17  Ind.  202;  Hogshead  v.  Wil- 
liams, 55  Ind.  145;  Miller  v.  Arnold,  65  Ind.  488;  Ingels  v.  Sutliff,  36  Kas.  444; 
Goodson  v.  Skinner,  47  Kas.  575,  579;  Stout  v.  Ashton,  5  Mon.  251;  Nichols  v. 
McDowell,  14  B.  Mon.  6  ;  Boutte  ?>.  Martin,  16  La.  133 ;  La.  Bank  v.  Le  Doux,  3  La. 
An.  674;  Page  v.  Webster,  15  Me.  249;  Eaton  v.  Waite,  66  Me.  221;  Sasscer  v. 
Kemp,  6  Gill  &  J.  243,  249  ;  Gray  v.  Farmers'  Bank,  81  Md.  631  ;  Frye  v.  Barker,  4 
Pick.  382  ;  Bellows  v.  Lovell,5  Pick.  307;  Haydenville  Bank  v.  Parsons,  138  Mass.  53  ; 
Inkster  v.  First  Bank,  30  Mich.  143;  Michigan  Co.  v.  Soule,  51  Mich.  312  ;  Routon  v. 
Lacy,  17  Mo.  399;  Freligh  v.  Ames,  31  Mo.  253;  Smith  v.  Frayler,  4  Mont.  489; 
Quillen  v.  Quigley,  14  Nev.  215 ;  Davis  v.  Huggins,  3  N.  H.  231  ;  Mahurin  v.  Pearson; 
8  N.  H.  539  ;  Morrison  v.  Citizens'  Bank,  65  N.  H.  253,  280 ;  Manning  v.  ShotwelP 
2  South.  584  ;  Pinterd  v.  Davis,  1  Spencer,  205,  1  Zab.  632 ;  Thompson  v.  Bowne,  39 
N.  J.  2     Bizzell  v.  Smith,  2  Dev.  Eq.  27  (semble) ;  First  Bank  v.  Homesley,  99  N.  Ca. 


RJ5CT    VI.J  TRIMBLE    V.   THORNE.  223 


TRIMBLE  v.   THORNE. 
In  the  Supreme  Court,  New  York,  May,  1819. 

[Reported  in  16  Johnson,  152.] 

This  was  an  action  of  assumpsit,  on  a  promissory  note  made  by 
James  Cunningham,  dated  the  20th  of  October,  1813,  for  $800, 
payable  with  interest,  six  months  after  date,  at  the  bank  of  Orange 
count}',  to  the  defendant,  who  indorsed  it  to  the  plaintiff. 

It  was  proved  that  the  plaintiff  had  admitted  that  after  the  note 
fell  due  he  had  been  requested  by  the  defendant  to  prosecute  Cunning- 
ham, which  was  not  done  ;  and  it  was  admitted  that  if  Cunningham 
had  then  been  prosecuted,  the  amount  of  the  note  could  have  been 
recovered  of  him. 

A  verdict  was  found  for  the  plaintiff,  subject  to  the  opinion  of  the 
Court  on  the  above  case. 

Spencer,  C.  J.,  delivered  the  opinion  of  the  Court. 

We  do  not  think  the  case  of  Pain  v.  Packard  applies ;  for  the  in- 

531  ;  Jenkins  v.  Clarkson,  7  Ohio,  72 ;  Findley  v.  Hill,  8  Oreg.  247  ;  Pickett  v.  Land, 
2  Bail.  608 ;  Caston  v.  Dunlap,  Rich.  Eq.  Cas.  77  (but  see  Lang  v.  Brevard,  3  Strob. 
Eq.  59,  64-65)  ;  Hubbard  v.  Davis,  1  Aik.  296;  Hogaboom  v.  Herrick,  4  Vt.  131; 
Baker  v.  Marshall,  16  Vt.  522;  Hickok  v.  Farmers'  Bank,  35  Vt.  476  ;  Croughton  v. 
Duval,  3  Call,  59  ;  Harris  v.  Newell,  42  Wis.  687. 

Even  where  the  doctrine  of  Pain  v.  Packard  obtains,  it  does  not  cover  the  case  of 
the  surety's  request  and  the  creditor's  refusal  to  distrain  the  debtor  :  Brooks  v.  Castor, 
36  Ala.  682;  Ruggles  v.  Holden,  3  Wend.  216  ;  or  to  issue  execution  upon  a  judg- 
ment :  Buckalew  v.  Smith,  44  Ala.  638 ;  or  to  take  out  letters  of  administration  upon 
the  estate  of  the  deceased  principal  debtor  in  order  to  sue :  Brown  v.  Elanders,  80 
Ga.  209. 

In  Alabama  the  creditor  does  not  lose  his  remedy  against  a  surety  by  declining,  on 
the  latter's  request,  to  enforce  a  mortgage.  Branch  Bank  v.  Perdue,  3  Ala.  409 ; 
Haden  v.  Brown,  18  Ala.  641.  But  see  contra,  Souter  v.  Bank,  94  Ga.  713  (semble); 
Remsen  v.  Beekman,  25  N.  Y.  552. 

Statutory  Provisions.  In  several  States  there  are  statutory  provisions  in  regard 
to  a  request  by  a  surety  to  the  creditor  to  sue  the  debtor.  Nearly  all  of  such  statutes 
require  a  request  in  writing,  and,  by  some  of  them,  failure  to  sue  releases  the  surety 
even  though  the  surety  has  suffered  no  loss  by  such  failure.  But  there  is  no  uni- 
formity in  these  statutes  which  are  discussed  in  the  following  cases.  Pickens  v.  Yar- 
borough,  26  Ala.  417  ;  Savage  v.  Carletou,  33  Ala.  443 ;  Derby  v.  Berney,  97  Ala.  643  ; 
Thompson  v.  Robinson,  34  Ark.  44 ;  Bailey  v.  New,  29  Ga.  214  ;  Fish  v.  Glover,  154  111. 
86;  Chrisman  v.  Tuttle,  59  Ind.  155;  Barnes  v.  Sammon,  128  Ind.  596;  Barnes  v. 
Mowry,  129  Ind.  568  ;  McMilliu  v.  Deardorff  (Indiana  Appeals,  1897),  48  N.  E.  R.  233  ; 
Thornburgh  v.  Madren,  33  Iowa,  380;  Graham  v.  Rush,  73  Iowa,  451  ;  Shenandoah 
Bank  v.  Ayres,  87  Iowa,  526 ;  English  v.  Bourn,  7  Bush,  138  ;  Medley  v.  Tandy,  85  Ky. 
566 ;  Taylor  v.  Davis,  38  Miss.  493  ;  Brides  v.  Winters,  42  Miss.  135  ;  Smith  v.  Clopton, 
48  Miss.  66  ;  Keirn  v.  Andrews,  59  Miss.  39  ;  Routon  v.  Lacy,  17  Mo.  399;  Langdon 
v.  Markle,  48  Mo.  357 ;  Petty  v.  Douglass,  76  Mo.  70 ;  First  Bank  v.  Homersburg,  99 
N.  Ca.  531 ;  Jenkins  v.  Clarkson,  7  Ohio,  72  ;  Baker  v.  Kellogg,  39  Ohio  St.  663 ;  Clark 
v.  Osborn,  41  Ohio  St.  28  ;  Bailey  Co.  v.  Seward  (S.  Dakota,  1896),  69  N.  W.  R.  58; 
Thompson  v.  Watson,  10  Yerg.  362  ;  Sullivan  v.  Dwyer  (Texas  Civ.  Ap.  1897),  42 
S.  W.  R.  355;  Harrison  v.  Price,  25  Grat.  553;  Kittridge  v.  Stegmier,  11  Wash.  3; 
Gillilan  v.  Ludington,  6  W.  Va.  128.  — Ed. 


224  THIMBLE    V.   THORNE.  [CHAP.  H 

dorser,  though  in  the  nature  of  a  surety,  is  answerable  upon  an 
independent  contract,  and  it  is  his  duty  to  take  up  the  bill  when 
dishonored.1  Judgment  of  nonsuit.2 

1  Ross  v.  Jones,  22  Wall.  576 ;  Freligh  v.  Ames,  31  Mo.  253 ;  Boatmen's  Bank  v. 
Johnson,  24  Mo.  Ap.  316  ;  Wells  v.  Maun,  45  N.  Y.  327, 330  (semble) ;  Colgrove  v.  Tall- 
man,  67  N.  Y.  95,  99  (semble)  ;  First  Bank  v.  Wood,  71  N.  Y.  405,  411  ;  Newcomb  v. 
Hale,  90  N.  Y.  326,  331  ;  Converse  v.  Cook,  25  Hun,  44,  31  Hun,  417  ;  Beebe  v.  West 
Bank,  7  W.  &  S.  375. 

Nor  is  one  who  assigns  a  chose  in  action,  guaranteeing  its  payment,  treated  as  a 
surety  within  the  doctrine  of  Fain  v.  Packard.  Wells  v.  Mann,  45  N.  Y.  327 ;  Newcomb 
v.  Hale,  90  N.  Y.  326.  On  the  other  hand  the  rule  of  Pain  v.  Packard  applies  to  one 
who,  although  originally  a  principal  debtor,  has  become  in  effect  a  surety  through  the 
assumption  of  his  liability  by  another  person.  Colgrove  v.  Tallman,  67  N.  Y.  95.  But 
see  contra,  Fish  v.  Glover,  154  111.  86. 

In  Pitts  v.  Congdon,  2  N.  Y.  352,  the  Court  carried  the  notion  that  an  indorser  is 
not  a  surety  so  far  as  to  decide  that  the  owner  of  a  note  who  transferred  it  as  an  in- 
dorser continued  liable  for  the  full  amount  of  the  note,  notwithstanding  the  holder's 
surrender  to  the  maker  of  collateral  security.  —  Ed. 

2  The  plaintiff  failed  for  want  of  due  notice  of  dishonor  to  the  defendant.  Every- 
thing is  omitted  except  the  opinion  of  the  Court  upon  the  point  of  request.  —  Ed. 


SECT.  VII.]  SOMEL'SALL   V.   BAIiNEBY.  225 


SECTION   VII. 

No  Notice  to  Guarantor  of  Acceptance  of  the  Guaranty. 

SOMERSALL    v.   THOMAS    BARNEBY. 
In  the  King's  Bexch,  Michaelmas  Term,  1611. 

[Reported  in  Croke,  James,  287.] 

Assumpsit.  Whereas  communication  was  betwixt  the  plaintiff  and 
defendant  for  and  concerning  credit  to  be  obtained  and  given  for 
Charles  Fox  ;  that  the  defendant,  in  consideration  of  the  premises, 
and  in  consideration  that  the  plaintiff  would  be  obliged  for  the  said 
Charles  in  such  sums  of  monej"  and  to  such  persons  as  the  said  Charles 
should  desire  of  the  plaintiff,  assumed  that  he  would  discharge  and 
save  harmless  the  plaintiff  of  and  concerning  all  such  sums  of  money 
and  all  such  debts  as  he  should  become  bound  to  any  person  in,  as 
surety,  for  his  said  son  ;  and  allegeth  in  fact,  that  he,  at  the  request 
of  his  son,  14  November,  at  such  a  place,  became  obliged,  as  surety 
for  the  said  Charles  for  his  debt  to  one  Robert  Clerk,  in  two  hundred 
and  forty  pounds,  with  condition  for  the  delivery  of  twenty  foders  of 
lead  upon  the  twentieth  da}-  of  May  following ;  the  which  twenty 
foders  of  lead,  nor  any  part  thereof,  the  said  Charles  did  not  deliver ; 
whereupon  the  bond  was  forfeited,  and  he  compelled  to  pay  the  said 
two  hundred  and  forty  pounds  for  the  debt  of  the  said  Charles  to  the 
said  Robert  Clerk. 

The  defendant  pleaded  non  assumpsit ;  and  found  against  him  to 
his  damages  of  two  hundred  and  fifty  pounds. 

And  it  was  now  moved  in  arrest  of  judgment, 

Fourthly,1  Because  it  is  not  alleged  that  he  gave  notice  unto  the 
defendant  of  that  bond,  nor  requested  him  to  save  him  harmless  from 
it ;  and  the  defendant  is  a  stranger  thereto,  and  doth  not  know  in 
what  bonds  the  plaintiff  is  obliged  with  his  said  son  ;  and  being  a 
future  thing  to  be  entered  into  by  the  plaintiff,  the  defendant,  being 
a  stranger,  ought  to  have  notice  thereof  from  him  :  but  if  it  had  been 
to  save  him  harmless  from  bonds  formerly  entered  into,  it  had  been 
otherwise  ;  for  there  by  intendment  the  defendant  had  as  well  cogniz- 
ance of  them  as  the  plaintiff. —  Seel  non  allocatur  ;  for  the  Court  said 
it  was  all  one,  and  that  he  at  his  peril  ought  to  take  notice  thereof.2 

Wherefore  it  was  adjudged  for  the  plaintiff.8 

1  Only  what  relates  to  this  objection  is  here  reprinted.  —  Ed. 

2  See  also  Atkinson  v.  Rolfe,  1  Leon.  105. 

3  Oxley  v.  Young,  2  H.  Bl.  613;  Lysaght  v.  Walker,  5  Bligh,  n.  s.  1,  19,  22-23; 
Oldershaw  v.  King,  2  H.  &N.  399,  403,  517  ;  White  v.  Woodward,  5  C.  B.  810,  814,816 
\semble) ;  Fisk  v.  Stone,  6  Dak.  35;  Carman  v.  Elledge,  40  Iowa,  409 ;  Case  v.  Howard, 

15 


226  SOMEKSALL    V.    BARNEBY.  [CHAP.  II. 

41  Iowa,  479 ;  Davis  Co.  v.  Mills,  55  Iowa,  543  ;  Platter  v.  Green,  26  Kas.  252 ;  Caton 
v.  Shaw,  2  Har.  &  G.  13 ;  Boyd  v.  Snyder,  49  Md.  325  (see  also  Heymau  v.  Dooley, 
77  Md.  162);  Crittenden  v.  Fiske,  46  Mich.  70;  Wilcox  v.  Draper,  12  Neb.  138; 
Klosterman  v.  Olcott,  25  Neb.  382 ;  Whitney  v.  Groot,  24  Wend.  82 ;  Smith  v.  Dane, 
6  Hill,  543;  Union  Bank  v.  Coster,  3  N.  Y.  203;  City  Bank  v.  Phelps,  86  N.  Y.  484  ; 
Niles  Co.  v.  Reynolds,  4  N.  Y.  Ap.  Div.  24;  Powers  v.  Bumcratz,  12  Ohio  St.  273 
(overruling  dictum  in  Taylor  v.  Wetmore,  10  Ohio,  490) ;  Wise  v.  Miller,  45  Ohio  St. 
388;  Bright  v.  McKnight,  1  Sneed,  158;  Yancey  v.  Brown,  3  Sneed,  89;  Wells  v. 
Davis,  2  Utah,  411  ;  McNaughton  v.  Couklin,  9  Wis.  316  (semble),  Accord. 

Douglas  v.  Reynolds,  7  Pet.  113,  12  Pet.  497  ;  Lee  v.  Dick,  10  Pet.  482;  Adams  v. 
Jones,  12  Pet.  207 ;  Davis  Co.  v.  Richards,  115  U.  S  524 ;  Burne  v.  Semmes,  4  Cranch 
C.  C.  702  ;  Hart  v.  Minchen,  69  F.  R.  520 ;  Barnes  Co.  v.  Reed,  84  F.  R.  603 ;  Lawson 
i\  Townes,  2  Ala.  373  ;  Walker  v.  Forbes,  25  Ala.  139 ;  Fay  v.  Hall,  25  Ala.  709 ; 
Cahusac  v.  Samine,  29  Ala.  288 ;  McCollum  v.  Cushing,  22  Ark.  540 ;  Henderson  v. 
Reilly,  1  McArth.  25 ;  Rapelye  v.  Bailey,  3  Conn.  438 ;  Craft  v.  Isham,  13  Conn.  28 ; 
Taylor  v.  McCluug,  2  Houst.  24;  Buckingham  v.  Murray,  7  Houst.  176;  Farmers' 
Bank  v.  Tatnall,  7  Houst.  287  ;  Claflin  v.  Briant,  58  Ga.  414  ;  Newman  v.  Streator  Co., 
19  111.  Ap.  594;  Ruffner  v.  Love,  33  111.  Ap.  601  ;  Mayer  v.  Ruhstadt,  66  111.  Ap.  346  ; 
Milroy  v.  Quinn,  69  Ind.  406;  Hasselman  v.  Japanese  Co.,  2  Ind.  Ap.  180  (but  notice 
not  necessary  in  Indiana  if  guaranty  is  definite  as  to  time  and  amount  of  payment. 
Kline  v.  Raymond,  70  Ind.  271  ;  Snyder  v.  Click,  112  Ind.  293.  See  also  Jackson  v. 
Yaudes,  7  Blackf.  526;  Nading  v.  McGregor,  121  Ind.  465)  ;  Kincheloe  v.  Holmes,  7 
B.  Mon.  5  ;  Bell  v.  Keller,  13  B.  Mon.  381 ;  Lowe  v.  Beckwith,  14  B.  Mon.  184;  Sted- 
man  v.  Guthrie,  4  Met.  (Ky.)  147;  Thompson  v.  Glover,  78  Ky.  193  (semble);  Eaton 
v.  Harris  (Kentucky,  1897),  43  S.  W.  R.  199  ;  Illinois  Bank  v.  Sloo,  16  La.  539  ;  Men- 
ard v.  Scudder,  7  La.  An.  386 ;  Lachman  v.  Block,  47  La.  Au.  505 ;  Norton  v.  East- 
man, 4  Me.  521 ;  Seaver  v.  Bradley,  6  Me.  60  (semble)  ;  Tuckerman  v.  French,  7  Me. 
115;  Bradley  v.  Cary,  8  Me.  234;  Howe  v.  Nickels,  22  Me.  175  (semble);  Mussey  v. 
Rayner,  22  Pick.  223  ;  Allen  v.  Pike,  3  Cush.  238;  Paige  v.  Parker,  8  Gray,  211 
(semble);  Bishop  v.  Eaton,  161  Mass.  496;  Bascom  v.  Smith,  164  Mass.  61;  Winne- 
bago Mills  v.  Travis,  56  Minn.  480;  Straight  v.  Wight,  60  Minn.  515  (semble) ;  Smith 
v.  Anthony,  5  Mo.  504;  Central  Bank  v.  Shine,  48  Mo.  456;  Taylor  v.  Shouse,  71  Mo. 
361  (but  see  Davis  Co.  v.  Jones,  61  Mo.  409)  ;  Mitchell  v.  Railton,  45  Mo.  Ap.  273; 
Tolmau  Co.  v.  Means,  52  Mo.  Ap.  385  ;  Hill  v.  Calvin,  5  Miss.  231  ;  Montgomery  v. 
Kellogg,  43  Miss.  486  ;  Ellis  v.  Jones,  70  Miss.  60 ;  McDougal  v.  Calef,  34  N.  II.  534 
(semble)  (but  see  Bank  v.  Sinclair,  60  N.  H.  100) ;  Shewell  v.  Knox,  1  Dev.  (N.  Ca.) 
404  (semble)  ;  Patterson  v.  Reed,  7  W.  &  S.  144 ;  Kay  v.  Allen,  9  Barr,  320 ;  Kellogg 
v.  Stockton,  29  Pa.  460  ;  Gardner  v.  Lloyd,  110  Pa.  278  ;  Coe  v.  Buehler,  110  Pa.  366  ; 
Evans  v.  McCormick,  167  Pa.  247  ;  Bay  v.  Thompson,  1  Pears.  (Pa.)  551  ;  King  v. 
Batterson,  13  R.  I.  117  ;  Sollee  v.  Meugy,  1  Bail.  620  ;  Lawton  v.  Maner,  9  Rich.  335; 
Wardlaw  v.  Harrison,  11  Rich.  626  ;  Duncan  v.  Heller,  13  S.  Ca.  94;  Mayfield  v. 
Wheeler,  37  Tex.  256  ;  Wilkins  v.  Carter,  84  Tex.  438  ;  Carter  v.  Wilkins  (Tex.  Civ. 
Ap.  1895),  29  S.  W.  R.  1102;  Train  v.  Jones,  11  Vt.  444;  Oaks  v.  Weller,  13  Vt.  106, 
16  Vt.  63;  Lowry  v.  Adams,  22  Vt.  160;  Woodstock  Bank  v.  Downer,  27  Vt.  539; 
Noyes  v.  Nichols,  28  Vt.  189,  Contra. 

Reasonable  Time.  The  notice  of  acceptance,  when  required  at  all,  must  be  given 
in  a  reasonable  time.  The  notice  was  deemed  too  late  in  Mussey  v.  Rayner,  22  Pick. 
223  (two  years  and  nine  months) ;  Allen  v.  Pike,  3  Cush.  238  (three  years).  The 
notice  was  held  to  be  seasonable  in  Lowry  v.  Adams,  22  Vt.  160  (two  months).  In 
Seaver  v.  Bradley,  6  Me.  60,  a  delay  of  ten  months  was  not  fatal,  the  principal  debtor 
continuing  solvent.  In  Central  Bank  v.  Shine,  48  Mo.  456,  it  was  thought  that  fail- 
ure to  give  notice  was  immaterial  if  the  guarantor  was  not  thereby  damaged. 

Mode  of  Notice.  Notice  by  mail  is  sufficient  even  though  it  never  reach  the 
guarantor.  Bishop  v.  Eaton,  161  Mass.  496.  But  see  Hart  v.  Minchen,  69  F.  R.  520 
(leaving  the  question  open). 

Waiver  of  Notice.  Before  Default.  An  express  stipulation  that  the  guarantor 
shall  receive  notice  of  the  principal's  default  has  been  adjudged  to  imply  a  waiver 


SECT.  VII.]  M'lVER   V.   RICHAKDSON.  227 


M'lVER   and   Another    v.    RICHARDSON. 

In  the  King's  Bench,  May  31,  1813. 

[Reported  in  1  Muule  8f  Selwyn,  557.] 

Lord  Ellenborough,  C.  J.,  on  this  da}'  delivered  the  judgment  of 
the  Court.1  This  was  an  action  against  the  defendant  as  guarantor 
of  D.  Anderson  &  Co.  for  goods  which  the  plaintiffs  were  about  to 
supply  to  them,  but  hesitated  so  doing  upon  their  credit  alone;  on 
which  the  defendant  gave  them  the  paper  in  question.  Under  what 
representation  the  defendant  was  induced  to  sign  that  paper  we 
know  not.  The  question  mainly  for  our  consideration  was,  whether 
the  paper  imports  to  be  a  perfect  and  conclusive  guaranty,  or  only 
a  proposition  tending  to  a  guaranty.  And  in  the  latter  point  of  view 
the  Court  consider  it.    The  paper  was  to  this  effect :  — 

"  Messrs.  MTver  &  Co. 

"  Gentlemen,  —  As  I  understand  Messrs.  David  Anderson  &  Co., 
of  Quebec,  have  given  you  an  order  for  rigging,  &c,  which  will 
amount  to  about  four  thousand  pounds,  I  can  assure  you,  from  what  I 
know  of  D.  A.'s  honor  and  probity,  you  will  be  perfectly  safe  in  credit- 
ing them  to  that  amount ;  indeed  I  have  no  objection  to  guarantee  you 
against  any  loss  from  giving  them  this  credit. 

"  (Signed)  John  Richardson. 

'•Liverpool,  12th  March,  1811." 

We  do  not  know  on  what  kind  of  previous  application  the  defendant 
signed  it,  nor  is  there  any  subsequent  circumstance  stated  in  the  case 
from  which  it  can  be  collected.  The  paper  therefore  must  be  con- 
strued according  to  the  plain  natural  import  of  its  terms.  The  im- 
port is,  that  the  part}*  signing  it  understood  that  Anderson  &  Co.  had 
given  an  order  for  goods  amounting  to  about  £4,000  ;  that  this  order 


of  notice  of  acceptance.  Wadsworth  v.  Allen,  8  Grat.  174.  But  see  contra,  Taylor  v. 
McClung,  2  Houst.  24. 

After  Default.  A  guarantor,  discharged  by  the  creditor's  failure  to  give  seasonable 
notice  of  acceptance  of  the  guaranty  (or  of  the  default  of  the  principal  debtor)  re- 
nounces his  defence  by  a  subsequent  promise  to  pay.  Gamage  v.  Hutchins,  23  Me. 
565  ;  Sigourney  v.  Wetterell,  6  Met.  553  ;  Ashford  v.  Robinson,  8  Ired.  114.  The  sub- 
sequent promise  operates  here  just  as  in  the  following  cases  where  the  surety,  with 
knowledge  of  the  creditor's  agreement  to  give  time  to  the  principal,  promised  to  pay. 
Stevens  v.  Lynch,  12  East,  38;  Mayhew  v.  Crickett,  2  Sw.  185,  192,  per  Lord  Eldon; 
Smith  v.  Winter,  4  M.  &  W.  454 ;  Ellis  v.  Bibb,  2  Stew.  (Ala.)  63,  70  ;  First  Bank  v. 
Whitman,  66  111.  331 ;  Montgomery  v.  Hamilton,  43  Ind.  45 1  (semble) ;  Williams  v.  Boyd, 
75  Ind.  286 ;  Crutcher  v.  Trabue,  5  Dana,  80  ;  Young  v.  New  Farmers'  Bank  (Kentucky, 
1897),  43  S.  W.  R.  473  ;  Bishop  v.  Eaton,  161  Mass.  501  (semble) ;  Porter  v.  Hodenpuyl, 
9  Mich.  11  (semble)  ;  Hooper  v.  Pike  (Minnesota,  1897),  72  N.  W.  R.  829 ;  Merrimack 
Bank  v.  Brown,  12  N.  H.  320  (semble);  Fowler  v.  Brooks,  13  N.  H.  240  (semble)  ; 
Rochester  Bank  v.  Chick,  64  N.  H.  410  (semble)  ;  Bramble  v.  Ward,  40  Ohio  St.  267  ; 
Dey  v.  Martin,  78  Va.  1  (semble)  ;  Fay  v.  Tower,  58  Wis.  286  (semble).  But  seecontra. 
Walters  v.  Swallow,  6  Whart.  446.  —  Ed. 

1  Only  the  opinion  of  the  Court  is  given.  —  Ed. 


228  DAVIS   V.   WELLS.  [CHAP.  II 

remained  unexecuted ;  and  then,  as  if  a  question  had  been  put  to 
the  defendant  respecting  the  honor  and  probity  of  Anderson  &  Co., 
the  defendant  says,  "  I  can  assure  you  from  what  I  know  of  Anderson, 
you  will  be  perfectly  safe  in  crediting  them  to  that  amount ;  "  and  then 
he  adds,  " indeed  I  have  no  objection  to  guarantee  3011  against  any  loss 
from  giving  them  this  credit :  "  which  words  import,  that  if  application 
were  made  he  would  guarantee  ;  but  no  such  subsequent  application  was 
made,  indeed  it  appears  that  a  guaranty  was  obtained  from  another 
house.  A  considerable  period  elapsed,  and  it  was  not  made  known 
to  the  defendant  until  the  failure  of  Anderson  &  Co.  that  his  paper 
had  ever  been  communicated  to  the  plaintiffs.  Considering  this  as 
a  mere  overture  to  guarantee,  it  appears  to  us  that  the  defendant  ought 
to  have  had  notice  that  it  was  so  regarded,  and  meant  to  be  accepted, 
or  that  there  should  have  been  a  subsequent  consent  on  his  part  to 
convert  it  into  a  conclusive  guaranty.  Under  these  circumstances, 
therefore,  we  think  there  must  be  Judgment  of  nonsuit} 


DAVIS   v.   WELLS. 

In  the  Supreme  Court,  United  States,  October,  1881. 

[Reported  in  104  United  States  Reports,  159.] 

Error  to  the  Supreme  Court  of  the  Territory  of  Utah. 
Mr.  Justice  Matthews  delivered -the  opinion  of  the  Court. 
The  action  below  was  brought  b}T  Wells,  Fargo,  &  Co.,  against  the 
pwintiffs  in  error,  upon  a  guaranty,  in  the  following  words  :  — 

"  For  and  in  consideration  of  one  dollar  to  us  in  hand  paid  by  Wells, 
Fargo,  &  Co.  (the  receipt  of  which  is  hereby  acknowledged),  we  hereby 
guarantee  unto  them,  the  said  Wells,  Fargo,  &  Co.,  unconditionally  at  all 
times,  an}7  indebtedness  of  Gordon  &  Co.,  a  firm  now  doing  business  at 
Salt  Lake  Cit}',  Territory  of  Utah,  to  the  extent  of  and  not  exceeding 
the  sum  often  thousand  dollars  ($10,000)  for  any  overdrafts  now  made, 
or  that  may  hereafter  be  made  at  the  bank  of  said  Wells,  Fargo,  &  Co. 

"  This  guarant}'  to  be  an  open  one,  and  to  continue  one  at  all  times 
to  the  amount  of  ten  thousand  dollars,  until  revoked  by  us  in  writing. 

"  Dated,  Salt  Lake  City,  11th  November,  1874. 

"  In  witness  whereof  we  have  hereunto  set  our  hands  and  seals  the 

day  and  year  above  written. 

"Erwin  Davis.  [seal.] 

"  Witness:  J.  Gordon."  "J.  N.  H.  Patrick,      [seal.] 

1  Symmon  v.  Want,  2  Stark.  371  ;  Mozley  v.  Tinkler,  1  C,  M.  &  R.  692  ("  Gentle- 
men, Mr.  France  informed  me  that  you  are  about  publishing  an  arithmetic  for  him, 
and  I  have  no  objection  to  being  answerable  as  far  as  £50.  For  my  reference,  apply  to 
Messrs.  Brooke  &  Co.  of  this  place,"  signed  Geo.  Tinkler)  ;  Kastner  v.  Winstanley,  20 
Up.  Can.  C.  P.  101;  Sutherland  v.  Patterson,  4  Ont.  565;  Scribner  v.  Rutherford, 
65  Iowa,  551  ;  Stafford  v.  Low,  16  Johns.  67;  Beekman  v.  Hale,  17  Johns.  134; 
Powers  v.  Bumcratz,  12  Ohio  St.  273,  287,  288  (semble),  Accord.  —  Ed. 


SECT.  VII.]  DAVIS   V.   WELLS.  229 

The  answer  set  up,  by  way  of  defence,  that  there  was  no  notice  to 
the  defendants  from  the  plaintiffs  of  their  acceptance  of  the  guaranty, 
and  their  intention  to  act  under  it ;  and  no  notice  after  the  account 
was  closed,  of  the  amount  due  thereon ;  and  no  notice  of  the  demand 
of  payment  upon  Gordon  &  Co.,  and  of  their  failure  to  pay  within  a 
reasonable  time  thereafter.  But  there  was  no  allegation  that  by 
reason  thereof  any  loss  or  damage  had  accrued  to  the  defendants. 

On  the  trial  it  was  in  evidence,  that  this  guaranty  was  executed  by 
the  defendants  below,  and  delivered  to  Gordon  on  the  day  of  its  date, 
for  delivery  by  him  to  Wells,  Fargo,  &  Co.,  which  took  place  on  the 
same  day  ;  that  Gordon  &  Co.  were  then  indebted  to  the  plaintiffs 
below  for  a  balance  of  over  $9,000  on  their  bank  account ;  that  their 
account  continued  to  be  overdrawn,  Wells,  Fargo,  &  Co.  permitting 
it  on  the  faith  of  the  guaranty,  from  that  time  till  July  31,  1875,  when 
it  was  closed,  with  a  debit  balance  of  $6,200 ;  that  the  account  was 
stated  and  payment  demanded  at  that  time  of  Gordon  &  Co.,  who 
failed  to  make  payment;  that  a  formal  notice  of  the  amount  due  and 
demand  of  payment  was  made  by  Wells,  Fargo,  &  Co.,  of  the  defend- 
ants below,  on  May  26,  1876,  the  day  before  the  action  was  brought. 
There  was  no  evidence  of  any  other  notice  having  been  given  in  refer- 
ence to  it ;  either  that  Wells,  Fargo,  &  Co.  accepted  it  and  intended  to 
rely  upon  it,  or  of  the  amount  of  the  balance  due  at  or  after  the  account 
was  closed  ;  and  no  evidence  was  offered  of  any  loss  or  damage  to  the 
defendants  b}T  reason  thereof,  or  in  consequence  of  the  delay  in  giving 
the  final  notice  of  Gordon  &  Co.'s  default.1 

The  charge  of  the  Court  first  assigned  for  error,  and  its  refusal  to 
charge  upon  the  point  as  requested  by  the  plaintiffs  in  error,  raise  the 
question  whether  the  guaranty  becomes  operative  if  the  guarantor  be 
not,  within  a  reasonable  time,  informed  by  the  guarantee  of  his  accept- 
ance of  it  and  intention  to  act  under  it. 

It  is  claimed  in  argument  that  this  has  been  settled  in  the  negative 
by  a  series  of  well-considered  judgments  of  this  Court. 

It  becomes  necessary  to  inquire  precisely  what  has  been  thus  set- 
tled, and  what  rule  of  decision  is  applicable  to  the  facts  of  the  present 
case. 

In  Adams  v.  Jones,2  Mr.  Justice  Story,  delivering  the  opinion  of  the 
Court,  said:  "And  the  question  which,  under  this  view,  is  presented, 
is  whether,  upon  a  letter  of  guaranty,  addressed  to  a  particular  person 
or  to  persons  generally,  for  a  future  credit  to  be  given  to  the  party  in 
whose  favor  the  guaranty  is  drawn,  notice  is  necessary  to  be  given  to 
the  guarantor  that  the  person  giving  the  credit  has  accepted  or  acted 
upon  the  guaranty  and  given  the  credit  on  the  faith  of  it.  We  are  all 
of  the  opinion  that  it  is  necessaiy  ;  and  this  is  not  now  an  open  ques- 
tion in  this  Court,  after  the  decisions  which  have  been  made  in  Russell 

1  The  statement  of  the  case  is  abridged.  —  Ed. 

2  12  Pet.  207,  213. 


230  DAVIS   V.   WELLS.  [CHAP.  Ii. 

v.  Clarke  ; 1  Edmonston  v.  Drake  ;  2  Douglass  v.  Reynolds  ; 3  Lee  v. 
Dick  ; 4  and  again  recognized  at  the  present  term  in  the  case  of  Rey- 
nolds v.  Douglass.  It  is  in  itself  a  l'easonable  rule,  enabling  the  guar- 
antor to  know  the  nature  and  extent  of  his  liability  ;  to  exercise  due 
vigilance  in  guarding  himself  against  losses  which  might  otherwise  be 
unknown  to  him  ;  and  to  avail  himself  of  the  appropriate  means  in 
law  and  equity  to  compel  the  other  parties  to  discharge  him  from  fur- 
ther responsibility.  The  reason  applies  with  still  greater  force  to  cases 
of  a  general  letter  of  guaranty  ;  for  it  might  otherwise  be  impracticable 
for  the  guarantor  to  know  to  whom  and  under  what  circumstances  the 
guaranty  attached,  and  to  what  period  it  might  be  protracted.  Trans- 
actions between  the  other  parties  to  a  great  extent  might  from  time  to 
time  exist,  in  which  credits  might  be  given  and  payments  might  be 
made,  the  existence  and  due  appropriation  of  which  might  materiall}' 
affect  his  own  rights  and  security.  If,  therefore,  the  questions  were 
entirely  new,  we  should  not  be  disposed  to  hold  a  different  doctrine ; 
and  we  think  the  English  decisions  are  in  entire  conformity  to  our  own." 

In  Re3'nolds  v.  Douglass,5  decided  at  the  same  term  and  referred  to 
in  the  foregoing  extract,  Mr.  Justice  McLean  stated  the  rule  to  be 
' '  that,  to  entitle  the  plaintiffs  to  recover  on  said  letter  of  credit, 
they  must  prove  that  notice  had  been  given  in  a  reasonable  time  after 
Baid  letter  of  credit  had  been  accepted  by  them  to  the  defendants,  that 
the  same  had  been  accepted  ; "  and  he  added:  "This  notice  need  not 
be  proved  to  have  been  given  in  writing  or  in  any  particular  form,  but 
may  be  inferred  by  the  jury  from  the  facts  and  circumstances  which 
shall  warrant  such  inference." 

There  seems  to  be  some  confusion  as  to  the  reason  and  foundation  of 
the  rule,  and  consequently  some  uncertainty  as  to  the  circumstances 
in  which  it  is  applicable.  In  some  instances  it  has  been  treated  as  a 
rule,  inhering  in  the  very  nature  and  definition  of  every  contract,  which 
requires  the  assent  of  a  party  to  whom  a  proposal  is  made  to  be  signi- 
fied to  the  party  making  it,  in  order  to  constitute  a  binding  promise ;  6 

1  7  Cranch,  69.  2  5  Pet.  624.  3  7  Pet.  113. 

4  10  Pet.  482.  5  12  Pet.  497,  504. 

6  Louisville  Co.  w.  Welch,  10  How.  461,475  ;  Barnes  Co.  v.  Reed,  84  F.  R,  603  ;  New- 
man v.  Streator,  19  111.  Ap.  594;  Ruffner  v.  Love,  33  111.  Ap.  601  ;  Kincheloe  v.  Holmes, 
7  B.  Mon.  5  ;  Lachman  v.  Block,  47  La.  An.  505  ;  Howe  v.  Nickels,  22  Me.  175  ;  Winne- 
bago Mills  v.  Travis,  56  Minn.  480  ;  Mitchell  v.  Railton,45  Mo.  Ap.  273 ;  Kay  v.  Allen, 
9  Barr,  320  ;  Kellogg  v.  Stockton,  29  Pa.  460  ;   Wilkins  v.  Carter,  84  Tex.  438,  Accord. 

Contrast  with  this  view  the  following  statement  by  Bronson,  J.,  in  Smith  v.  Dann, 
6  Hill,  544  :  "  The  defendant  invited  the  plaintiff  to  sell  goods  to  Steel  &  Wall,  on  his 
promise  to  guarantee  the  payment  of  the  debt.  The  plaintiffs  assented,  and  delivered 
the  goods.  The  proposition  of  one  party  was  accepted  by  the  other  ;  and  according  to 
our  notions  of  the  law  this  made  a  complete  contract.  Nothing  further  was  necessary 
to  its  consummation.  If  the  defendant  wanted  notice,  and  did  not  get  it  from  the  per- 
sons whom  he  thought  worthy  of  credit,  it  was  his  business  to  inquire  and  ascertain 
what  had  been  done.  There  is  nothing  in  the  defendant's  undertaking  which  looks 
like  a  condition,  or  even  a  request,  that  the  plaintiffs  should  give  him  notice  if  they 
acted  upon  the  guaranty  ;  and  there  is  no  principle  upon  which  we  can  hold  that  notice 
Was  an  essential  element  of  the  contract."  —  Ed. 


SECT.  VII.]  DAVIS   V.   WELLS.  231 

in  others  it  has  been  considered  as  a  rule  springing  from  the  peculiar 
nature  of  the  contract  of  guaranty,  which  requires,  after  the  forma- 
tion of  the  obligation  of  the  guarantor,  and  as  one  of  its  incidents,  that 
notice  should  be  given  of  the  intention  of  the  guarantee  to  act  under  it, 
as  a  condition  of  the  promise  of  the  guarantor.1 

The  former  is  the  sense  in  which  the  rule  is  to  be  understood  as  hav- 
ing been  applied  in  the  decisions  of  this  Court.  This  appears  very 
plainly,  not  only  from  a  particular  consideration  of  the  cases  themselves, 
but  was  formerly  declared  to  be  so  by  Mr.  Justice  Nelson,  speaking  for 
the  Court  in  delivering  its  opinion  in  Louisville  Manufacturing  Co.  v. 
Welch,2  where  he  uses  this  language  :  "  He  [the  guarantor]  has  already 
had  notice  of  the  acceptance  of  the  guaranty  and  of  the  intention  of 
the  party  to  act  under  it.  The  rule  requiring  this  notice  within  a  rea- 
sonable time  after  the  acceptance  is  absolute  and  imperative  in  this 
Court,  according  to  all  the  cases  ;  it  is  deemed  essential  to  an  inception 
of  the  contract ;  he  is,  therefore,  advised  of  his  accruing  liabilities  upon 
the  guaranty,  and  may  very  well  anticipate  or  be  charged  with  notice 
of  an  amount  of  indebtedness  to  the  extent  of  the  credit  pledged." 

And  in  Wildes  v.  Savage,3  Mr.  Justice  Story,  who  had  delivered  the 
opinion  in  Douglass  v.  Reynolds,4  after  stating  the  rule  requiring  notice 
b}'  the  guarantee  of  his  acceptance,  said  :  "  This  doctrine,  however,  is 
inapplicable  to  the  circumstances  of  the  present  case  ;  for  the  agree- 
ment to  accept  was  contemporaneous  with  the  guarant}',  and,  indeed, 
constituted  the  consideration  and  basis  thereof." 

The  agreement  to  accept  is  a  transaction  between  the  guarantee  and 
guarantor,  and  completes  that  mutual  assent  necessary  to  a  valid  con- 
tract between  them.  It  was,  in  the  case  cited,  the  consideration  for  the 
promise  of  the  guarantor.  And  wherever  a  sufficient  consideration  of 
any  description  passes  directly  between  them,  it  operates  in  the  same 
manner  and  with  like  effect.  It  establishes  a  privity  between  them  and 
creates  an  obligation.  The  rule  in  question  proceeds  upon  the  ground 
that  the  case  in  which  it  applies  is  an  offer  or  a  proposal  on  the  part  of 

1  "The  language  relied  on  was  an  offer  to  guarantee,  which  the  plaintiff  might 
or  might  not  accept.  ...  It  was  an  offer  to  be  bound  in  consideration  of  an  act 
to  be  done,  and  in  such  a  case  the  doing  of  the  act  constitutes  the  acceptance  of 
the  offer  and  furnishes  the  consideration.  Ordinarily  there  is  no  occasion  to  notify 
the  offerer  of  the  acceptance  of  such  an  offer,  for  the  doing  of  the  act  is  a  sufficient 
acceptance,  and  the  promisor  kuows  that  he  is  bound  when  he  sees  that  action  has  been 
taken  on  the  faith  of  his  offer.  But  if  the  act  is  of  such  a  kind  that  knowledge  of  it 
will  not  quickly  come  to  the  promisor,  the  promisee  is  bound  to  give  him  notice  of  his 
acceptance  within  a  reasonable  time  after  doing  that  which  constitutes  the  acceptance. 
In  such  a  case  it  is  implied  in  the  offer  that,  to  complete  the  contract,  notice  shall  be 
given  with  due  diligence,  so  that  the  promisor  may  know  that  a  contract  has  been 
made.  But  where  the  promise  is  in  consideration  of  an  act  to  be  done,  it  becomes 
binding  upon  the  doing  of  the  act  so  far  that  the  promisee  cannot  be  affected  by  a 
subsequent  withdrawal  of  it,  if  within  a  reasonable  time  afterward  he  notifies  the 
promisor"  (a).  From  the  opinion  of  the  Court,  per  Knowlton,  J.,  in  Bishop  v.  Eaton, 
161  Mass.  499-500.  —  Ed. 

8  10  How.  461,  475.  3  1  Story,  22.  *  7  Pet.  113. 

(a)  Oaks  v.  Weller,  13  Vt.  106,  Accord.  —  Ed. 


232  DAVIS   V.   WELLS.  [CHAP.  IL 

the  guarantor,  which  does  not  become  effective  and  binding  as  an  obli- 
gation until  accepted  by  the  party  to  whom  it  is  made  ;  that  until  then 
it  is  inchoate  and  incomplete,  and  may  be  withdrawn  by  the  proposer. 
Frequently  the  only  consideration  contemplated  is  that  the  guarantee 
shall  extend  the  credit  and  make  the  advances  to  the  third  person,  for 
whose  performance  of  his  obligation,  on  that  account,  the  guarantor 
undertakes.  But  a  guaranty  may  as  well  be  for  an  existing  debt,  or  it 
may  be  supported  by  some  consideration  distinct  from  the  advance  to 
the  principal  debtor,  passing  directly  from  the  guarantee  to  the  guaran- 
tor. In  the  case  of  the  guarant}7  of  an  existing  debt,  such  a  consider- 
ation is  necessary  to  support  the  undertaking  as  a  binding  obligation. 
In  both  these  cases,  no  notice  of  assent,  other  than  the  performance  of 
the  consideration,  is  necessaiy  to  perfect  the  agreement ;  for,  as  Pro- 
fessor Langdell  has  pointed  out  in  his  Summary  of  the  Law  of  Con- 
tracts,1 "  though  the  acceptance  of  an  offer  and  the  performance  of 
the  consideration  are  different  things,  and  though  the  former  does  not 
itnply  the  latter,  yet  the  latter  does  necessarily  imply  the  former ;  and 
as  the  want  of  either  is  fatal  to  the  promise,  the  question  whether  a.u 
offer  has  been  accepted  can  never  in  strictness  become  material  in  those 
cases  in  which  a  consideration  is  necessary;  and  for  all  practical  pur- 
poses it  may  be  said  that  the  offer  is  accepted  in  such  cases  by  giving 
or  performing  the  consideration." 

If  the  guarant}-  is  made  at  the  request  of  the  guarantee,  it  then  be- 
comes the  answer  of  the  guarantor  to  a  proposal  made  to  him,  and  its 
delivery  to  or  for  the  use  of  the  guarantee  completes  the  communication 
between  them  and  constitutes  a  contract.  The  same  result  follows,  as 
declared  in  Wildes  v.  Savage  (supra),  where  the  agreement  to  accept  is 
contemporaneous  with  the  guarant}7,  and  constitutes  its  consideration 
and  basis.  It  must  be  so  wherever  there  is  a  valuable  consideration, 
other  than  the  expected  advances  to  be  made  to  the  principal  debtor, 
which,  at  the  time  the  undertaking  is  given,  passes  from  the  guarantee 
to  the  guarantor,  and  equally  so  where  the  instrument  is  in  the  form  of 
a  bilateral  contract,  in  which  the  guarantee  binds  himself  to  make  the 
contemplated  advances,  or  which  otherwise  creates,  bjr  its  recitals,  a 
privity  between  the  guarantee  and  the  guarantor ;  for  in  each  of  these 
cases  the  mutual  assent  of  the  parties  to  the  obligation  is  either  ex- 
pressed or  necessarily  implied.2 

1  Langdell's  Cases  on  Contracts,  987. 

2  Guaranty  of  Existing  Debts  or  of  Liabilities  arising  at  the  Moment 
the  Guaranty  is  given.  Bushnell  v.  Church,  15  Conn.  406;  Chester;;.  Leonard, 
68  Conn.  495;  Solary  v.  Stultz,  22  Fla.  263;  Sanderson  v.  Etcherson,  36  Ga.  404; 
Wills  v.  Ross,  77  Ind.  1  ;  Bechtold  v.  Lyon,  130  Ind.  194  ;  Mitchell  v.  McClary,  42 
Md.  374,  Accord. 

Duncan  v.  Heller,  13  S.  Ca.  94;  Wilkins  v.  Carter,  84  Tex.  438,  Contra. 

Guaranty  in  Consideration  of  $1.  Taylor  v.  Tolman,  47  111.  Ap.  264  ;  Sears  v. 
Swift,  66  111.  Ap.  496 ;  Furst  Co.  v.  Black,  1 1 1  Ind.  308  ;  Howe  v.  Nickels,  22  Me.  175  ; 
March  v.  Putney,  56  N.  H.  34  ;  Johnson  v.  Bailey,  79  Tex.  516,  Accord. 

Farmers'  Bank  v.  Tatuall,  7  Houst.  287,  Contra. 


SECT.  VII.]  DAVIS   V.   WELLS.  233 

The  view  we  have  taken  of  the  rule  under  consideration,  as  requiring 
notice  of  acceptance  and  of  the  intention  to  act  under  the  guaranty, 
only  when  the  legal  effect  of  the  instrument  is  that  of  an  offer  or  pro- 
posal, and  for  the  purpose  of  completing  its  obligation  as  a  contract,  is 
the  one  urged  upon  us  by  the  learned  counsel  for  the  plaintiff  in  error, 
who  says,  in  his  printed  brief:  "  For  the  ground  of  the  doctrine  is  not 
that  the  operation  of  the  writing  is  conditional  upon  notice,  but  it  is 
that  until  it  is  accepted,  and  notice  of  its  acceptance  given  to  the 
guarantor,  there  is  no  contract  between  the  guarantor  and  the  guaran- 
tee ;  the  reason  being  that  the  writing  is  merely  an  offer  to  guarantee 
the  debt  of  another,  and  it  must  be  accepted  and  notice  thereof  given 
to  the  party  offering  himself  as  security  before  the  minds  meet  and  he 
becomes  bound.  Until  the  notice  is  given,  there  is  a  want  of  mutual- 
ity :  the  case  is  not  that  of  an  obligation  on  condition,  but  of  an  offer 
to  become  bound  not  accepted  ;  that  is,  there  is  not  a  conditional  con- 
tract, but  no  contract  whatever.'' 

It  is  thence  argued  that  the  words  in  the  instrument  which  is  the 
foundation  of  the  present  action,  —  "we  hereby  guarantee  unto  them, 
the  said  Wells,  Fargo,  &  Co.,  unconditionally,  at  all  times,"  &c,  —  can- 
not have  the  effect  of  waiving  the  notice  of  acceptance,  because  they 
can  have  no  effect  at  all  except  as  the  words  of  a  contract,  and  there 
can  be  no  contract  without  notice  of  acceptance.  And  on  the  suppo- 
sition that  the  terms  of  the  instrument  constitute  a  mere  offer  to  guar- 
antee the  debt  of  Gordon  &  Co.,  we  accept  the  conclusion  as  entirely 
just. 

But  we  are  unable  to  agree  to  that  supposition.  "We  think  that  the 
instrument  sued  on  is  not  a  mere  unaccepted  proposal.  It  carries  upon 
its  face  conclusive  evidence  that  it  had  been  accepted  by  Wells,  Fargo, 
&  Co.,  and  that  it  was  understood  and  intended  to  be,  on  delivery  to 
them,  as  it  took  place,  a  complete  and  perfect  obligation  of  guarant}'. 
That  evidence  we  find  in  the  words,  "  for  and  in  consideration  of  one 
dollar  to  us  paid  by  Wells,  Fargo,  &  Co.,  the  receipt  of  which  is  here- 
by acknowledged,  we  hereby  guarantee,"  &c.  How  can  that  recital  be 
true,  unless  the  covenant  of  guaranty  had  been  made  with  the  assent 
of  Wells,  Fargo,  &  Co.,  communicated  to  the  guarantors?  Wells, 
Fargo,  &  Co.  had  not  only  assented  to  it,  but  had  paid  value  for  it,  and 
that  into  the  very  hands  of  the  guarantors,  as  they  by  the  instrument 
itself  acknowledge. 

It  is  not  material  that  the  expressed  consideration  is  nominal.  That 
point  was  made,  as  to  a  guarantee,  substantially  the  same  as  this,  in  the 
case  of  Lawrence  v.  McCalmont,1  and  was  overruled.  Mr.  Justice 
Story  said  :    "  The  guarantor  acknowledged  the  receipt  of  the  one  dol- 

Compare  Barnes  Co.  v.  Reed,  84  F.  R.  603. 

Bilateral  Contracts.  Wildes  v.  Savage,  1  Story,  22  ;  Bechtold  v.  Lyon,  130  Ind. 
194  (semble) ;  Cook  v.  Orne,  37  111.  186 ;  Neagle  v.  Sprague,  63  111.  Ap.  25 ;  Lehigh  Co. 
v.  Scallen,  61  Minn.  63,  Accord.  —  Ed. 

1  2  How.  426,  452. 


234  DAVIS   V.    WELLS.  [CHAP.  II. 

lar,  and  is  now  estopped  to  deny  it.  If  she  has  not  received  it,  she 
would  now  be  entitled  to  recover  it.  A  valuable  consideration,  how- 
ever small  and  nominal,  if  given  or  stipulated  for  in  good  faith,  is,  in 
the  absence  of  fraud,  sufficient  to  support  an  action  on  any  pai*ol  con- 
tract ;  and  this  is  equally  true  as  to  contracts  of  guaranty  as  to  other 
contracts.  A  stipulation  in  consideration  of  one  dollar  is  just  as  effec- 
tual and  valuable  a  consideration  as  a  larger  sum  stipulated  for  or  paid. 
The  very  point  arose  in  Dutchman  y.  Tooth,1  where  the  guarantor  gave 
a  guaranty  for  the  payment  of  the  proceeds  of  the  goods  the  guarantee 
had  consigned  to  his  brother,  and  also  all  future  shipments  the  guaran 
tee  might  make  in  consideration  of  two  shillings  and  sixpence  paid  him, 
the  guarantor.  And  the  Court  held  the  guaranty  good,  and  the  con- 
sideration sufficient." 

It  is  worthy  of  note  that  in  the  case  from  which  this  extract  is 
taken  the  guaranty  was  substantially  the  same  as  that  in  the  present 
case,  and  that  no  question  was  made  as  to  a  notice  of  acceptance.  It 
seems  to  have  been  treated  as  a  complete  contract  by  force  of  its 
terms. 

It  does  not  affect  the  conclusion,  based  on  these  views,  that  the 
present  guarant}T  was  for  future  advances  as  well  as  an  existing  debt. 
It  cannot,  therefore,  be  treated  as  if  it  were  an  engagement,  in  which 
the  only  consideration  was  the  future  credit  solicited  and  expected. 
The  recital  of  the  consideration  paid  b}*  the  guarantee  to  the  guarantor 
shows  a  completed  contract,  based  upon  the  mutual  assent  of  the  par- 
ties ;  and  if  it  is  a  contract  at  all,  it  is  one  for  all  the  purposes 
expressed  in  it.  It  is  an  entirety,  and  cannot  be  separated  into  dis- 
tinct parts.  The  covenant  is  single,  and  cannot  be  subjected  in  its  in- 
terpretation to  the  operation  of  two  diverse  rules. 

Of  course  the  instrument  takes  effect  only  upon  delivery.  But  in 
this  case  no  question  was  or  could  be  made  upon  that.  It  was  admitted 
that  it  was  delivered  to  Gordon  for  delivery  to  the  plaintiffs  below,  and 
that  he  delivered  it  to  them. 

But  if  we  should  consider  that,  notwithstanding  the  completeness  of 
the  contract  as  such,  the  guaranty  of  future  advances  was  subject  to  a 
condition  implied  by  law  that  notice  should  be  given  to  the  guarantor 
that  the  guarantee  either  would  or  had  acted  upon  the  faith  of  it,  we 
are  led  to  inquire  what  effect  is  to  be  given  to  the  use  of  the  words 
which  declare  that  the  guarantors  thereb}'  "  guarantee  unto  them,  the 
said  Wells,  Fargo,  &  Co.,  unconditionally,  at  all  times,  airy  indebted- 
ness of  Gordon  &  Co.,  &c,  to  the  extent  and  not  exceeding  the  sum 
of  ten  thousa-nd  dollars,  for  any  overdrafts  now  made,  or  that  hereafter 
ma}T  be  made,  at  the  bank  of  said  Wells,  Fargo,  &  Co." 

Upon  the  supposition  now  made,  the  notice  alleged  to  be  necessary 
arises  from  the  nature  of  such  a  guaranty.  It  is  not  and  cannot  be 
claimed  that  such  a  condition  is  so  essential  to  the  obligation  that  it 

1  5  Bingham's  New  Cases,  577. 


BEGT.  VII.]  DAVIS   V.   WELLS.  235 

cannot  be  waived.  "We  do  not  see,  therefore,  what  less  effect  can  be 
ascribed  to  the  words  quoted  than  that  all  conditions  that  otherwise 
would  qualify  the  obligation  are  by  agreement  expunged  from  it  and 
made  void.  The  obligation  becomes  thereby  absolute  and  unqualified  ; 
free  from  all  conditions  whatever.  This  is  the  natural,  obvious,  and 
ordinary  meaning  of  the  terms  employed,  and  we  cannot  doubt  that 
they  express  the  real  meaning  of  the  parties.  It  was  their  manifest 
intention  to  make  it  unambiguous  that  Wells,  Fargo,  &  Co.,  for  any 
indebtedness  that  might  arise  to  them  in  consequence  of  overdrafts  by 
Gordon  &  Co.,  might  securely  look  to  the  guarantors  without  the  per- 
formance on  their  part  of  anj-  conditions  precedent  thereto  whatever. 

It  has  always  been  held  in  this  Court  that,  notwithstanding  the  con- 
tract of  guaranty  is  the  obligation  of  a  surety,  it  is  to  be  construed  as 
a  mercantile  instrument  in  furtherance  of  its  spirit  and  liberally,  to 
promote  the  use  and  convenience  of  commercial  intercourse. 

This  view  applies  with  equal  force  to  the  exceptions  to  the  other 
charges  and  refusals  to  charge  of  the  Court  below.  These  exceptions 
are  based  on  the  propositions,  — 

1.  That  if  Wells,  Fargo,  &  Co.  neglected  to  notify  the  defendants 
below  of  the  amount  of  the  overdraft  within  a  reasonable  time  after 
closing  the  account  of  Gordon  &  Co. ;  and, 

2.  That  if  they  failed  within  a  reasonable  time  after  demand  of  pa}T- 
ment  made  upon  Gordon  &  Co.,  to  notify  the  defendants  of  the  default, 
the  plaintiffs  could  not  recover  upon  the  guaranty. 

For  if  the  necessity  in  either  or  both  of  these  contingencies  existed 
to  give  the  notice  specified,  it  was  because  the  dut}T  to  do  so  was,  by 
construction  of  law,  made  conditions  of  the  contract. 

But  by  its  terms,  as  we  have  shown,  the  contract  was  made  absolute, 
and  all  conditions  were  waived. 

It  is  undoubtedly  true,  that  if  the  guarantee  fails  to  give  reasonable 
notice  to  the  guarantor  of  the  default  of  the  principal  debtor,  and  loss 
or  damage  thereby  ensues  to  the  guarantor,  to  that  extent  the  latter  is 
discharged  ;  but  both  the  laches  of  the  plaintiff  and  the  loss  of  the  de- 
fendant must  concur  to  constitute  a  defence. 

If  an}-  intermediate  notice,  at  the  expiration  of  the  credit,  of  the 
extent  of  the  liability  incurred  is  requisite,  the  same  rule  applies.1    Such 

1  In  jurisdictions  where  notice  of  acceptance  of  a  guaranty  is  required,  failure  to  give 
notice,  within  a  reasonable  time  after  the  close  of  the  transactions  under  a  continuing 
guaranty,  of  the  amount  advanced  thereunder  will  discharge  the  guarantor,  unless  it 
appears  that  the  guarantor  was  not  prejudiced  by  the  creditor's  laches.  Douglas  v. 
Reynolds,  7  Pet.  113  (semble) ;  Louisville  Co.  v.  Welch,  10  How.  461  ;  Cremer  v.  Hig- 
ginson,  1  Mas.  323 ;  Wildes  v.  Savage,  1  Story,  22,  33  (semble) ;  Craft  v.  Isham,  13 
Conn.  28;  Davis  Co.  v.  Mills,  55  Iowa,  543;  Singer-  Co.  v.  Littler,  56  Iowa,  601 ;  Howe 
v.  Nickels,  22  Me.  175;  Babcock  v.  Bryant,  12  Pick.  133;  Courtis  r.  Dennis,  7  Met. 
CIO;  Clark  v.  Remington,  11  Met.  361;  Paige  v.  Parker,  8  Gray,  211;  Whiting  v. 
Stacy,  15  Gray,  270;  Montgomery  v.  Kellogg,  43  Miss.  486:  Beebe  v.  Dudley,  26  N.  H. 
249;  Bay  v.  Thompson,  1  Pears.  551. 

But  see  contra,  Cahusac  v.  Samini,  29  Ala.  288;  Lowe  v.  Beckwith,  14  B.  Mon.  184 
-Ed. 


236  MAYNARD   V.   MORSE.  [CHAP.  II. 

was  the  express  decision  in  Louisville  Manufacturing  Co.  v.  Welch, 
supra.  An  unreasonable  delay  in  giving  notice,  or  a  failure  to  give  it 
altogether,  is  not  of  itself  a  bar. 

There  was  a  question  made  at  the  trial  as  to  the  meaning  of  the 
word  "overdrafts,"  as  used  in  the  guaranty.  It  was  contended  that 
it  would  not  include  the  debit  balance  of  account  charged  to  Gordon  & 
Murray,  and  assumed  by  Gordon  &  Co.,  as  their  successors,  before  the 
guaranty  was  made,  nor  charges  of  interest  accrued  upon  the  balances 
of  Gordon  &  Co.'s  account,  which  were  entered  to  the  debit  of  the 
account.  The  reason  alleged  was,  that  no  formal  checks  were  given 
for  these  amounts.  The  point  was  not  urged  in  argument  at  the  bar, 
and  was  very  properly  abandoned.  The  charges  were  legitimate  and 
correct,  and  the  balance  of  the  account  to  the  debit  of  Gordon  &  Co. 
was  the  overdraft  for  which  they  were  liable.  There  could  be  no  doubt 
that  it  was  embraced  in  the  guaranty. 

We  find  no  error  in  the  record.  Judgment  affirmed. 


C.   B.   MAYNARD   v.   JAMES    MORSE   and   AARON   MORSE. 
In  the  Supreme  Court,  Vermont,  January  Term,  1864. 

[Reported  in  36  Vermont  Reports,  617.] 

Assumpsit  upon  the  following  contract:  "  Hydepark,  July  17,  1855. 
For  value  received  we  jointly  and  severally  promise  to  pay  C  B.  May- 
nard, or  order,  any  sum  of  money  that  James  Morse  may  be  indebted 
to  said  Maynard  up  to  the  1st  day  of  November  next,  said  sum  not  to 
exceed  five  hundred  dollars  at  any  one  time  and  interest.  James 
Morse.  Aaron  Morse."  Plea,  the  general  issue.  Trial  by  jury, 
at  the  September  Term,  1863,  Aldis,  J.,  presiding.  The  plaintiff  in- 
troduced this  contract,  and  then  proceeded  to  show  that  James  Morse 
was  justly  indebted  to  the  plaintiff,  up  to  November  1st,  1855,  in  the 
sum  of  $500.  The  only  exception  taken  was  upon  this  point,  viz., 
The  defendant  Aaron  Morse,  who  signed  the  contract  as  surety  for 
James  Morse,  claimed  that  the  contract  aforesaid  was  a  mere  guaranty, 
and  that  Aaron  Morse  was  entitled  to  notice  of  the  acceptance  of  the 
said  guaranty  by  Maynard,  and  that  the  plaintiff  acted  upon  it  in 
allowing  the  defendant  James  Morse  to  become  indebted  to  him  to 
the  aforesaid  amount  of  $500.  But  the  Court  ruled  otherwise,  and 
under  this  ruling  the  defendant  Aaron  Morse  submitted  to  a  verdict 
for  the  plaintiff,  and  excepted  to  the  decision  of  the  defendant. 

Edson  &  Rand,  for  the  defendant. 

W.  C.   Wilson  and  H.  S.  Boyce,  for  the  plaintiff. 

Barrett,  J.  The  question  is  not,  whether  James  Morse  could 
become  a  guarantor,  in  the  commercial  sense,  for  his  own  debt,  nor 


SECT.  VII.]  MAYNAKD   V.   MORSE.  237 

whether,  if  Aaron  Morse  had  individually  executed  such  a  paper  as  the 
present,  he  would  have  been  a  guarantor  of  James,  in  the  commercial 
sense,  and  thereupon  been  entitled  to  notice  that  the  guaranty  had 
been  acted  upon. 

But  it  is  whether,  by  force  of  the  instrument  in  this  case,  the  de- 
fendants became  bound  to  perform  according  to  its  stipulation,  upon 
its  being  received  by  the  plaintiff  for  property  or  money  advanced  to 
James. 

The  defendants,  by  this  paper,  assume  a  joint  obligation,  to  become 
operative  upon  a  specified  event,  as  constituting  the  consideration.  If 
such  consideration  be  valid  to  give  the  instrument  effect  as  to  either, 
it  gives  it  effect  as  to  both  ;  and  it  is  not  allowable  for  one  of  the  obli- 
gors to  claim  exemption  on  the  score  of  some  peculiar  relation  that  he, 
in  fact,  sustained  to  his  fellow ;  unless  the  obligee  has  been  guilty  of 
some  fraud,  or  bad  faith,  that  would  avoid  the  obligation  assumed  by 
the  tenor  of  the  contract. 

There  is  no  question  but  that  the  obligation  of  the  paper  became 
effectual  as  to  James  Morse,  when  the  plaintiff  took  it  and  advanced 
property  to  him  on  the  strength  of  it.  We  have  not  been  apprised  of 
any  principle  or  case  which  distinguishes  between  joint  obligors  or 
promisors  in  respect  to  their  respective  liability  to  the  obligee  or 
promisee,  where  the  undertaking  is  for  the  same  thing  and  upon  the 
same  consideration. 

We  see  no  occasion  to  discuss  the  subject  of  notice  to  a  guarantor, 
as  involved  in  many  of  the  cases,  —  for  we  do  not  think  it  is  involved 
in  this  beyond  the  notice  operated  by  the  fact  that  James  Morse  passed 
off  the  paper  for  property  advanced  just  as  the  paper  was  upon  its  face 
intended  to  be  used  ;  and  the  effect  of  this  act  was  the  same  as  to  both 
the  joint  makers  of  the  instrument.  If  that  act  be  treated  in  the  nature 
of  notice  of  the  acceptance  of  the  paper,  then  by  force  of  the  joint 
relation  of  the  defendants,  it  operated  upon  both  to  every  legal  intent 
of  fixing  the  liability  of  both.  The  judgment  is  affirmed.1 

1  See  to  the  same  effect  Hall  v.  Weaver,  34  F.  R.  104;  McMillan  v.  Bull's  Head 
Bank,  32  Ind.  11 ;  Bryant  v.  Stout,  16  Ind.  Ap.  380  (explaining  La  Rose  v.  Bank,  102 
Ind.  532);  Bank  v.  Kercheval,  2  Mich.  504;  Cox  v.  Machine  Co.,  57  Miss.  350,  in 
which  oases  the  surety  and  principal  joined  in  the  execution  of  a  bond ;  and  Saint 
v.  WheeXsr,  95  Ala.  362,  where  the  joint  ohligation  was  a  covenant.  —  Ed. 


238  BKOOKBAiSTK   V.    TAYLOK.  [CHAP.  II. 


SECTION  VIII. 

No  Notice  to  Guarantor  of  Default  of  Principal  Debtor, 

■ 

BROOKBANK  v.   TAYLOR. 

In  the  Exchequer  Chamber,  Hilary  Term,  1624. 

[Reported  in  Croke,  James,  685.] 

Assumpsit.  Whereas  the  plaintiff,  at  the  defendant's  request,  20 
April,  19  Jac.  I.,  demised  to  one  John  Jennings  his  house  in  London 
for  a  3'ear  a  prcedicto  20  Aprilis,  19  Jac.  I.,  rendering  fifty  shillings 
quarterly ;  that  the  defendant  promised,  if  the  said  Jennings  did  not 
pay  the  rent,  that  he  would  pa}-  it ;  and  allegeth  in  fact,  quod  virtute 
dimissionis  he  entered  the  aforesaid  20  April,  19  Jac.  L,  and  was 
possessed,  and  had  not  paid  the  rent ;  and  that  the  defendant,  licet  re- 
quisitus,  had  not  paid  it.  The  defendant  pleaded  non  assumpsit;  and 
found  against  him  ;  and  the  jury  find  damages  occasione  assumptionis 
prcedict.  to  five  pounds  ;  and  judgment  thereupon  ;  and  error  thereupon 
in  the  Exchequer  Chamber. 

The  second 1  error  assigned  was,  because  it  is  not  alleged  that 
notice  was  given  that  the  other  had  not  paid.  Sed  non  allocatur ;  for 
he  at  his  peril  ought  to  take  cognizance  of  the  non-payment  and  pay 
the  rent,  otherwise  the  promise  is  broken. 

Wherefore  the  judgment  was  affirmed.2 

1  Only  what  relates  to  this  error  is  here  reprinted.  —  Ed. 

2  guaranty  of  a  Definite  Payment  or  Performance  at  a  Definite  Time.  Voltz  v.  Harris, 
40  111.  155  ;  Tavlor  v.  Taylor,  64  Ind.  356  ;  Frash  v.  Polk,  67  Ind.  55  ;  Kline  v.  Ray- 
mond, 70  Ind.  271 ;  Shearer  v.  Peele,  9  Ind.  Ap.  282  (but  see  Virden  v.  Ellsworth, 
15  Ind.  144  ;  Gaff  v.  Sims,  45  Ind.  262  ;  Ward  v.  Wilcox,  100  Ind.  52  ;  Snyder  v.  Click, 
1 1 2  Ind.  293) ;  Douglass  v.  Howland,  24  Wend.  35  ;  Van  Rennselaer  v.  Miller,  Hill  &  D. 
237  ;  Barhydt  v.  Ellis,  45  N.  Y.  107  (semble)  ;  Cordier  v.  Thompson,  8  Daly,  172  ;  Weiler 
v.  Henarie,  15  Oreg.  28;  Bank  v.  Hammond,  1  Rich.  281  ;  Savings  Bank  v.  Strother, 
28  S.  Ca.  504  ;  Hunter  n.  Dickinson,  10  Humph.  37  (but  see  Kannon  v.  Neely,  10  Humph. 
288 ;  Rhodes  v.  Morgan,  1  Baxt.  360);  Mallory  v.  Lyman,  3  Finn.  (Wis.)  443,  Accord. 

Ringgold  v.  Newkirk,  3  Ark.  96  ;  Vinal  v.  Richardson,  13  All.  521,  contra. 

Guaranty  of  Payment  or  Performance  Indefinite  in  Amount,  or  at  an  Indefinite  Time. 
Treweek  v.  Howard,  105  Cal.  434  (statutory) ;  Hammond  v.  Gilmore,  14  Conn.  479 ; 
Bushnell  v.  Church,  15  Conn.  406;  Redfiehl  r.  Haight,  27  Conn.  31  ;  Kincheloe  v. 
Holmes,  7  B.  Moii.  5  {semble);  Lowe  v.  Beckwith,  14  B.  Mon.  184;  Heyman  v. 
Dooley,  77  Md.  162  (semble) ;  Farmers'  Bank  v.  Kercheval,  2  Mich.  504  (semble) ;  Grant 
v.  Hotchkiss,  26  Barb.  63  ;  Clark  v.  Burdett,  2  Hall,  197;  Yancey  t\  Brown,  3  Sneed, 
89  ;  Train  v.  Jones,  11  Vt.  444  ;  Noyes  v.  Nichols,  28  Vt.  159,  Accord. 

But  in  some  jurisdictions  the  guarantor  is  discharged  to  the  extent  of  any  loss 
that  would  result  to  him  by  the  creditor's  failure  to  give  reasonable  notice  of  the  prin- 


SECT.  VIII.]  HUNGEIIFORD   V.   O'BKIEN.  239 


C.  HUNGERFORD  v.  J.  K.    O'BRIEN,  Impleaded,  etc. 
In  the  Supreme  Court,  Minnesota,  July  27,  1887. 

[Reported  in  37  Minnesota  Reports,  306.] 

Dickinson,  J.1' 2  The  defendant  Sawbridge  made  his  negotiable 
promissory  note,  which  was  indorsed  to  one  Gage,  who  indorsed  it 
in  blank  to  the  defendant  O'Brien,  and  he,  before  maturity,  transferred 
it  for  value  to  the  plaintiff,  indorsing  upon  the  note  and  signing  this 
guaranty:  "For  value,  I  hereby  guarantee  the  payment  of  the  within 
note  to  Cassie  Hungerford  or  bearer."  The  note  was  not  paid.  Noth- 
ing was  done  by  the  plaintiff  at  the  maturity  of  the  note  to  fix  the  lia- 
bility of  the  indorser  Gage.  The  defendant  O'Brien  had  no  notice  of 
the  non-payment  of  the  note  until  more  than  a  year  after  its  maturity. 
Upon  the  trial  of  the  issue  raised  by  the  answer  of  the  defendant 
O'Brien,  evidence  was  presented  tending  to  show  that  the  maker  of 
the  note  was  solvent  at  the  time  of  its  maturity,  but  has  since  become 
insolvent ;  and  that  the  indorser,  Gage,  was  also  solvent.  The  Court 
directed  a  verdict  for  the  plaintiff. 

The  nature  of  the  obligation  of  the  guarantor  is  affected  by  the 
character  of  the  principal  contract  to  which  the  guaranty  relates.  The 
note  expressed  the  absolute  obligation  of  the  maker  to  pay  the  sum 
named  at  the  specified  date  of  maturity  or  before.  The  guaranty  of 
"the  payment  of  the  within  note"  imported  an  undertaking,  without 
condition,  that,  in  the  event  of  the  note  not  being  paid  according  to  its 

cipal's  default.  Reynolds  v.  Douglas,  12  Pet.  497  (qualifying  s.  c.  7  Pet.  113);  Wildes  v. 
Savage,  1  Story,  22  (semble)  ;  Dunbar  v.  Brown,  4  McL.  166;  Walker  v.  Forbes,  25 
Ala.  139  ;  Cahusac  v.  Samini,  29  Ala.  288  ;  McCollum  v.  Cusliing,  22  Ark.  540 ;  May- 
burv  v.  Bainton,  2  Harringt.  24 ;  Taussig  v.  Reid,  145  111.  488 ;  Smith  v.  Bainbridge, 
6  Blackf.  12  ;  Furst  Co.  v.  Bradley,  111  Ind.  308  (but  see  Kirby  v.  Studebaker,  1-5  Ind. 
45;  Nading  v.  McGregor,  121  Ind.  465);  Davis  Co.  v.  Mills,  55  Iowa,  543;  Howe  v. 
Nickels,  22  Me.  175 ;  Clark  v.  Remington,  11  Met.  361  ;  Vinal  v.  Richardson,  13  All. 
521  (semble)  ;  Bishop  v.  Eaton,  161  Mass.  496,  501  ;  Montgomery  v.  Kellogg,  43  Miss. 
486  ;  Rankin  v.  Childs,  9  Mo.  665  ;  Sullivan  v.  Field,  118  N.  Ca.  358. 

In  Pennsylvania  an  odd  distinction  prevails.  A  general  guaranty  of  payment  or  per- 
formance is  treated  like  a  guaranty  of  collectibility.  Johnston  v.  Chapman,  3  Pen.  &  W. 
18 ;  Isett  v.  Hoge,  2  Watts,  128 ;  Hoffman  v.  Bechtel,  52  Pa.  190 ;  Nat.  Society  v.  Lichten- 
walner,  100  Pa.  100;  Tissue  v.  Hanna,  158  Pa.  384:  Ritchie  v.  Walter,  166  Pa.  604 
(semb/e).  But  a  guaranty  of  faithful  performance  or  of  payment  when  due  is  regarded 
as  the  undertaking  of  a  surety  who  becomes  absolutely  liable  immediately  on  the  de- 
fault of  the  principal,  no  diligence  of  any  kind  being  required.  Campbell  v.  Baker,  46 
Pa.  243 ;  Reigart  v.  White,  52  Pa.  438  ;  Boschert  v.  Brown,  72  Pa.  372  ;  Korn  v.  Hohl, 
80  Pa.  333;  Sherman  v.  Roberts,  1  Grant,  261;  Cochran  v.  Dawson,  1  Miles,  276; 
Girard  Co.  v.  Finley,  1  Phila.  70.  In  accordance  with  this  distinction,  a  promise  to 
be  "  security  "  for  payment  or  performance  of  another  is  treated  as  the  undertaking  of  a 
surety.  Marberger  v.  Pott,  16  Pa.  9 ;  Allen  v.  Hubert,  49  Pa.  259;  Ashton  v.  Bayard, 
71  Pa.  139  (overruling  Gilbert  v.  Henck,  30  Pa.  205).  — Ed. 

1  Berry,  J.,  because  of  illness,  took  no  part  in  this  case. 

2  Only  the  opinions  of  the  judges  are  given.  —  Ed. 


240  HUNGERFORD   V.    O'BRIEN.  [CHAP.  II. 

terms,  —  that  is,  at  maturity, —  the  guarantor  should  be  responsible. 
The  non-payment  of  the  note  at  maturity  made  absolute  the  liability  of 
the  guarantor,  and  an  action  might  at  once  have  been  maintained 
against  him  without  notice  or  demand.1  Such  was  the  effect  of  the 
unqualified  guaranty  of  the  payment  of  an  obligation  which  was  in 
itself  absolute  and  perfect  and  certain  as  respects  the  sum  to  be  paid, 
and  the  time  when  payment  should  be  made,  — all  of  which  was  known 
to  the  guarantor,  and  appears  upon  the  face  of  the  contract.  The 
liability  of  the  guarantor  thus  becoming  absolute  by  the  non-payment 
of  the  note,  the  neglect  of  the  holder  to  pursue  such  remedies  as  he 
might  have  against  the  maker  (the  guarantor  not  having  required  him 
to  act)  would  not  discharge  the  alreadj'  fixed  and  absolute  obligation 
of  the  guarantor,  nor  would  neglect  to  notify  the  guarantor  of  the  non- 

1  Walton  v.  Mascall,  13  M.  &  W.  72,  452  (but  see  Warrington  v.  Furber,  8  East, 
242 ;  Holbrow  v.  Wilkins,  1  B.  &  C.  10  ;  Hitchcock  v.  Humphrey,  5  M.  &  G.  559) ;  Lee 
v.  Dick,  10  Pet.  482,  496 ;  N.  Y.  Co.  v.  Lombard  Co.,  73  F.  R.  537  (semble)  ;  Donley  v. 
Camp,  22  Ala.  659  ;  Killian  v.  Ashby,  24  Ark.  51 1  ;  First  Bank  o.  Babcock,  94  Cal.  96  ; 
Williams  v.  Granger,  4  Day,  444 ;  Breed  v.  Hillhouse,  7  Conn.  523 ;  Clark  v.  Morison, 
25  Conn.  576 ;  City  Bank  v.  Hopson,  53  Conn.  453 ;  Tyler  v.  Waddingtou,  58  Conn. 
375  (but  see  Sage  v.  Wilcox,  6  Conn.  81)  ;  Wright  v.  Shorter,  56  Ga.  72;  Gammell 
v.  Parsons,  58  Ga.  54  ;  Gage  v.  Mechanics'  Bank,  79  111.  62 ;  Stowell  v.  Raymond,  83 
HI.  120;  Hooker  v.  Gorring,  86  111.  60 ;  Taussig  v.  Bird,  145  111.  488,  491-492  ;  Pool  v. 
Roberts,  19  111.  Ap.  438  ;  Burnham  v.  Gallentine,  11  Ind.  295;  Studebaker  v.  Cody,  54 
Ind.  586;  Levi  v.  Mendall,  1  Duv.  77;  Gasquet  v.  Thorn,  14  La.  506 ;  Roberts  v. 
Hawkins,  70  Mich.  566;  Threshers.  Ely,  10  Miss.  139;  Tatum  v.  Bonner,  27  Miss. 
760  ;  Baker  v.  Kelly,  41  Miss.  696  ;  Holmes  v.  Preston,  71  Miss.  541  ;  Wright  v.  Dyer, 
48  Mo.  525;  Barker  v.  Scudder,  56  Mo.  272;  Burrus  v.  Davis,  67  Mo.  Ap.  210  ;  Huff 
v.  Slife,  25  Neb.  448 ;  Flentham  v.  Steward,  45  Neb.  640  (but  see  Newton  Co.  v.  Diers, 
10  Neb.  284)  ;  Bank  v.  Sinclair,  60  N.  H.  100  (but  see  Simmons  v.  Steele,  36  N.  H.' 
73) ;  Allen  v.  Rightmere,  20  Johns.  365  ;  Brown  v.  Curtiss,  2  N.  Y.  225  ;  Bartholomew 
v.  Seaman,  25  Hun,  619  ;  Kenny  v.  Maseman,  14  Daly,  379  ;  Clay  v.  Etlgerton,  19  Ohio 
St.  549;  Neil  v.  Trustees,  31  Ohio  St.  15,  22;  Taylor  v.  Ross,  3  Yerg.  330  (but  see 
Rhodes  v.  Morgan,  1  Baxt.  360) ;  Woodstock  Bank  v.  Downer,  27  Vt.  539  ;  Ten  Eyck 
v.  Brown,  3  Pinn.  (Wis.)  452 ;  Hoover  v.  McCormick,  84  Wis.  215,  Accord. 

But  in  some  jurisdictions  failure  to  make  due  demand  on  the  maker  of  a  note  and 
to  give  notice  of  dishonor  to  the  guarantor,  will  discharge  the  latter  to  the  extent  of 
any  damage  due  to  such  laches.  Lewis  v.  Brewster,  2  McL.  21  ;  Foote  v.  Brown, 
2  McL.  369  ;  Fuller  v.  Scott,  8  Kas.  25  ;  Withers  v.  Berry,  25  Kas.  373  ;  Gamage  v. 
Hutchins,  23  Me.  565 ;  Bank  v.  Small,  25  Me.  366  ;  Oxford  Bank  v.  Haynes,  8  Pick. 
423  ;  Talbot  v.  Gay,  18  Pick.  534  ;  Whiton  v.  Mears,  11  Met.  563  ;  Vin'al  v.  Richard- 
son, 13  All.  521,  530;  Bishop  v.  Eaton,  161  Mass.  496,  501  (semble) ;  Simons  v.  Steele, 
36  N.  H.  73  (semble);  Grice  v.  Ricks,  3  Dev.  62  ;  Farrow  v.  Respess,  11  Ired.  170;  Cox 
v.  Brown,  6  Jones  (N.  Ca.),  1 00,  Contra. 

See  Savings  Bank  v.  Strother,  28  S.  Ca.  504. 

In  Iowa  the  guarantor  of  a  note  is  discharged  to  the  extent  of  damage  resulting 
from  the  laches  of  the  holder,  but  a  distinction  is  taken  as  to  the  burden  of  proof.  H 
the  guaranty  is  by  a  stranger  to  the  note,  the  plaintiff  must  allege  and  prove  diligence 
or  the  absence  of  damage  to  the  guarantor.  Sabine  v.  Harris,  12  Iowa,  87  ;  Knight  v. 
Dunsmore,  12  Iowa,  35  ;  Picket  v.  Hawes,  14  Iowa,  460.  But  if  the  payee  or  assignee 
makes  the  guaranty,  he  must  establish  affirmatively  the  holder's  laches  and  damage  to 
himself.  Peck  v.  Frink,  10  Iowa,  193;  Marvin  v.  Adamson,  11  Iowa,  371  ;  Greene  v. 
Thompson,  33  Iowa,  293 ;  Second  Bank  v.  Gaylord,  34  Iowa,  246 ;  Martyn  v.  Lamor, 
?5  Iowa,  235.  —  Ed. 


SECT.  VIII. J  HUNGERFORD   V.    O'BRIEN.  241 

payment  have  such  effect.  Brown  v.  Curtiss  ; a  Allen  v.  Rightmere  ; a 
Newcomb  v.  Hale;8  Read  v.  Cutts;4  Breed  v.  Hillhouse  ; 5  Campbell 
v.  Baker  ; 6  Roberts  v.  Riddle  ; 7  Bank  v.  Sinclair ; 8  Heaton  v.  Hulbert ; 9 
Dickerson  v.  Derrickson  ; 10  Fenny  v.  Crane  Mfg.  Co  ;  "  Clay  v.  Edger- 
ton ; 12  Wright  v.  Dyer.13  See  also  Vinai  v.  Richardson,14  modifying 
former  decisions  of  the  same  Court. 

It  follows  that  the  fact  that  the  maker  had  become  insolvent  since 
maturity,  or  that  a  mortgage  security  had  become  impaired  by  depre- 
ciation in  the  value  of  the  property,  was  no  defence  ;  nor  was  it  a 
defence  that  the  guarantor  was  not  notified  of  the  non-payment  of  the 
note.  We  are  aware  that  the  position  here  taken  is  opposed  by  some 
decisions.  No  valid  agreement  was  shown  between  the  maker  and  the 
plaintiff  extending  the  time  of  payment.  From  the  position  above  taken, 
it  logically  follows  that  the  neglect  of  the  guarantee  to  take  the  steps 
necessary  to  fix  the  liability  of  the  indorser,  Gage,  did  not  discharge 
the  guarantor.  The  latter,  by  his  unqualified  guaranty  of  the  payment 
of  the  note,  took  it  upon  himself  to  see  that  the  note  was  paid,  and  was 
therefore  not  entitled  to  notice  of  its  non-payment.  (Authorities  above 
cited.)  For  the  same  reason,  the  plaintiff  did  not  owe  to  the  guarantor 
the  duty  of  taking  the  steps  necessary  to  fix  the  contingent  liability 
of  the  indorser  by  demand  and  notice  of  dishonor.  Philbrooks  v. 
McEwen  ; 15  Lang  v.  Brevard  ; 16  Pickens  v.  Finney.17  No  such  obliga- 
tion is  involved  in  this  contract  of  guaranty.  Even  in  the  case  of  an 
ordinary  indorsement,  the  holder,  at  maturity,  is  under  no  obligation 
to  his  indorser  to  give  notice  of  dishonor  to  prior  indorsers  or  parties.18 
The  last  indorser  becomes  liable  when  he  alone  is  notified,  and  he  in 
turn  may  fix  the  liability  of  prior  parties  by  giving  notice  to  them. 

Order  affirmed.19 

Mitchell,  J.  (dissenting).  I  am  unable  to  concur  in  the  proposi- 
tion that  the  plaintiff  owed  no  duty  to  O'Brien  to  take  steps,  at  the 
maturity  of  the  note,  to  fix  the  liability  of  Gage,  the  indorser.     It  does 

i  2  N.  Y.  225.  9  3  Scam.  489. 

2  20  John.  365.  10  39  111.  574. 

3  90  N.  Y.  326.  u  80  111.  244. 

«  7  Greenl.  186.  12  19  Ohio  St.  549. 

5  7  Conn.  523.  13  48  Mo.  525. 

6  46  Pa.  St.  243.  14  13  Allen,  521. 

7  79  Pa.  St.  468.  15  29  Ind.  347. 

8  60  N.  H.  100.  16  3  Stroh.  Eq.  (So.  Car.)  59. 
»  12  Smedes  &  M.  468. 

18  Rickford  v.  Ridge,  2  Camp.  537  ;  Spencer  v.  Ballou,  18  N.  Y.  327 ;  Baker  v.  Morris, 
25  Barb.  138 ;  Deck  v.  Works,  18  Hun,  266,  272,  Accord.  —Ed. 

19  Green  v.  Thompson,  33  Iowa,  293 ;  Deck  v.  Works,  18  Hun,  266,  Accord. 
Philips  v.  Astling,  2  Taunt.  206;  Vinal  v.  Richardson,  13  All.  521,  532  (sembl'); 

City  Bank  v.  Young,  43  N.  H.  457,  462;  Bank  v.  Sinclair,  60  N.  H.  100,  107 
{semble) ;  Brown  v.  Curtiss,  2  N.  Y.  225,  228  (semble) ;  Gibbs  v.  Cannon,  9  S.  &  R. 
198  (semble),  Contra. 

See  also,  as  to  the  effect  of  laches  in  collecting  a  chose  in  action  held  as  collateral 
security,  supra,  205,  n.  1,  ad  Jinem. — Ed. 

:s 


242  HUNGERFORD    V.    O'BRIEN.  [CHAP.  IL 

not  seem  to  me  that  the  fact  that  O'Brien's  guaranty  of  payment  was 
unconditional  and  absolute  is  at  all  decisive  of  the  question.  As  be- 
tween the  parties  to  this  action,  O'Brien  occupied  the  position  of  surety, 
who,  in  case  he  had  to  pa}-  the  note,  would  have  recourse  against  Gage, 
the  indorser,  provided  steps  were  taken  to  fix  the  liability*  of  the  latter. 
The  question,  therefore,  is  to  be  determined  by  the  equitable  principles 
which  govern  the  relative  rights  and  duties  of  creditor  and  surety. 

It  is  a  well-settled  rule  of  equity  that  an}-  laches  b}1  the  creditor  in 
the  care  or  management  of  collateral  remedies  or  securities,  if  loss 
ensues,  will  discharge  the  suretj7 pro  tanto.  Nelson  v.  Munch.1  As  a 
surety,  on  payment  of  the  debt,  is  entitled  to  all  the  securities  of  the 
creditor,  if,  through  the  negligence  of  the  creditor  who  has  them  in  his 
possession  and  under  his  control,  a  security,  to  the  benefit  of  which  the 
suret}'  is  entitled,  is  lost  or  not  properly  perfected,  the  surety,  to  the 
extent  of  such  security,  will  be  discharged.  Wulff  v.  Ja}-.2  And  we 
can  see  no  difference  in  this  respect  whether  the  security  is  chattel  or 
personal.  This  is  not  a  case  of  mere  passiveness  bj'  the  creditor  in  not 
taking  steps  to  enforce  collection  of  the  debt  at  maturit}',  but  an  omis- 
sion to  take  steps  to  perfect  and  fix  the  liability  of  the  indorser.  which 
amounted  to  positive  negligence.  He  had  possession  and  control  of 
the  note  on  the  day  of  its  maturity,  and  consequently  was  the  only  per- 
son who  could  present  it  for  pa}rment,  or  who  would  know  whether  or 
not  it  was  paid,  and  hence  was  the  only  person  in  position  to  give  notice 
to  the  indorser  in  case  of  its  non-payrnent.  To  require  him  to  do  this, 
would,  I  think,  be  both  good  business  morals  and  good  law. 

1  28  Minn.  314,  322.  2  L.  E.  7  Q.  B.  756. 


SECT.  IX.  j  DAVIUSOX  V.   COOPER.  243 


SECTION  IX. 

Alteration  of  Principal* 's  Contract,  or  Variation  of  Surety's  Risk. 

DAVIDSON,  Public   Officer,   &c,   u.   COOPER   and  Another. 

In  the  Exchequer  Chamber,  July  6,  1844. 

[Reported  in  13  Meeson  8f  Welsbtj,  343.] 

Lord  Denman,  C.  J.1  This  was  a  declaration  in  assumpsit  on  a 
written  guaranty,  to  which  one  defendant  pleaded,  that,  while  the 
guarant}-  was  in  the  plaintiff's  hands,  it  was,  without  the  defendant's 
consent  or  knowledge  [b}'  some  person  or  persons  to  the  defendant  then 
and  now  unknown],2  materially  altered  by  the  addition  of  two  seals 
opposite  the  names  of  the  defendant  and  the  other  party  to  it,  whereby 
its  apparent  nature  and  effect  were  wholly  altered.  Issue  being  taken 
on  this  plea,  the  jury  found  it  was  so  altered  ;  and  judgment  has  been 
given  by  the  Court  of  Exchequer  for  the  defendant,  after  having  dis- 
charged a  rule  for  judgment  non  obstante  veredicto,  upon  argument. 

After  much  doubt,  we  think  the  judgment  right.  The  strictness  of 
the  rule  on  this  subject,  as  laid  down  in  Pigot's  Case,3  can  only  be 
explained  on  the  principle  that  a  party  who  has  the  custody  of  an 
instrument  made  for  his  benefit,  is  bound  to  preserve  it  in  its  original 
state.  It  is  highly  important  for  preserving  the  purity  of  legal  instru- 
ments that  this  principle  should  be  borne  in  mind,  and  the  rule  adhered 
to.  The  party  who  may  suffer  has  no  right  to  complain,  since  there 
cannot  be  any  alteration  except  through  fraud,  or  laches  on  his  part.  To 
say  that  Pigot's  Case 3  has  been  overruled,  is  a  mistake  ;  on  the  contrary, 
it  has  been  extended  :  the  authorities  establishing,  as  common  sense 
requires,  that  the  alteration  of  an  unsealed  paper  will  vitiate  it.  Upon 
the  doubt  whether  this  instrument  is  altered,  because  it  remains  exactly 
as  it  was  when  signed,  but  only  something  is  added  near  to  the  signa- 
tures of  the  defendants,  we  may  observe,  that  that  addition  gives  a  dif- 
ferent legal  character  to  the  writing,  and  would,  if  made  with  the  consent 
of  all  interested,  completely  change  the  nature  of  the  relation  towards 
each  other  of  the  parties  to  it,  and  the  remedies  upon  it.  The  observa- 
tion that  a  deed  is  not  made  by  sealing,  but  by  delivery,  does  not  appear 
to  touch  the  argument,  for  no  addition,  erasure,  or  interlineation,  after 
execution,  makes  the  actual  instrument  different  in  legal  effect  from 
what  it  was  ;  the  original  document  may  be  perfectly  visible  through 
the  attempt  to  disguise  it,  but  a  different  appearance  is  produced.  The 
truth  cannot  be  known  from  inspection,  but  would  require  to  be  estab- 

1  Only  the  opinion  of  the  Court  is  given.  —  Ed. 

2  The  bracketed  clause  is  taken  from  the  plea.     11  M.  &  W.  780.  —  Ed. 

3  11  Coke,  27. 


244  WOOD    V.    STEELE.  [CHAP.  II. 

lished  by  evidence,  and  this  through  some  default  of  the  person  to 
whose  care  it  was  consigned,  and  who  would  be  possessed  of  a  superior 
legal  remedy  if  the  altered  writing  could  be  imposed  on  the  contractor 
as  genuine.  We  are  therefore  of  opinion,  both  upon  principle  and 
authority,  that  this  judgment  must  be  affirmed. 

Judgment  affirmed. 


WOOD  v.   STEELE. 

In  the  Supreme  Court,  United  States,  December,  1867. 

[Reported  in  6  Wallace,  80.] 

Error  to  the  Circuit  Court  for  the  District  of  Minnesota. 

Mr.  Justice  Swayne  delivered  the  opinion  of  the  Court. 

The  action  was  brought  by  the  plaintiff  in  error  upon  a  promissory 
note,  made  by  Steele  and  Newson,  bearing  date  October  11th,  1858, 
for  $3,720,  payable  to  their  own  order  one  year  from  date,  with  interest 
at  the  rate  of  two  per  cent  per  month,  and  indorsed  by  them  to  Wood, 
the  plaintiff. 

Upon  the  trial  it  appeared  that  Newson  applied  to  Allis,  the  agent 
of  Wood,  for  a  loan  of  money  upon  the  note  of  himself  and  Steele. 
Wood  assented,  and  Newson  was  to  procure  the  note.  Wood  left  the 
money  with  Allis,  to  be  paid  over  when  the  note  was  produced.  The 
note  was  afterwards  delivered  by  Newson,  and  the  money  paid  to  him. 
Steele  received  no  part  of  it.  At  that  time,  it  appeared  on  the  face  of 
the  note  that  "September"  had  been  stricken  out  and  "October 
11th"  substituted  as  the  date.  This  was  done  after  Steele  had  signed 
the  note  and  without  his  knowledge  or  consent.  These  circumstances 
were  unknown  to  Wood  and  to  Allis.  Steele  was  the  surety  of 
Newson.  It  does  not  appear  that  there  was  any  controversy  about  the 
facts.  The  argument  being  closed,  the  Court  instructed  the  jury,  "that 
if  the  said  alteration  was  made  after  the  note  was  signed  by  the 
defendant,  Steele,  and  by  him  delivered  to  the  other  maker,  Newson, 
Steele  was  discharged  from  all  liability  on  said  note."  The  plaintiff 
excepted.  The  jury  found  for  the  defendant,  and  the  plaintiff  prose- 
cuted this  writ  of  error  to  reverse  the  judgment.  Instructions  were 
asked  by  the  plaintiff's  counsel,  which  were  refused  by  the  Court.  One 
was  given  with  a  modification.  Exceptions  were  duly  taken,  but  it  is 
deemed  unnecessary  particularly  to  advert  to  them.  The  views  of  the 
Court  as  expressed  to  the  jury  covered  the  entire  ground  of  the  contro- 
versy between  the  pai'ties. 

The  state  of  the  case,  as  presented,  relieves  us  from  the  necessity  of 
considering  the  questions,  —  upon  whom  rested  the  burden  of  proof, 
the  nature  of  the  presumption  arising  from  the  alteration  apparent  on 
the  face  of  the  paper,  and  whether  the  insertion  of  a  day  in  a  blank 
left  after  the  month,  exonerates  the  maker  who  has  not  assented  to  it. 


SECT.  IX.j  WOOD   V.   STEELE.  245 

Was  the  instruction  given  correct  ? 

It  was  a  rule  of  the  common  law  as  far  back  as  the  reign  of  Edward 
III.  that  a  rasure  in  a  deed  avoids  it.1  The  effect  of  alterations  in 
deeds  was  considered  in  Pigot's  Case,2  and  most  of  the  authorities  upon 
the  subject  down  to  that  time  were  referred  to.  In  Master  v.  Miller,3 
the  subject  was  elaborately  examined  with  reference  to  commercial 
paper.  It  was  held  that  the  established  rules  apply  to  that  class  of 
securities  as  well  as  to  deeds.  It  is  now  settled,  in  both  English  and 
American  jurisprudence,  that  a  material  alteration  in  any  commercial 
paper,  without  the  consent  of  the  party  sought  to  be  charged,  ex- 
tinguishes his  liabilit}'.  The  materiality  of  the  alteration  is  to  be 
decided  by  the  Court.  The  question  of  fact  is  for  the  juiy.  The  altera- 
tion of  the  date,  whether  it  hasten  or  delay  the  time  of  payment,  has 
been  uniformly  held  to  be  material.  The  fact  in  this  case  that  the 
alteration  was  made  before  the  note  passed  from  the  hands  of  Newson, 
cannot  affect  the  result.     He  had  no  authority  to  change  the  date. 

The  grounds  of  the  discharge  in  such  cases  are  obvious.  The  agree- 
ment is  no  longer  the  one  into  which  the  defendant  entered.  Its 
identity  is  changed  :  another  is  substituted  without  his  consent,  and 
by  a  party  who  had  no  authority  to  consent  for  him.  There  is  no 
longer  the  necessary  concurrence  of  minds.  If  the  instrument  be 
under  seal,  he  may  well  plead  that  it  is  not  his  deed ;  and  if  it  be  not 
under  seal,  that  he  did  not  so  promise.  In  either  case,  the  issue  must 
necessarily  be  found  for  him.  To  prevent  and  punish  such  tampering, 
the  law  does  not  permit  the  plaintiff  to  fall  back  upon  the  contract  as 
it  was  originally.  In  pursuance  of  a  stern  but  wise  policy,  it  annuls 
the  instrument,  as  to  the  party  sought  to  be  wronged. 

The  rules,  that  where  one  of  two  innocent  persons  must  suffer,  he 
who  has  put  it  in  the  power  of  another  to  do  the  wrong  must  bear  the 
loss,  and  that  the  holder  of  commercial  paper  taken  in  good  faith  and 
in  the  ordinary  course  of  business  is  unaffected  by  anj-  latent  infirmi- 
ties of  the  security,  have  no  application  in  this  class  of  cases.  The 
defendant  could  no  more  have  prevented  the  alteration  than  he  could 
have  prevented  a  complete  fabrication  ;  and  he  had  as  little  reason  to- 
anticipate  one  as  the  other.  The  law  regards  the  security,  after  it  is 
altered,  as  an  entire  forgery  with  respect  to  the  parties  who  have  net 
consented,  and,  so  far  as  they  are  concerned,  deals  with  it  accordingly.4 

The  instruction  was  correct,  and  the 

Judgment  is  affirmed} 

1  Brooke's  Abridgment,  Faits,  pi.  11.  2  11  Coke,  27. 

3  4  Term,  320;  1  Smith's  Leading  Cases,  1141. 

4  Goodman  ».  Eastman,  4  New  Hampshire,  456;  Waterman  v.  Vose,  43  Maine, 
504;  Outhwaite  v.  Lnntley,  4  Campbell,  180;  Bank  of  the  United  States  v.  Boone, 
3  Yates,  391  ;  Mitchell  v.  Ringgold,  3  Harris  &  Johnson,  159;  Stephens  v.  Graham, 
7  Sergeant  &  Rawle,  509;  Miller  v.  Gilleland,  19  Pennsylvania  State,  119  ;  Heffner  v. 
Wenrich,  32  id.  423  ;  Stout  v.  Cloud,  5  Little,  207  ;  Lisle  v.  Rogers,  18  B.  Monroe,  529. 

6  Miller  v.  Stewart,  9  Wheat.  680 ;  State  v.  Churchill,  48  Ark.  426  :  People  v. 
Kneeland,  31  Cal.  288  ;  Pelton  v.  San  Jacinto  Co.,  1 13  Cal.  21  ;  Hill  v.  O'Neill  (Georgia,. 


246  WOOD    V.   STEELE.  [CHAP.  II. 

1897),  28  S.  E.  R.  996 ;  Mulky  v.  Long  (Idaho,  1897),  47  P.  R.  949 ;  Henry  v.  Coats, 
17  Ind.  161 ;  Johnston  v.  May,  76  Ind.  293  (amount  payable  diminished) ;  Stayner  v. 
Joice,  82  Ind.  35  ;  Weir  Plow  Co.  v.  Walmesley,  110  Ind.  242  (compare  Huff  v.  Cole, 
45  Ind.  300) ;  Marsh  v.  Griffin,  42  Iowa,  403 ;  State  v.  Craig,  58  Iowa,  238  ;  Bank  v. 
McChord,  4  Dana,  191 ;  Blakey  v.  Johnson,  13  Bush,  197;  Warren  v.  Pant,  79  Ky.  1  ; 
Waterman  v.  Vose,  43  Me.  504 ;  Fay  v.  Smith,  1  All.  477 ;  Draper  v.  Wood,  112  Mass. 
315;  Bradley  v.  Mann,  37  Mich.  1;  Haskell  o.  Champion,  30  Mo.  136;  Britton  v. 
Dierker,  46  Mo.  591  ;  Robinson  v.  Berryman,  22  Mo.  Ap.  509  ;  Goodman  v.  Eastman, 
4  N.  H.  455 ;  McGrath  v.  Clark,  56  N.  Y.  34 ;  Jones  v.  Bangs,  40  Ohio  St.  139 ;  New- 
man v.  King,  54  Ohio  St.  273. 

A  fortiori  an  alteration  of  the  contractual  document  by  the  creditor  alone,  or  by 
the  principal  debtor  with  the  concurrence  of  the  creditor,  releases  the  surety.  Gard- 
ner v.  Walsh,  5  E.  &  B.  83  (overruling  Catton  v.  Simpson,  8  A.  &  E.  136  ;  but  see 
Mersman  v.  Werges,  112  U.  S.  139,  142) ;  Martin  v.  Thomas,  24  How.  315  ;  U.  S.  Co. 
v.  West  Va.  Co.,  81  F.  R.  993;  Glover  v.  Robbins,  49  Ala.  219;  Hanson  v.  Crowley, 
41  Ga.  303;  Newland  v.  Harrington,  24  111.  206;  Pahlman  v.  Taylor,  75  111.  629; 
Wyman  v.  Yeomans,  84  111.  403;  Bowers  v.  Briggs,  20  Ind.  139;  Crandall  v.  First 
Bank,  61  Ind.  349  (semble) ;  Hart  v.  Clouser,  30  Ind.  210;  State  v.  Blair,  32  Ind.  313; 
Franklin  Co.  v.  Courtney,  60  Ind.  134  ;  Eckert  v.  Louis,  84  Ind.  99 ;  Hall  v.  McHenry, 
19  Iowa,  521  ;  Hamilton  v.  Hooper,  46  Iowa,  515;  Robinson  v.  Reed,  46  Iowa,  219; 
Berryman  v.  Manker,  56  Iowa,  150;  Bell  v.  Mahin,  69  Iowa,  408;  Lockuane  v.  Emer- 
son, 11  Bush,  69;  Bracken  Co.  e.  Daum,  80  Ky.  388;  Jackson  v.  Cooper  (Kentucky, 
1897),  39  S.  W.  R.  39;  Wilde  v.  Armsby,  6  Cush.  314;  People  v.  Brown,  2  Doug. 
(Mich.)  9;  Bolton  v.  Fitz,  88  Mich.  354;  State  v.  McGonigle,  101  Mo.  353;  State  v. 
Findley,  101  Mo.  368;  Warden  v.  Ryan,  37  Mo.  Ap.  466 ;  Haines  v.  Dennett,  11  N.  H. 
180;  Chappell  v.  Spencer,  23  Barb.  584;  Dewey  v.  Reed,  40  Barb.  16;  McVean  v. 
Scott,  46  Barb.  379;  Church  v.  Howard,  17  Hun,  5  ;  Boalt  v.  Brown,  13  Ohio  St.  364; 
Patterson  v.  MeNeely,  16  Ohio  St.  348;  Wallace  v.  Jewell,  21  Ohio  St.  163  ;  Harsh  v. 
Klepper,  28  Ohio  St.  200;  Thompson  v.  Massie,  41  Ohio  St.  307  ;  Miller  v.  Gilleland,  19 
Pa.  119;  Neff  v.  Horner,  63  Pa.  327;  Fulmer  v.  Seitz,  68  Pa.  237;  Hartley  v.  Corboy, 
150  Pa.  23  ;  Bogarth  v.  Breedlove,  39  Tex.  561  ;  Davis  v.  State,  5  Tex.  Ap.  48  ;  Wegner 
v.  State,  28  Tex.  Ap.  419 ;  Eyre  v.  Hollier,  LI.  &  G.  250,  Accord. 

Immaterial  Alteration.  The  creditor's  right  against  a  surety  is  not  affected 
by  an  immaterial  alteration.  Gardner  v.  Harback,  21  111.  129  ;  Kline  v.  Raymond,  70 
Ind.  271  ;  Hunt  v.  Adams,  6  Mass.  519  ;  Bullock  v.  Taylor,  39  Mich.  137  ;  Manufactur- 
ers' Bank  v.  Follett,  11  R.  I.  92.     See  also  1  Ames,  Cases  on  Bills  and  Notes,  449. 

Alteration  by  a  Stranger  or  by  Accident.  In  the  United  States,  if  an  in- 
strument is  once  effectually  delivered  to  the  creditor,  its  subsequent  alteration  by  some 
third  person  will  not  release  the  surety.  Anderson  v.  Bellenger,  87  Ala.  334 ;  State  v. 
Berg,  50  Ind.  496;  Brooks  v.  Allen,  62  Ind.  401  ;  Murray  v.  Graham,  29  Iowa,  520; 
Medlin  v.  Piatt  Co.,  8  Mo.  235  ;  Brown  v.  Weatherby,  71  Mo.  152 ;  State  v.  McGonigle, 
101  Mo.  353  (semble) ;  Rhoads  v.  Frederick,  8  Watts,  448 ;  Hill  v.  Calvert,  1  Rich.  Eq. 
56 ;  Harrison  v.  Turbeville,  2  Humph.  242.  See  also  1  Ames,  Cases  on  Bills  and 
Notes,  449. 

Innocent  Alteration  by  the  Holder.  It  is  also  generally  held  in  this  coun- 
try that  a  material  alteration  by  the  holder  of  a  bill  or  note,  if  made  without  fraudu- 
lent intention,  will  not  bar  the  right  to  recover  upon  the  instrument  as  if  unaltered. 
1  Ames,  Cases  on  Bills  and  Notes,  449  ;  Croswell  v.  Labree,  81  Me.  44.  But  see  contra, 
Tormer  v.  Rutland,  57  Ala.  379 ;  Newman  v.  King,  54  Ohio,  273 ;  Taylor  v.  Taylor, 
12  Lea,  714. 

Ratification  or  Waiver.  A  promise  by  a  surety  to  pay  an  altered  obligation 
is  not  a  waiver  of  the  defence  of  alteration.  Warren  v.  Fant,  79  Ky.  1.  But  see 
Knoebel  v.  Kiucher,  33  111.  308  ;  Bell  v.  Mahin,  69  Iowa,  408.  —  Ed. 


SECT    IX.]        ELLESMERE    BREWERY    COMPANY   V.    COOPER.  247 


ELLESMERE   BREWERY   COMPANY  v.  COOPER  and  Others. 

In  the  Queen's  Bench  Division,  December  5,  1895. 

[Reported  in  Law  Reports,  1896,  1  Queen's  Bench  Division,  75.] 

Lord  Russell,  of  Killowen,  C.  J.1  This  was  an  action  against 
Cooper  and  four  other  defendants  who  had  signed  a  bond  as  sureties 
for  Cooper.  At  the  trial  before  the  learned  county  court  judge,  judg- 
ment was  given  for  the  plaintiffs  as  against  Cooper,  and  judgment  was 
given  for  the  four  remaining  defendants  as  sureties. 

The  facts  were  that  Cooper,  having  become  agent  and  traveller  for 
the  plaintiffs,  was  called  upon  to  give  them  some  security.  He  accord- 
ingly gave  the  bond  in  question,  in  which  he  was  joined  by  the  four 
other  defendants. 

The  bond  was  dated  April  30,  1894.     Bv  its  terms  the  five  defend- 
ants  were  jointly  and  severally  bound  to  the  plaintiffs  in  the  sum  of 
£150.     It  then  recited  that  Cooper  had  been  appointed  agent  for  the 
company,  and  stated  the  condition  of  the  bond  to  be  that,  if  Cooper 
duly  accounted  for  all  moneys  received  by  him  for  the  plaintiffs,  and 
otherwise  performed  the  duties  of  his  agency,  the  bond  should  be  void. 
It  then  provided  that  the  liability  of  Nunnerley  and  Emberton  (two  of 
the  defendants)  should  be  limited  to  £50  each,  and  that  of  Pay  and 
Bromfield  (two  other  of  the  defendants)   to  £25   each.      The  effect, 
therefore,  of  the  bond,  as  drawn,  was  that  the  principal  and  the  sure- 
ties were  jointby  and  severally  bound  in  the  sum  of  £150,   but  that 
liability  could  not  be  enforced  against  any  of  the  sureties  beyond  the 
limit  of  the  sum  specified  as  to  each  of  them.     Nunnerley  was  the  last 
to  sign,  and  his  signature  thus  appears  on  the  bond:   "  Walter  Nun- 
nerley,   twenty-five   pounds  only."     The  witness  to  the  execution  of 
each  of  the  signatures  was  Mr.  Bruce,  the  plaintiffs'  manager,  who,  so 
far  as  appears,  took  the  bond  without  making  any  objection  to  the 
manner  of  Nunnerley's  execution  ;   nor  was  it  suggested  that  Nun- 
nerly  had  surreptitiously  added  the  qualification  of  "twenty-five  pounds 
only"  to  his  signature.     As  no  evidence  was  given  on  the  point,  it 
cannot  be  assumed  that  Nunnerley  in  bad  faith  sought  by  the  form  of 
his  execution  of  the  bond  to  limit  any  liability  he  had  previously  agreed 
to  undertake.      The  probability   is  that  in   giving   particulars  of  his 
sureties  Cooper  had  erroneously  stated  that  Nunnerley  had  agreed  to 
undertake  liability  to  the  extent  of  £50,  whereas  he  had  done  so  only 
to  the  extent  of  £25.       Subsequently  Cooper,   the  principal,  received 
moneys  of  the  plaintiffs  to  the  amount  of  £48,  for  which  he  had  failed 
to  account ;  and  judgment  was  given  against  him  at  the  trial  for  that 
amount.     The  contested  question  was  the  liability  of  the  other  defend- 
ants, the  sureties.     The  learned  count}-  court  judge  held  that  no  one  of 

1  Only  the  opinion  of  the  court  is  given.  —  Ed. 


248  ELLESMERE    BREWERY   COMPANY    V.    COOPER.         [CHAP.  IL 

them  was  liable,  and  gave  judgment  for  them  accordingly.     The  pres- 
ent appeal  is  against  that  judgment. 

It  was  argued  for  the  plaintiffs  (1)  that  the  form  of  Nunnerley's  exe- 
cution did  not  constitute  an  alteration  of  the  bond  so  as  to  discharge 
from  liability  the  three  prior  executing  sureties;  (2)  that,  if  an  alter- 
ation, it  was  not  a  material  alteration,  and  therefore  did  not  discharge 
such  sureties ;  and,  lastly,  (3)  that  in  any  case  Nunnerley  was  liable 
to  the  extent  of  £50,  or  if  not  of  £50,  at  least  to  the  extent  of  £25. 

In  my  judgment,  no  one  of  these  contentions  is  well  founded.  I 
think  the  effect  of  Nunnerley's  mode  of  execution,  on  the  facts  of  this 
case,  is  substantially  the  same  as  if  the  proviso  in  the  body  of  the  bond 
had  been  altered  by  him  before  execution  i:y  him  b}'  striking  out  £50 
and  inserting  instead  £25.  It  was,  therefore,  an  alteration.  Its  effect 
I  shall  presently  discuss. 

The  argument  of  the  learned  counsel  for  the  appellant  was,  that  the 
loss  in  question  was  to  be  divided  into  fourths,  and  that  so  long  as  each 
fourth  did  not  exceed  the  sum  for  which  each  surety  had  become  liable, 
each  of  them  was  bound  to  pay,  and  without  any  right  to  contribution 
from  his  co-sureties,  whether  the  fixed  limit  of  his  liability  was  for  the 
greater  or  the  smaller  amount.  Here  it  was  said  the  one-fourth  of  the 
loss  was  £12,  and  as  Nunnerley  had  clearly  intended  to  make  himself 
liable,  as  also  had  Pay  and  Bromfield,  for  £25  each,  it  was  immaterial 
whether  Nunnerlej7  signed  for  £25  or  £50.  Each,  it  was  contended, 
was  bound  to  pay  £12  ;  and  Emberton  was  bound  to  bear  no  more  of 
the  loss  than  the  others. 

In  m}'  judgment,  this  contention  is  founded  on  a  misapprehension  of 
the  law.  It  renders  it  necessary  to  consider  the  principle  upon  which 
liability  of  sureties  inter  se  rests.  That  principle  is,  that  sureties  for 
the  same  principal  and  for  the  same  engagement,  even  although  bound 
hy  different  instruments  and  for  different  amounts,  have  a  common 
interest  and  a  common  burthen  ;  so  that  if  one  surety  who  is  directly 
liable  to  the  creditor  pays  such  creditor,  he  can  claim  contribution  from 
his  co-sureties  whose  obligation  to  the  creditor  he  has  discharged.  But 
how  is  the  amount  of  the  claim  to  be  determined?  According  to  the 
argument  of  the  learned  counsel  for  the  plaintiffs,  it  is  to  be  determined 
b}'  the  number  of  the  sureties.  Thus,  if  there  are  four  sureties  and  one 
of  them  pa}'s  all,  he  can  recover  one-fourth,  and  one-fourth  only,  of  his 
payment  from  each  of  the  other  three  co  sureties.  But  this  is  not  in  all 
cases  true,  even  where  each  of  the  sureties  has  made  himself  liable  for 
the  same  amount.  Thus,  where  four  sureties  are  jointly  and  severally 
bound  in  a  surety  bond,  and  one  of  them  pays  the  amount  of  the  bond, 
but  one  of  the  remaining  three  sureties  is  insolvent,  the  right  to  contri- 
bution against  the  two  other  sureties  is  for  thirds,  not  for  fourths,  of  the 
sum  paid.  But  how  is  the  amount  to  be  determined,  where,  although 
the  sureties  are  jointly  and  severally  bound,  there  are  different  limits  of 
liability,  as  in  this  case?  It  is  clear  that  where  the  full  amount  of  the 
bond  is  due  and  payable  to  the  creditor,  that  liability  can  only  be  en- 


SECT.  IX.]        ELLESMEEE    BREWERY   COMPANY    V.   COOPER.  249 

forced  against  each  surety  to  the  limit  of  the  liability  fixed  In  the  instru- 
ment. In  such  ease  there  would  be  no  riglit  of  contribution,  for  each 
would  have  paid  to  the  limit  of  his  liability.  But  suppose  only  half  the 
amount  of  the  bond  is  due  and  payable  to  the  creditor,  and  such  amount 
is  paid  by  one  only  of  the  sureties,  who  has  fixed  the  limit  of  his  liabil- 
ity at  one-half  the  amount  of  his  bond.  Could  it  be  said  that  he  had 
no  right  to  any  contribution  from  his  co-sureties?  Surely  not.  The 
burthen  is  a  common  burthen  of  all,  but  unequally  distributed.  By  his 
payment  of  the  loss  of  one-half  the  surety  has  discharged  a  liability 
which  might  have  been  enforced  against  the  other  sureties  up  to  the 
fixed  limit.  It  would  be  against  all  equitable  principles  that  in  such  a 
case  the  other  sureties  should  go  free  because  it  happened  that  the 
creditor  had  enforced  payment  against  one  only.  Again,  it  is  clear  that 
one  surety  cannot  keep  for  his  own  sole  benefit  a  security  for  his  surety- 
ship where  he  is  bound  with  other  sureties  for  the  same  principal  and 
the  same  engagement.  Suppose,  then,  that  one  surety,  whose  limit  of 
liability  was  £1,000,  has  realized  £1,000  from  such  security,  being  bound 
with  three  other  sureties  with  a  limit  of  liability  of  £2,000  each,  making 
in  all  £7,000.  It  is  clear  that  that  £1,000  must  be  taken  into  account 
for  the  benefit  of  all  such  sureties  inter  se.  But  upon  what  principle? 
Sureby  upon  the  only  principle  which  will  secure  its  equitable  division, 
namely,  proportional  distribution.  Thus  the  surety  for  £1,000  would 
benefit  to  the  extent  of  one-seventh,  and  each  of  the  others  to  the  ex- 
tent of  two-sevenths  each.  The  same  principle  must  apply  where  the 
burthen  has  to  be  distributed.  Where  the  claim  of  the  creditor  is  to 
the  full  amount,  each  must  pay  up  to  the  fixed  limit  of  his  liability  ;  but 
where  the  claim  is  less  than  such  full  amount,  and  is  discharged  by  one, 
the  claim  must  be  proportionately  borne  by  the  others,  even  where  the 
claim  does  not  exceed  the  fixed  limit  of  the  liability  of  the  surety  who 
has  paid. 

What  I  have  so  far  said  is,  I  think,  to  be  gathered  from  the  princi- 
ples laid  down  in  Dering  v.  Winchelsea  ; l  but  in  Pendlebury  ''.  Walker,3 
Alderson,  B.,  expressly  states  the  rule  thus  :  "Where  the  same  default 
of  the  principal  renders  all  the  co-sureties  responsible,  all  are  to  con- 
tribute ;  and  then  the  law  superadds  that  which  is  not  only  the  princi- 
ple, but  the  equitable  mode  of  applying  the  principle,  that  they  should 
all  contribute  equally  if  each  is  a  surety  to  an  equal  amount ;  and  if  not 
equall}',  then  proportionally  to  the  amount  for  which  each  is  a  surety." 
In  Steel  v.  Dixon,3  Fry,  J.,  cites  with  approval  the  language  I  have 
quoted  ;  and",  later,  Pearson,  J.,  in  In  re  Arcedeckne,4  adopts  the  lan- 
guage of  Fit,  J.    (See  also  Ellis  v.  Emmanuel 5  and  Evans  v.  Bremridge.6) 

Apply  this  principle  to  the  present  case.  I  assume  the  bond  to  have 
been  executed  according  to  its  original  tenor  without  qualification  or 
alteration.     The  total  loss  being  £48,  Emberton,  having  subscribed  for 

1  1  Cox,  318.  2  4  Y.  &  C.  (Exch.)  424. 

3  17  Ch.  D.  825,  at  p.  830  *  24  Ch.  T).  709,  at  p.  714- 

5  1  Ex.  D.  157.  6  2  K.  &  J.  174. 


250  ELLESMERE   BREWERY    COMPANY   V.    COOPER.        [CHAP.  II. 

£50  out  of  the  total  of  £150,  would  be  liable  for  one-third ;  and  if  he 
paid  no  more  he  would  have  no  claim  for  contribution  ;  if  he  paid  to 
the  plaintiff  more  than  one-third,  he  could  claim  contribution  from  his 
co-sureties  in  the  proportion  of  their  subscription.  Stated  as  a  sum  in 
proportion,  Emberton's  liability  would  be  arrived  at  thus :  As  150  is  to 
50,  so  is  48  to  the  result.  So  worked  out,  Emberton  would  be  liable 
for  £16  only,  and  if  he  paid  more  would  have  a  claim  for  contribution. 
In  like  manner  Pay  and  Bromfield  would  be  liable  for  £8  each,  and 
Nunnerley  for  £16.  Now,  to  appreciate  the  materiality  of  the  altera- 
tion, let  us  consider  its  effect  upon  the  liability  of  Nunnerley.  He 
explicitly  says,  "I  execute  the  bond  only  on  the  terms  of  my  liability 
being  limited  to  £25."  He  could  not,  therefore,  in  any  case  be  made 
liable  for  more.  Whether  he  can  be  made  liable  even  for  the  £25  I 
shall  presently  consider.  What,  then,  is  the  effect  of  the  altered  limi- 
tation to  £25  by  Nunnerley  upon  the  position  of  the  other  three  sure- 
ties? Take  Emberton's  position.  For  simplicity,  assume  that  the  total 
liability  to  the  plaintiff  company  for  £48  has  been  paid  by  Emberton. 
According  to  the  tenor  of  the  bond  without  the  alteration,  Emberton 
would  have  to  bear  two-sixths  —  equal  to  one-third  of  the  loss;  Nun- 
nerley  two-sixths  —  equal  to  one-third  ;  and  Pay  and  Bromfield  one- 
sixth  each.  But  by  the  alteration  it  is  manifest  that  Emberton,  who 
has  paid,  would  not  have  the  same  right  of  contribution  against  Nun- 
nerley, and  if  Nunnerley  is  not  bound  at  all,  would  have  no  right  of 
contribution  against  him.  The  alteration  was  then  clearly  material. 
It  is  unnecessary  to  give  similar  illustrations  as  to  Pa}*  and  Bromfield. 
The  result,  therefore,  is  that  neither  Emberton,  Pa}',  nor  Bromfield 
can  be  made  liable  on  this  bond.  Each  of  them  is  entitled  to  say, 
"  The  contract  into  which  I  entered  was  on  'the  basis  of  Nunnerley  being 
a  party  to  it  with  a  liability  of  £50.  That  is  not  the  contract  as  it  now 
appears  from  the  bond,  and  I  am,  therefore,  not  bound  by  it."  Their 
position  would  be  still  stronger  if  Nunnerley  is  not  bound  by  the  bond 
at  all.  The  remaining  question  then  is,  Is  Nunnerley  bound  at  all?  I 
have  already  intimated,  that  as  he  has  expressly  said,  "I  shall  be  liable 
only  for  £25,"  he  cannot  be  made  liable  for  the  £50  ;  but  is  he  liable 
even  for  the  £25  ?  I  think  he  is  not.  He,  in  good  faith,  expressly 
limits  his  liability  to  £25  ;  but  he  undertakes  that  liability,  not  as  a 
separate  or  independent  liability,  but  as  part  of  a  contract  in  which 
three  other  sureties  are  joining  him,  against  whom  in  certain  eventuali- 
ties he  will  have  rights  of  i*ecourse,  between  whom  and  himself  a  com- 
mon burthen  is  to  be  borne,  although  unequally  distributed.'  But  if  in 
fact  such  sureties  are  not  bound  by  the  contract  (and  we  have  adjudged 
that  the}'  are  not),  Nunnerley  is  entitled  to  say,  "This  is  not  the  con- 
tract into  which  I  have  entered,  and  I  am  not  bound  by  it." 

The  judgment  of  the  learned  county  court  judge  must  stand,  and  the 
appeal  will  therefore  be  dismissed  with  costs.        Appeal  dismissed.1 

1  The  erasure  by  the  creditor  of  the  name  of  one  surety  discharges  the  co-sureties 
on  the  same  obligation.  Nicholson  v.  Revill,  4  A.  &  E.  675;  Mitchell  v.  Burton,  2 
Head,  613.     But  see  Collins  v,  Prosser,  1  B.  &  C.  682.  — Ed. 


SECT.  IX.]  WHITCHEK   V.    HALL.  251 

WHITCHER  v.   JAMES   HALL. 

In  the  King's  Bench,  Hilary  Term,  1826. 

[Reported  in  5  Barnewalt.  Sf  Cresswell,  269.] 

Bayley,  J.1  I  think  that  the  rule  for  entering  a  nonsuit  ought  to  be 
made  absolute.  Bv  the  agreement  which  is  set  out  in  the  declaration, 
the  plaintiff  agreed  to  let,  and  Joseph  Hall  agreed  to  take,  the  milking 
of  thirty  cows  (not  more  nor  less)  for  the  sum  of  £7  10.s\  per  cow  per 
annum,  to  commence  on  the  14th  of  February,  1824,  and  on  the  condi- 
tions therein  mentioned.  The  agreement  was,  that  Joseph  Hall  was  to 
have  the  milking  of  thirty  cows,  and  the  benefit  was  to  inure  to  Joseph, 
not  to  James,  but  the  latter  stipulated  that  he  would  pay  the  whole  rent. 
One  question  is,  whether  that  is  an  entire  contract  as  to  the  number  of 
cows.  If  it  be,  Joseph  was  entitled  to  have  the  milking  of  thirty  cows 
during  the  continuance  of  the  term.  If  it  was  not  an  entire  contract, 
but  a  contract  to  pay  for  so  man}-  cows  as  the  plaintiff  should  supply, 
and  the  plaintiff  supplied  twentj'-nine  or  any  other  number,  he  would  be 
entitled  to  payment  for  so  man}'.  I  am  of  opinion  that  this  was  an 
entire  contract  for  the  purchase  of  thirty  cows  ;  and  if  at  the  commence- 
ment of  the  term  the  plaintiff  could  not  insist  that  this  was  a  divisible 
contract,  it  must  follow  that  it  continued  an  entire  contract  during  the 
term.  I  do  not  enter  into  the  question  whether  there  was  a  perform- 
ance of  the  contract  at  the  commencement  of  the  term.  It  is  sufficient 
to  say  that  there  was  a  new  agreement,  without  the  knowledge  of  James  ; 
that  Joseph  was  to  have  the  milking  of  twenty-eight  cows  during  one 
part  of  the  year,  and  thirty-two  during  the  other  part.  That,  as  it 
seems  to  me,  was  not  a  continuance  of  the  original  bargain,  which  was 
for  the  milking  of  thirty  cows,  but  a  new  agreement.  The  new  agree- 
ment  was  binding  onby  on  those  persons  who  were  parties  to  it.  If  it 
had  been  intended  to  bind  James  by  it,  he  should  have  been  consulted  ; 
he  had  a  right  to  insist  upon  a  literal  performance  of  the  original  bar- 
gain. If  a  new  bargain  was  made,  he  had  a  right  to  exercise  his  judg- 
ment whether  he  would  become  a  party  to  it.2  There  ma}*,  perhaps,  be 
very  little  difference  between  the  two  contracts,  but  the  question  does 
not  turn  on  the  amount  of  the  difference  ;  but  the  question  is,  whether 
the  contract  performed  by  the  plaintiff  is  the  original  contract  to  which 
the  defendant  was  a  party.  If  it  is,  then  James  is  bound  by  it ;  other- 
wise he  is  not.  There  is  no  hardship  upon  the  plaintiff,  for  he  knew 
that  James  stipulated  to  pay  the  rent  upon  his,  the  plaintiffs,  fulfilling 
the  terms  of  the  original  bargain,  and  that  he,  James,  was  not  bound  to 
consent  to  the  substitution  of  a  new  contract.     In  Heard  v.  Wadham  3 

1  Only  the  opinion  of  Batlet,  J.,  is  given.     Holroyd,  J., concurred,  but  Little- 
pale,  J.,  dissented.  —  Ed. 

2  If  the  surety  assents  to  the  new  contract  his  liability  continues.  —  Ed. 

3  1  East,  619." 


252  SANDERSON    V.   ASTON.  [CHAP.  IL 

and  Campbell  v.  French  x  it  was  held  that  the  performance  of  a 
contract,  substantially  the  same  as  that  originally  made,  did  not  give  a 
right  of  action  against  a  surety  who  had  not  consented  to  the  alteration. 
Here  the  plaintiff  attempts  to  maintain  his  action  by  proving  the  per- 
formance not  of  the  contract  declared  on,  but  of  a  subsequent  agree- 
ment. But  he  has  averred,  and  was  bound  to  prove  performance  of  the 
original  agreement.  That  he  has  not  proved  ;  and,  upon  that  ground, 
I  am  of  opinion  that  he  was  not  entitled  to  recover,  and  that  the  rule 
for  entering  a  nonsuit  ought  to  be  made  absolute.2 


SANDERSON   v.   ASTON. 
In  the  Exchequer,  January  20,  1873. 

[Reported  in  Law  Reports,  8  Exchequer,  73.] 

Declaration  on  a  bond  given  by  the  defendant  to  the  plaintiff,  the 
condition  of  which  recited  that,  by  an  agreement  of  even  date,  the 
plaintiff  had  agreed  to  admit  into  his  service,  as  clerk  and  traveller, 
one  John  Thomas  Johnson,  upon  Johnson's  obtaining  two  sureties  "  for 
his  duly  and  faithfully  accounting  to  the  plaintiff,  his  executors,  &c, 
and  other  the  person  or  persons  who  should  or  might  become  partner  or 
partners  with  the  plaintiff  in  his  business  of  a  lead,  glass,  and  color 
merchant,  in  manner  thereinafter  mentioned,  and  for  his  faithful  and 
honest  conduct  during  the  time  of  his  continuance  in  the  said  service  ;  " 
the  condition  of  defeasance  being  that  Johnson  should  from  time  to 
time,  and  at  all  times,  well  and  satisfactorily  account  for,  and  pay  over 
and  deliver  to  the  plaintiff  all  and  eveiy  sum  and  sums  of  mone}*,  &c.T 
which  he  should  receive  for  the  use  of  the  plaintiff,  or  the  plaintiff  and 
any  person  who  might  become  his  partner ;  and  the  breach  alleged 
being,  that  Johnson  did  not  well  and  satisfactorily  account  for,  or  pay 
over,  or  deliver  to  the  plaintiff,  or  to  the  plaintiff  and  his  partner,  cer- 
tain sums  of  money  (amounting  to  £84  9s.)  received  by  him  for  the  use 
of  the  plaintiff  and  his  partner  during  his  service  with  them. 

i  2  H.  Black.  163  ;  6  T.  R.  200. 

2  Woodcock  v.  Oxford,  1  Drew.  521;  Northwestern  Co.  v.  Whinray,  10  Ex.  77  ;  U.  S. 
v.  Tillotson,  1  Paine  C.  C.  305 ;  St.  Louis  Co.  v.  Hayes,  71  Fed.  Rep.  110;  Parke  v.  White 
River  Co.,  110  Cal.  658  (real  surety) ;  Rowan  v.  Sharps  Co.,  33  Conn.  1  (real  surety) ; 
Chester  v.  Leonard,  68  Conn.  495  ;  Bethune  v.  Dozier,  10  Ga.  235 ;  Zimmerman  v.  Judah, 
13  Ind.  286,  22  Ind.  388;  Peru  Co.  v.  Ward  (Kansas  Appeals,  1895),  41  Pac.  R.  64,  51 
Pac.  R.  805  ;  Plunkett  v.  Davis  Co.,  84  Md.  529  ;  Erickson  v.  Brandt,  53  Minn.  10 ;  Prior 
v.  Kiso,  81  Mo.  241  ;  Beers  v.  Wolf,  116  Mo.  179  ;  Evans  r.  Graden,  125  Mo.  72  ;  Bnrley 
v.  Hitt,  54  Mo.  Ap.  272  ;  Consaul  v.  Sheldou,  35  Neb.  247  ;  Watriss  v.  Pierce,  32  N.  H. 
560  ;  Bangs  v.  Strong,  7  Hill,  250,  4  N.  Y.  315  ;  Farmers'  Bank  v.  Evans,  4  Barb.  487  ; 
Eneas  v.  Hoops,  42  N.  Y.  Sup'r  Ct.  517  ;  Cornell  v.  Eagan,  13  Daly,  505;  Northern  Co. 
v.  Kennedy  (North  Dakota,  1897),  73  N.  W.  R.  524  ;  Lane  v.  Scott,  57  Tex.  367  ;  Gard- 
ner v.  Watson,  76  Tex.  25;  Sage  v.  Strong,  40  Wis.  575  (modification  of  judgment); 
Nichols  v.  Palmer,  48  Wis.  110;  Titns  v.  Durkee,  12  Up.  Can.  C.  P.  367,  Accord.  —  Ed. 


SECT.  IX.]  SANDEKSON   V.   ASTON.  253 

Pleas :  2.  On  equitable  grounds,  that  it  was  one  of  the  terms  of  tho 
agreement  in  the  said  condition  mentioned,  that  the  agreement  should 
be  terminated  by  one  month's  notice  on  either  side  ;  and  that,  after- 
wards, the  plaintiff  and  Johnson,  without  the  knowledge,  privity,  or 
consent  of  the  defendant,  altered  the  agreement  and  made  it  terminable 
by  three  months'  notice  on  either  side,  and  thereby  materially  increased 
the  risk  of  the  defendant  as  surety,  and  that  the  defaults  alleged  were 
committed  by  Johnson  after  the  alteration. 

3.  On  equitable  grounds,  that  Johnson,  before  the  commission  of  the 
said  defaults,  had  committed  during  the  said  service  divers  other 
defaults  of  the  same  kind  ;  and  that  the  plaintiff,  though  well  knowing 
the  said  last-mentioned  defaults,  wholly  omitted  and  neglected  to  inform 
the  defendant  thereof,  and,  notwithstanding  the  said  last-mentioned 
defaults,  continued  to  employ  and  retained  Johnson  in  the  said  service  ; 
and  that  the  defaults  alleged  were  committed  by  Johnson  during  the 
said  continuance  and  retention  of  him  by  the  plaintiff  in  the  said 
service. 

Demurrers  and  joinder. 

JR.  G.  Williams,  for  the  plaintiff.1 

.Leioers,  for  the  defendant,  was  directed  to  confine  himself  to  the 
second  plea.  The  second  plea  is  good.  If  the  agreement  between  the 
plaintiff  and  Johnson  was  altered  in  any  respect,  it  became  a  new  and 
different  agreement,  and  the  surety  is  discharged  ;  or,  rather,  it  becomes 
an  agreement  which  the  surety  had  never  guaranteed.  Tayleur  v. 
Wildin.2  But,  further,  the  alteration  was  a  material  one  ;  it  took  away 
from  the  surety  the  security  which  would  be  afforded  to  the  employer 
(and  therefore  to  himself)  by  the  power  of  dismissing  a  clerk  on  a  short 
notice. 

Kelly,  C.  B.  I  am  of  opinion  that  there  is  nothing  in  the  matters 
alleged  in  the  second  plea  to  discharge  the  surety.  The  authorities 
cited  go  to  show  that  we  are  to  look  at  the  terms  of  the  surety's  engage- 
ment ;  not  at  the  terms  of  any  agreement  between  the  empkyer  and 
employed,  unless  these  terms  are  made  part  of  the  surety's  agreement, 
or  unless  something  has  been  done,  which,  with  reference  to  those 
terms,  substantially  alters  his  position.  Now  the  plea  alleges  that  it 
was  a  term  of  the  contract  between  the  employer  and  employed  that 
the  service  should  be  terminable  by  one  month's  notice,  and  that  after- 
wards, and  before  the  defaults  in  respect  of  which  the  action  is  brought, 
they  varied  the  contract  by  providing  that  the  service  should  only  be 
terminable  by  a  three  months'  notice  on  either  side.  And  if  it  clearly 
appeared  that  the  surety  had  entered  into  the  agreement  on  the  faith  of 
the  original  contract,  that  is,  if  notice  had  been  given  to  him  of  the 
terms  of  the  contract,  and  he  had,  after  that  notice,  entered  into  this 
bond,  he  would  undoubtedl}'  have  been  discharged  by  the  alteration. 
The  case  of  North  Western  Ry.  Co.  v.  Whinray  3  shows  that  if  the 

1  The  argument  for  plaintiff  is  omitted.  — Ed.  -  Law  Rep  3  Ex.  303 

•  10  Ex.  77;  23  L.  J.  (Ex.)  261. 


J54  SANDERSON   V.    ASTON.  [CHAP.  II. 

agreement  between  the  employer  and  employed  had  been  made  the 
basis  of  the  surety's  contract,  and  if  for  that  original  agreement  another 
had  been  substituted  determinable  on  a  different  event,  that  which  was 
the  basis  of  the  surety's  contract  would  be  gone,  and  the  suret}'  would 
be  discharged.  But  it  does  not  appear  that  the  surety  ever  had  notice 
of  that  agreement,  further  than  that  the  plaintiff  had  agreed  to  employ 
Johnson  as  traveller  upon  his  obtaining  two  sureties  for  his  u  duly  and 
faithfully  accounting,"  and  for  his  "  faithful  and  honest  conduct." 

But  the  third  plea  raises  a  different  question.  The  case  of  Phillips  v. 
Foxall 1  clearly  shows  that,  if  any  defaults  or  breaches  of  duty,  whether 
by  dishonesty  or  not,  have  been  committed  by  the  employed  against  the 
employer,  under  such  circumstances  that  the  employer  might  have  dis- 
missed the  employed,  the  surety  is  entitled  to  call  on  the  employer  to 
dismiss  him.  The  question  therefore  is,  whether  the  allegation  of  the 
plea  shows  such  breaches  of  duty  as  would  have  entitled  the  plaintiff  to 
dismiss  Johnson,  and  would,  therefore,  have  entitled  the  surety  to  call 
upon  him  to  do  so.  It  is  said  that  no  dishonesty  is  shown  b}r  the  plea. 
That  may  well  be  ;  and  3Tet  the  employed  by  failing  to  pay  over  money 
which  he  has  received  may  commit  a  breach  of  his  duty,  which  would 
entitle  his  employer  to  dismiss  him.  Now  we  must  take  it  on  the  plea, 
reading  it  with  the  declaration,  that  Johnson  had  received  for  the  plain- 
tiff certain  sums  of  money  which  it  was  his  duty  to  pa}7  over,  and  which 
he  did  not  pay  over,  and  the  question  is,  whether  that  is  not  prima 
facie  a  breach  of  duty  which  would  entitle  the  plaintiff  to  dismiss  him. 
I  am  of  opinion  that  it  is,  and  that  it  is  sufficient  if  the  plea  raises  such 
a  prima  facie  case. 

Martin,  B.  I  think  the  third  plea  is  good  on  the  authority  of 
Phillips  v.  Foxall.2 

It  is  my  impression  that  the  second  plea  is  good  also  ;  for  I  think  the 
declaration  must  be  taken  as  meaning  that  the  defendant  was  to  guar- 
antee Johnson's  fidelity  in  that  service  which  he  entered  on  with  the 
plaintiff;  and  I  apprehend  that,  if  afterwards  the  plaintiff  and  Johnson 
entered  into  a  new  contract  which  would  cast  a  new  liability  upon  the 
surety,  the  surety  was  discharged.  Now,  if  by  the  original  contract 
Johnson  was  liable  to  be  dismissed  at  one  month's  notice,  and  that  is 
afterwards  altered  into  a  contract  for  a  three  months'  notice,  that  is  a 
material  alteration,  involving  a  new  liability  in  the  surety,  and  which, 
therefore,  if  entered  into  without  his  consent,  will  discharge  him.  I  do 
not,  however,  entertain  this  opinion  so  strongly  as  to  induce  me  to  dis- 
sent from  the  judgment  of  the  Court. 

Pigott,  B.  I  think  the  second  plea  is  no  defence.  It  is  pleaded  on 
equitable  grounds,  and  the  fact  relied  on  is,  that  the  agreement  between 
Johnson  and  the  plaintiff  was  made  determinable  by  a  three  months' 
notice  instead  of  a  one  month's  notice,  without  the  knowledge  or  con- 
sent of  the  surety,   whereby  the  risk  of  the   surety  was  materiallj 

i  Law  Rep.  7  Q.  B.  666.  2  Ibid. 


SECT.  IX.]  SANDERSON    V.   ASTON.  255 

increased.  I  think  the  averment  that  the  risk  was  materially  increased 
is  a  proposition  of  law,  an  inference  from  the  previous  statement ;  we 
have  to  see  whether  that  is  a  proper  inference,  so  as  to  give  the  surety 
a  defence  in  equity,  and  I  am  of  opinion  that  it  is  not.  If  the  creditor 
agrees  to  change  the  terms  of  his  contract  with  the  person  on  whose 
behalf  the  guaranty  is  given,  and  does  thereby  increase  the  surety's 
risk  without  his  consent,  the  surety  is  discharged.  Equally,  if  the 
surety  chooses  to  contract  on  the  terms  of  the  original  agreement,  so  as 
to  make  that  agreement  a  material  part  of  his  contract,  he  is  discharged 
by  the  alteration.  But  if  (which  appears  to  be  the  case  here)  the  change 
of  terms  takes  place  in  an  agreement  which  is  merely  collateral  to  that 
of  the  surety,  and  is  not  made  a  part  of  it,  and  if  it  is  also  quite 
immaterial  to  the  risk,  it  affords  the  surety  no  answer.  Now,  I  think 
this  change  did  not  affect  the  surety's  risk  at  all.  If  a  notice  were 
given  for  three  months,  as  required  by  the  new  agreement,  his  risk  would 
not  extend  over  the  whole  three  months,  but  would  terminate  at  the  end 
of  the  first  month.  He  is  therefore  no  worse  off  because  of  the  change, 
and  his  plea  therefore  fails. 

As  to  the  third  plea,  I  agree  that  it  is  good,  for  the  reasons  already 
given. 

Pollock,  B.     I  also  agree  that  the  third  plea  is  quite  within  Phillips 
v.  Foxall.1 

As  to  the  second  plea,  after  what  has  been  said  by  my  Brother 
Martin,  I  express  my  opinion  with  some  diffidence,  but  I  think  it  is 
bad.  Pleas  of  this  kind  are  well  known  at  law,  and  Whitcher  v.  Hall 
is  a  leading  case  upon  the  subject.  In  that  case  there  was  an  agreement 
between  the  plaintiff  and  Joseph  Hall  for  the  letting  of  the  milking  of 
thirty  cows,  and  that  agreement  was  imported  into  the  contract  by 
which  James  Hall,  the  defendant,  guaranteed  to  the  plaintiff  the  pay- 
ment by  Joseph  Hall  of  the  rent.  A  change  being  afterwards  made  in 
the  number  of  the  cows,  the  surety  was  held  to  be  discharged,  and 
'  Bayley,  J.,  says  : 2  "  The  new  agreement  was  binding  only  on  the  per- 
sons who  were  parties  to  it.  If  it  had  been  intended  to  bind  James  by 
it,  he  should  have  been  consulted  ;  he  had  a  right  to  insist  upon  a 
literal  performance  of  the  original  bargain.  If  a  new  bargain  was  made, 
he  had  a  right  to  exercise  his  judgment  whether  he  would  become  a 
party  to  it.  There  ma}-  perhaps  be  very  little  difference  between  the 
two  contracts,  but  the  question  does  not  turn  on  the  amount  of  the 
difference ;  but  the  question  is  whether  the  contract  performed  by 
the  plaintiff  is  the  original  contract  to  which  the  defendant  was  a  party." 
That  case  (which  was  no  doubt  a  very  strong  decision)  has  been  acted 
on  ever  since,  when  the  party  who  has  become  surety  has  taken  care 
that  the  original  agreement  should  be  made  part  of  his  contract.  But 
in  the  cases  cited  to  us,  where  the  original  contract  was  not  made  part 
of  the  surety's  contract,  but  the  Court  has  nevertheless  said  that  the 

1  Law  Rep.  7  Q.  B.  666.  2  5  B.  &  C,  at  p.  275. 


256  HOLME    V.    BRUNSKILL,  [CHAP.  IL 

suretj'  was  discharged,  there  has  been  some  material  alteration  in  the 
terms  of  the  original  agreement,  in  this  sense,  that  the  suret}-  has  been 
injured  or  put  in  a  worse  position  by  the  change.  It  is  therefore  open 
to  the  Court  in  such  cases  to  consider  whether  the  alteration  is  a 
material  one  or  not,  and  I  am  of  opinion  that  the  alteration  in  the  pres- 
ent case  is  not  so.  The  distinction  I  have  adverted  to  was  no  doubt 
in  the  mind  of  the  pleader  when  he  pleaded  this  plea  on  equitable 
grounds. 

Judgment  for  the  plaintiff  on  the  demurrer  to  the  2d  plea  ;l  for 
the  defendant  on  the  demurrer  to  the  3d  plea. 


HOLME   v.   BRUNSKILL. 

In  the  Coukt  of  Appeal,  June  7,  1877. 

[Reported  in  Law  Reports,  3  Queen's  Bench  Division,  495.] 

Cotton,  L.  J.2  This  is  an  appeal  of  the  plaintiff  against  a  judgment 
of  Denman,  J.,  in  favor  of  the  defendant,  Robert  Brunskill.  The  action 
was  on  a  bond  for  £1,000,  dated  the  18th  of  March,  1873,  executed  by 
George  Brunskill,  Robert  Brunskill,  and  others  in  favor  of  the  plaintiff. 
The  plaintiff  was  at  the  date  of  the  bond,  and  still  is,  the  owner  of  a 
farm  called  Riggindale,  and  before  the  execution  of  the  bond  he  had 
agreed  with  George  Brunskill  to  let  to  him  as  yearly  tenant  Riggindale 
Farm,  including  certain  hill  pasture  held  therewith,  and  also  a  flock  of 
700  sheep  :  and  the  bond,  in  which  Robert  Brunskill  joined  as  surety  for 
George  Brunskill,  was  given  to  the  plaintiff  to  secure  the  delivery  to 
him  at  the  end  of  the  tenancy  of  the  flock  of  sheep  in  good  order  and 
condition.  The  material  part  of  the  condition  of  the  bond  is  as  follows  : 
"  If  the  above  bounden  G.  Brunskill  should,  at  the  determination  of  the 
tenancy,  deliver  up  to  H.  P.  Holme,  along  with  the  said  farm  and 
premises,  the  like  number,  species,  and  quality  of  good  and  sound  sheep 
as  were  delivered  to  the  said  G.  Brunskill  as  aforesaid  ;  "  and  "  in  case 
the  said  stock  of  sheep  should,  at  the  determination  of  the  said  tenancy, 
be  reduced  or  deteriorated  in  number,  quality,  or  value,  should  pay  to 
H.  P.  Holme  compensation  for  such  reduction  or  deterioration,  to  be 
ascertained  by  certain  arbitrators  "  in  manner  therein  provided  ;  and 
"  should  yearly  and  every  year  during  the  tenancy  pay,  or  cause  to  be 
paid,  to  H.  P.  Holme,  by  way  of  rent  or  interest  for  the  sheep,  the  sum 
of  £35  by  two  equal  half-yearly  payments,"  then  the  bond  should  be 
void. 

On  the  9th  of  November,  1875,  the  plaintiff  gave  to  George  Brunskill 
a  notice  to  quit  the  farm,  which  was  in  terms  a  notice  to  quit  "  on  the 
10th  of  April,  1876,  or  at  the  expiration  of  the  year  of  your  tenancy, 

1  Stewart  v.  McKean,  10  Ex.  675,  Accord.  —  Ed. 

2  Only  the  opinions  of  the  Court  are  given.  —  Ed. 


SECT.  IX.]  HOLME   V.   BRUNSKILL.  257 

which  shall  expire  next  after  the  expiration  of  one  half  year  from  the 
service  of  the  notice."  The  notice  being  served  less  than  six  months 
before  the  10th  of  April,  1876,  was  ineffectual  to  determine  the  tenancy 
on  that  day,  but  was  effectual  to  determine  it  on  the  10th  of  April, 
1877.  Before  the  10th  of  April,  1876,  George  Brunskill  and  the  plain- 
tiff met,  and  George  Brunskill  objected  to  the  insufficiency  of  the  notice 
to  quit.  Whereupon  the  plaintiff  stated  that  he  did  not  wish  to  take 
the  farm  from  him,  but  that  he  wanted  part  of  the  farm  culled  the 
Bog  Field,  and  it  was  thereupon  agreed  that  George  Brunskill  should 
surrender  this  on  the  10th  of  April  then  next,  and  that  his  rent  should 
from  that  time  be  reduced  by  £10  a  year,  and  that  the  notice  to  quit 
should  be  considered  as  withdrawn.  This  agreement  was  carried  into 
effect,  and  George  Brunskill  continued  to  hold  the  remainder  of  the 
farm;  but  early  in  October  following,  the  plaintiff  gave  him  due  notice 
to  quit  on  the  10th  of  April,  1877.  Before  this  time  arrived  George 
Brunskill  got  into  difficulties  and  had  become  insolvent.  His  trustee, 
sometime  in  March,  1877,  gave  up  the  farm,  and  it  was  then  ascertained 
that  the  flock  referred  to  in  the  bond  was  reduced  in  number  and  deteri- 
orated in  quality  and  value;  and  the  action  has  been  brought  to  recover 
from  the  defendant,  under  his  bond,  compensation  for  the  diminished 
value  of  the  flock. 

Mr.  Justice  Denman,  before  whom  the  action  was  tried,  gave  judg- 
ment for  the  defendant,  and  against  this  judgment  the  plaintiff  has 
appealed. 

One  ground  on  which  the  defendant  relied  in  supporting  the  judg- 
ment was,  that  his  obligation  under  the  suretyship  bond  had  expired 
before  the  deficiency  arose,  that  is  to  sa}-,  that  by  the  notice  to  quit  and 
agreement  made  as  to  the  surrender  of  the  Bog  Field,  and  the  with- 
drawal of  the  notice,  a  new  tenancy  was  created,  to  which  the  bond 
did  not  apply  ;  and  for  this  he  relied  on  the  case  of  Tayleur  v.  Wildin  a 
as  an  authority,  that  under  the  circumstances  a  new  tenancy  was 
created  ;  and  it  was  on  the  authority  of  Tayleur  v.  Wildin1  that  Mr. 
Justice  Denman,  as  we  understand,  principally  relied,  but  we  are  unable 
to  agree  with  this  view.  In  Tayleur  v.  Wildin  l  the  tenant  continued 
in  the  occupation  of  the  farm  after  the  day  for  which  the  notice  to  quit, 
which  was  withdrawn,  had  been  effectually  given,  and  the  rent  for 
which  the  surety  was  sued  accrued  in  respect  of  the  occupation  after 
that  day,  and  the  Court  considered  the  continuance  of  the  tenant's  pos- 
session after  that  time  as  a  new  tenancy,  and  that  the  guaranty,  which 
applied  only  to  the  old  tenancy,  was  therefore  gone.  But  in  the  present 
case  the  tenancy  of  George  Brunskill  was,  in  fact,  determined  on  or 
before  the  day  when,  if  the  notice  to  quit  had  not  been  withdrawn,  it 
would  have  ended.  The  deficiency  and  deterioration  of  the  flock  there- 
fore  occurred  at  the  determination  of  the  very  tenancy  to  which  the 
bond  referred.     It  was,  however,  argued  that  the  effect  of  giving  up 

1  Law  Rep.  3  Ex.  303. 
17 


258  HOLME   V.    BRUNSKILL.  [CHAP.  II. 

the  Bog  Field  must  be  a  surrender  of  the  old  tenanc}T.  But  we  are  of 
opinion  that  this  cannot  be  maintained,  and  that  notwithstanding  the 
surrender  to  a  landlord  of  part  of  the  land  demised,  the  former  tenancy 
of  the  remainder  of  the  farm  still  continues. 

It  was  contended  by  the  defendant,  that  even  if  there  was  a  continu- 
ance of  the  old  tenancv  the  effect  of  the  surrender  of  the  Bog  Field 
was  to  discharge  him  as  surety  from  all  liability.  The  Bog  Field  con- 
tained about  seven  acres,  and  the  jury,  in  answer  to  a  question  left  to 
them,  at  the  trial,  found  that  the  new  agreement  with  the  tenant  had 
not  made  any  substantial  or  material  difference  in  the  relation  between 
the  parties,  as  regards  the  tenant's  capacity  to  do  the  things  mentioned 
in  the  condition  of  the  bond,  and  for  the  breaches  of  which  the  action 
was  brought.  The  plaintiffs  contention  was  that  this  must  be  treated 
as  a  finding  that  the  alteration  was  immaterial,  and  that,  except  in  the 
case  of  an  agreement  to  give  time  to  the  principal  debtor,  a  surety  waa 
not  discharged  by  an  agreement  between  the  principals  made  without 
his  assent,  unless  it  materially  varied  his  liability  or  altered  what  was 
in  express  terms  a  condition  of  the  contract. 

In  my  opinion  this  contention  on  behalf  of  the  plaintiff  cannot  be 
sustained.  No  doubt  there  is  a  distinction  between  the  cases  which 
have  turned  on  the  creditor  agreeing  to  give  time  to  the  principal 
debtor,  and  the  other  cases.  Where  a  creditor  does  bind  himself  to 
give  time  to  the  principal  debtor,  he,  with  an  exception  hereafter  referred 
to,  does  deprive  the  surety  of  a  right  which  he  has,  that  is  to  say,  of 
the  right  at  once  to  pay  off  the  debt  which  he  has  guaranteed,  and  to 
sue  the  principal  debtor ;  and  without  inquiry  whether  the  surety  has, 
by  being  deprived  of  this  right,  in  fact  suffered  any  loss,  the  Courts 
have  held  that  he  is  discharged.  The  exception  to  which  I  have  re- 
ferred is,  where  the  creditor,  on  making  the  agreement  with  the  prin- 
cipal debtor,  expressly  reserves  his  right  against  the  suret}' ;  but  this 
reservation  is  held  to  preserve  to  the  surety  the  right  above  referred  to, 
of  which  he  would  be  otherwise  deprived.  The  cases  as  to  discharge 
of  a  surety  by  an  agreement  made  b}'  the  creditor,  to  give  time  to  the 
principal  debtor,  are  only  an  exemplification  of  the  rule  stated  b}"  Lord 
Loughborough  in  the  case  of  Bees  v.  Berrington  :  *  "It  is  the  clearest 
and  most  evident  equit3r  not  to  cany  on  any  transaction  without  the 
knowledge  of  him  [the  surety],  who  must  necessarily  have  a  concern  in 
every  transaction  with  the  principal  debtor.  You  cannot  keep  him 
bound  and  transact  his  affairs  (for  they  are  as  much  his  as  your  own) 
without  consulting  him. 

The  true  rule  in  my  opinion  is,  that  if  there  is  any  agreement  be- 
tween the  principals  with  reference  to  the  contract  guaranteed,  the  surety 
ought  to  be  consulted,  and  that  if  he  has  not  consented  to  the  alter- 
ation, although  in  cases  where  it  is  without  inquiry  evident  that  the 
alteration  is  unsubstantial,  or  that  it  cannot  be  otherwise  than  beneficial 

1  2  Ves.  Jr.  540. 


SECT.  IX.]  HOLME   V.   BRUNSKILL.  259 

to  the  surety,  the  surety  ma}-  not  be  discharged  ;  yet,  that  if  it  is  not 
self-evident  that  the  alteration  is  unsubstantial,  or  one  which  cannot 
be  prejudicial  to  the  surety,  the  Court  will  not,  in  an  action  against  the 
surety,  go  into  an  inquiry  as  to  the  effect  of  the  alteration,  or  allow  the 
question,  whether  the  surety  is  discharged  or  not,  to  be  determined  by 
the  finding  of  a  jury  as  to  the  materiality  of  the  alteration  or  on  the 
question  whether  it  is  to  the  prejudice  of  the  surety,  but  will  hold  that 
in  such  a  case  the  surety  himself  must  be  the  sole  judge  whether  or  not 
he  will  consent  to  remain  liable  notwithstanding  the  alteration,  and  that 
if  he  has  not  so  consented  he  will  be  discharged.  This  is  in  acordance 
with  what  is  stated  to  be  the  law  by  Amphlett,  L.  J.,  in  the  Croydon 
Gas  Company  v.  Dickenson.1 

The  plaintiff,  in  support  of  his  contention,  that  having  regard  to  the 
finding  of  the  jury,  the  surety  was  not  discharged,  relied  on  various 
dicta  to  the  effect  that  an}'  material  change  in  the  contract  between  the 
principals  will  discharge  the  surety.  Even  if  by  these  expressions  the 
judges  intended  to  state  that  to  have  the  effect  of  releasing  the  surety 
the  alteration  must  be  material,  it  does  not  follow  that  they  intended 
to  lay  down  that  no  alteration  would  discharge  the  surety  unless  the 
jury,  in  an  action  to  enforce  his  liability,  held  it  to  be  material,  or  to 
express  any  opinion  at  variance  with  the  rule  laid  down  by  me.  The 
case  of  Sanderson  v.  Aston  was  specialty  relied  on  by  the  plaintiff. 
But  Martin,  B.,  though  he  did  not  formally  dissent  from  the  decision 
of  the  majority  of  the  Court,  was  not  satisfied  with  the  judgment;  and 
if  the  decision  is  to  be  considered  as  based  on  the  reason  given  by 
Pollock,  B.,  that  the  Court  was  entitled  to  consider  whether  the  altera- 
tion was  material,  it  cannot,  in  our  opinion,  be  sustained. 

In  the  present  case,  although  the  Bog  Field  contained  seven  acres 
only,  yet  it  cannot  be  said  to  be  evident  that  the  surrender  of  it  could 
not  prejudicially  affect  the  surety.  Some  of  the  witnesses  for  the 
plaintiff  admitted  that  it  was  occasionally  used  for  pasturing,  that  its 
loss  would  be  appreciable  in  the  spring,  and  that  it  might  make  a  differ- 
ence of  fifteen  in  the  number  of  the  sheep  which  the  farm  would  cany. 

The  case  ma}'  also  be  considered  in  another  point  of  view.  The 
bond  given  by  the  defendant,  the  surety,  was  to  guarantee  the  delivery 
up  of  the  flock  of  sheep  therein  referred  to  at  the  determination  of  the 
tenancy  of  the  Riggindale  Farm,  which,  in  our  opinion,  must  mean  Rig- 
gindale  Farm  as  then  demised  to  George  Brunskill,  and  the  bond  cer- 
tainly implied  that  he  should  continue  to  hold  the  farm  as  then  demised 
till  the  flock  was  given  up.  The  contention  of  the  plaintiff,  if  it  could 
be  supported,  would  make  a  variation  in  this  contract,  as  to  the  materi- 
ality of  which  there  is  at  least  a  doubt,  and  would  make  the  defendant 
liable  for  a  deterioration  of  the  flock  during  the  time  when  the  tenant 
held  a  smaller  farm  than  that  contemplated  by  the  contract  of  the 
surety. 

The  plaintiff's  counsel  relied  on  some  observations  made  by  Lord 

1  2  C.  P.  D.,  at  p.  51. 


260  HOLME    V.    BRUNSKILL.  [CHAP.  II. 

Cottenham  in  the  case  of  Hollier  v.  Eyre.1  But,  in  fact,  those  obser- 
vations are  in  favor  of  the  defendant  and  not  of  the  plaintiff.  What 
Lord  Cottenham  says  is,  "The  surety  will  be  left  to  judge  for  himself 
between  his  original  undertaking  and  another  substituted  for  it,  but  that 
is  not  the  case  where  the  contract  remains  the  same,  though  part  of  the 
subject-matter  is  withdrawn  from  its  operation."  In  this  case,  as  already 
pointed  out,  the  original  contract  of  the  surety  was  that  the  flock  should 
be  delivered  up  in  good  condition,  together  with  the  farm,  as  then 
demised  to  the  tenant.  No  part  of  that  which  was  guaranteed  was  ever 
withdrawn  from  the  operation  of  the  bond.  But  the  plaintiff  attempts 
to  substitute  for  the  contract  that  the  flock  should  be  given  up  in  good 
condition,  with  the  farm,  as  then  demised,  a  contract  that  it  should  be 
delivered  up  in  like  condition  with  a  farm  of  different  extent.  In  my 
opinion  the  surety  ought  to  have  been  asked  to  decide  whether  he  would 
assent  to  the  variation.  He  never  did  so  assent,  and  in  my  opinion 
was  discharged  from  liability,  notwithstanding  the  finding  of  the  jury, 
inasmuch  as  in  m}'  opinion  the  question  was  not  one  which  ought  to 
have  been  submitted  to  them. 

Lord  Justice  Thesiger  concurs  in  this  judgment. 

Brett,  L.  J.  I  speak  with  great  deference  when  I  say  I  cannot  bring 
nry  mind  altogether  to  agree  with  this  judgment,  and  I  feel  bound  to 
observe  that  I  arrive  at  another  view  than  that  which  has  been 
expressed.  As  to  the  first  part  of  the  judgment  I  entirely  agree.  I  do 
not  think  there  was  airv  new  tenancy,  and  I  ground  that  view  on  the 
fact  of  the  finding  of  the  jury,  amongst  other  things,  that  the  alteration 
was  immaterial.  It  is  the  latter  part  of  this  view  with  which  I  cannot 
agree.  In  the  first  place,  this  case  comes  before  us  fettered  by  certain 
rules.  We  are  bound  to  observe  that  it  is  a  direct  appeal  from  the 
decision  of  my  Brother  Denman,  after  a  trial  by  jur}- ;  we  are,  therefore, 
not  at  liberty  to  ask  whether  the  question  he  left  was  left  in  proper 
form.  There  cannot  be  a  motion  here  for  misdirection,  and  we  are  not 
at  liberty  to  say  that  the  finding  of  the  jury  was  contraiy  to  the  evi- 
dence. It  is  a  general  rule  that  we  have  no  right  to-.look  at  the  verdict, 
but  accept  it  according  to  its  ordinary  construction.  I  find  the  question 
left  to  the  jury  was,  whether  the  new  agreement  with  the  tenant,  which 
we  are  told  did  not  alter  the  tenancy,  made  a  substantial  or  material 
difference  in  the  relation  between  the  parties  as  to  the  tenant's  capacity 
to  do  the  things  mentioned  in  the  bond,  and  for  breach  of  which  the 
action  was  brought.  They  not  only  found  that,  but  m}T  Brother  Den- 
man says  that  the  matter  is  far  more  fit  for  the  consideration  of  a  jury 
of  the  county  of  Cumberland  than  for  a  lawyer,  and  he  cannot  say  that 
he  is  dissatisfied  with  their  view.  Therefore  there  is  the  finding  of  the 
jury  with  the  assent  of  the  judge.  If  it  were  necessaiy  to  give  an 
opinion,  considering  I  have  not  an  intimate  knowledge  of  these  things, 
but  from  what  I  know  of  Cumberland  farmers,  so  far  from  dissenting 
from  the  opinion  of  the  jury,  I  think  it  is  a  substantial  finding.     When 

i  9  H.  L.  C.  57. 


SECT.  IX.]  CAMBRIDGE    SAVINGS   BANK   V.    HYDE.  261 

one  remembers  how  many  views  are  taken  as  to  farms  in  Cumberland, 
I  should  be  inclined  to  agree  with  the  jury  and  say  it  did  not  make  any 
material  difference.  We  are  bound  by  that  finding,  and  can  act  in  con- 
formity with  it.  Where  there  is  a  suretyship  bond,  and  there  are  some 
alterations  in  the  contract  or  relation  of  the  parties  under  the  bond  as 
to  guaranteeing  its  performance,  the  question  is  whether  the  alteration 
is  not  material  or  substantial,  and  whether  the  surety  is  released.  I 
cannot  bring  my  mind  to  think  he  is,  for  the  law  takes  no  notice  of 
alterations  that  are  neither  material  nor  specific.  The  proposition  of 
law  as  to  suretyship  to  which  I  assent  is  this,  if  there  is  a  material 
alteration  of  the  relation  in  a  contract,  the  observance  of  which  is 
necessary,  and  if  a  man  makes  himself  surety  by  an  instrument  re- 
citing the  principal  relation  or  contract,  in  such  specific  terms  as  to 
make  the  observance  of  specific  terms  the  condition  of  his  liability, 
then  any  alteration  which  happens  is  material ;  but  where  the  surety 
makes  himself  responsible  in  general  terms  for  the  observance  of 
certain  relations  between  parties  in  a  certain  contract  between  two 
parties,  he  is  not  released  by  an  immaterial  alteration  in  that  relation 
or  contract.  My  opinion  is  in  accordance  with  the  finding  of  the  jury, 
and  it  will  be  most  dangerous  in  this  particular  case  to  put  ourselves  in 
the  place  of  a  jury,  and  because  we  think  seven  acres  may  make  a  differ- 
ence, or  £10  a  year  ma}T  make  a  difference,  to  set  aside  the  finding  of 
the  jury,  which  is  that  neither  one  is  material  or  substantial.  I  think 
the  surety  is  not  released.  The  doctrine  of  the  release  of  suretyship  is 
carried  far  enough,  and  to  the  verge  of  sense,  and  I  shall  not  be  one  to 
carry  it  any  further.  Judgment  affirmed. 


CAMBRIDGE   SAVINGS   BANK  v.    HYDE  and   Another. 

In  the  Supreme  Judicial  Court,  April  6,  1881. 

[Reported  in  131  Massachusetts  Reports,  77.] 

Morton,  J.  This  is  a  suit  against  the  executors  of  one  of  the 
sureties  upon  a  promissory  note  held  by  the  plaintiff.  By  the  note, 
which  is  dated  October  16,  1871,  the  maker  promises  to  pay  to  the 
plaintiff  $6,000  on  demand,  with  interest  at  the  rate  of  seven  and  one 
half  per  cent  per  annum,  payable  semi-annually.  At  the  trial,  it 
appeared  that  the  treasurer  of  the  plaintiff,  some  years  after  the  date 
of  the  note,  having  authority  to  do  so,  wrote  upon  the  back  of  the  note 
the  memorandum,  "  Rate  of  interest  to  be  6£  per  cent  from  Oct.  10, 
1876."  The  defendants  asked  the  Court  to  rule  "  that  any  change  in 
the  rate  of  interest  of  the  note,  whether  made  on  the  face  of  the  note 
or  by  a  memorandum  in  the  margin  or  upon  the  back  of  the  note,  was 
a  change  in  the  terms  of  the  contract,  and  a  material  alteration  of  the 
Oote  such  as  would  discharge  the  defendants'  testator,  if  made  without 


262  CAMBRIDGE    SAVINGS    BANK    V.   HYDE.  [CHAP.  IL 

his  consent,  and  that  the  indorsement  upon  the  back  of  the  note  in 
suit  was  such  an  alteration ;  "  which  ruling  the  Court  refused. 

The  defendants  contend,  in  the  first  place,  that  this  memorandum 
thus  made  was  a  material  alteration,  in  the  sense  of  a  mutilation,  of 
the  note,  which  avoided  it  as  to  all  parties  not  consenting  to  it.  In 
the  cases  where  it  has  been  held  that  a  material  alteration  of  a  note 
or  other  contract  avoids  it,  there  has  been  some  change  by  erasure  or 
interlineation  in  the  paper  writing  constituting  the  evidence  of  the 
contract,  so  as  to  make  it  another  and  different  instrument,  and  no 
longer  evidence  of  the  contract  which  the  parties  made.  The  ground 
Of  the  decisions  is  that  the  identity  of  the  contract  is  destnyyed. 
Wade  v.  Withington  ; *  Commonwealth  v.  Emigrant  Savings  Bank  ;  2 
Belknap  v.  National  Bank  of  North  America;3  Hewins  v.  Cargill.4 
But  in  the  case  at  bar  it  is  clear  that,  using  the  word  in  this  sense, 
there  has  been  no  alteration  of  the  note.  The  original  note  remains 
intact.  It  is  in  no  respect  altered  or  made  different.  The  memo- 
randum on  the  back  is  evidence  of  an  independent  collateral  agreement, 
and  has  no  more  effect  than  if  it  had  been  written  on  a  separate  paper. 
Stone  v.  White.5 

The  defendants  also  contend  that,  if  the  memorandum  is  to  be 
treated  as  an  independent  collateral  agreement,  yet  it  makes  such 
a  change  in  the  terms  of  the  contract  as  to  discbarge  the  sureties,  who 
did  not  consent  to  it.  It  is  clear  that,  if  a  creditor  makes  any  agree- 
ment with  the  principal  debtor,  or  does  any  other  act  which  is  preju- 
dicial to  the  rights  of  the  surety,  the  surety  is  discharged  from  his 
liability.  Thus,  if  the  creditor,  bj7  a  valid  agreement  founded  upon 
a  sufficient  consideration,  extends  the  time  of  pa}*ment  of  the  debt, 
the  surety  is  discharged.  The  reason  is,  that  such  an  agreement 
materially  affects  the  rights  of  the  suret}-,  since  it  prevents  him  from 
paving  the  debt  and  having  an  immediate  remedy  against  the  princi- 
pal debtor.  Hunt  v.  Bridgham  ; 6  Agricultural  Bank  v.  Bishop.7  Mr. 
Justice  Story  states  the  rule  to  be,  "  that  if  a  creditor  does  any  act 
injurious  to  the  surety,  or  inconsistent  with  his  rights  ;  or  if  he  omits 
to  do  any  act,  when  required  by  the  suret}7,  which  his  duty  enjoins  him 
to  do,  and  the  omission  proves  injurious  to  the  surety  ;  in  all  such 
cases  the  latter  will  be  discharged."  1  Story,  Eq.  Jur.,  §  325.  The 
surety  is  discharged  because  the  act  of  the  creditor  is  injurious  to  him 
and  is  inconsistent  with  the  duty  which  the  creditor  owes  to  him. 
Where  the  act  of  which  the  surety  complains  is  a  new  agreement 
changing  some  of  the  terms  of  the  original  agreement,  we  think  the 
true  rule  is,  that,  if  such  new  agreement  is  or  may  be  injurious  to  the 
surety,  or  if  it  amounts  to  a  substitution  of  the  new  agreement  for 
the  old,  so  as  to  discharge  and  put  an  end  to  the  latter,  the  surety  is 
discharged.  But  if  the  change  in  the  original  contract  from  its  nature 
is  beneficial  to  the  surety,  or  if  it  is  self-evident  that  it  cannot  prejudice 

1  1  Allen,  561.  3  100  Mass.  376.  5  8  Gray,  589.  7  6  Gray,  317. 

2  98  Mass.  12.  *  67  Maine,  554.  6  2  Pick.  581. 


SECT.  IX.]  CAMBRIDGE    SAVINGS    BANK    V.    HYDE.  263 

him,  the  surety  is  not  discharged.  Smith  v.  United  States  ; 1  Appleton 
v.  Parker;2  General  Steam  Navigation  Co.  v.  Rolt ; 3  Bowmaker  v. 
Moore  ;  4  Holme  v.  Brunskill. 

In  the  case  at  bar,  the  new  agreement  was,  that,  after  a  day  named, 
the  interest  on  the  principal  stun  lent  by  the  plaintiff  should  be  at  the 
rate  of  six  and  a  half  instead  of  seven  and  a  half  per  cent.  It  was 
clearly  not  the  intention  of  the  parties  to  discharge  the  note  and  sub- 
stitute a  new  contract  in  its  place.  The  agreement  presupposes  that 
the  note  is  to  remain  in  force  as  a  promise  to  pay  the  principal  debt. 
The  parties  did  not  intend  to  release  the  principal  debtor  or  the 
sureties  from  their  obligation  to  pay  the  note,  but  only  to  remit 
a  portion  of  the  interest  payable  under  it  for  the  use  of  the  money. 
We  know  of  no  rule  of  law  which  requires  us  to  defeat  the  intention 
of  the  parties  by  holding  that  this  operated  to  discharge  the  original 
contract  in  whole.  It  is  also  clear  that  the  change  in  the  original 
contract,  by  reducing  the  rate  of  interest,  could  not  be  prejudicial  to 
the  sureties.  It  is  to  be  borne  in  mind  that  there  was  no  contract  by 
the  plaintiff  giving  time  to  the  principal  debtor,  and  no  contract  by  the 
debtor  that  the  amount  of  the  note  should  remain  on  interest  at  the 
new  rate  for  airv  time.  The  plaintiff  could  at  an}-  time  have  sued 
on  the  note,  and  the  sureties  could  at  an}'  time  have  paid  the  note 
and  have  had  a  right  to  sue  their  principal  at  once.  The  agreement 
was  merely  a  stipulation  to  remit  a  part  of  the  sum  which  the  plaintiff 
might  claim  under  the  note.  It  did  not  tie  the  hands  of  the  creditor, 
or  alter  unfavorably  the  condition  of  the  surety.  If  there  was  any 
consideration  for  it,  so  that  it  had  any  validit}',  it  could  not  operate 
to  the  injury  of  the  sureties,  any  more  than  an  indorsement  of,  or 
a  receipt  for,  a  part  of  the  principal  would.  The  change  made  in  the 
terms  of  the  note  was  necessarily  beneficial  to  all  parties  bound  by  it. 
We  are  of  opinion  that  the  sureties  were  not  discharged,  even  if  they 
had  no  knowledge  of  the  change  ;  and  that  the  ruling  of  the  Superior 
Court  to  that  effect  was  correct. 

Judgment  on  the  verdict  for  the  plaintiff.* 

M.  F.  Dickinson,  Jr.,  &  H.  R.  Bailey,  for  the  defendants. 
G.  S.  Hale  (67.  F.  Walcott  with  him),  for  the  plaintiff. 

l  2  Wall.  219.  2  15  Gray,  173. 

3  6  C.  B.  n.  s.  550.  4  7  Price,  223. 

5  See  Sanford  e.  Story,  1 5  N.  Y.  Misc.  Rep.  536. 

Similarly,  an  agreement  by  the  creditor  to  accept  less  than  the  amount  due  from 
the  debtor  does  not  discharge  the  surety.  Preston  v.  Huntington,  67  Mich.  139 ; 
Ellis  v.  McCormick,  1   Hilt.  313. 

But  a  reduction  of  the  rate  of  interest,  or  the  amount  of  the  principal  by  altering 
the  lauguage  of  the  original  contract,  discharges  the  surety.  Franklin  Co.  v.  Courtney, 
60  Ind.  134;   /ohnston  v.  May,  76  Ind.  293.  — Ed. 


264  KINGSBURY   V.   WESTFALL.  [CHAP.  II. 


B.    P.   KINGSBURY,    Respondent,   v.   P.   R.   WESTFALL, 

Appellant. 

In  the  Court  of  Appeals,  New  York,  January,  1875. 

[Reported  in  61  New  York  Reports,  356.] 

Appeal  from  judgment  of  the  General  Term  of  the  Supreme  Court 
in  the  fourth  judicial  department,  affirming  a  judgment  in  favor  of 
plaintiff  entered  upon  a  verdict. 

This  action  was  upon  a  guaranty.  On  the  13th  of  September,  1855, 
the  plaintiff  leased  to  Messrs.  Hilliard  &  Bourne  a  village  lot,  with  the 
buildings  thereon,  situate  in  the  village  of  Lyons,  Wayne  County,  for 
the  term  of  five  years,  commencing  on  the  first  day  of  October  then 
next ;  to  which  lease  Alexander  B.  Williams,  the  defendant's  testator, 
appended  his  guaranty,  guaranteeing  the  payment,  by  the  lessees,  of 
the  rent  reserved  therein.  On  the  trial,  the  plaintiff,  after  proving  that 
the  several  quarters'  rent  commencing  with  the  one  falling  due  April  1, 
1858,  to  and  including  the  quarter  falling  due  April  1,  1860,  remained 
unpaid,  rested.  The  defendant  then  offered  to  show  that,  on  the  first 
da\T  of  January,  1858,  the  buildings  on  said  lot,  which  covered  nearly 
the  whole  thereof,  were  destroyed  by  an  accidental  fire,  and  became 
thereby  incapable  of  occupancy  ;  and  that  said  premises  were  not  there- 
after occupied  fry  or  under  the  lessees,  or  either  of  them.  The  defend- 
ant also  offered  to  prove  that,  on  the  9th  day  of  April,  18G0,  after  the 
expiration  of  the  last  quarter's  rent  sought  to  be  recovered,  the  plaintiff 
and  the  lessees,  without  the  knowledge  or  consent  of  the  defendant, 
entered  into  an  agreement,  under  seal,  by  which  the  plaintiff,  in  con- 
sideration of  the  lessees'  release  to  him  of  the  unexpired  portion  of  the 
terra,  released  all  claim  for  the  rent  of  the  demised  premises  which 
should  thereafter  accrue  ;  and  that  the  plaintiff  did  not  rebuild  the 
buildings  or  other  buildings  in  their  place  ;  and  that  the  use  of  the  de- 
mised premises  after  the  fire  was  not  worth,  for  the  residue  of  the  term, 
to  exceed  one  dollar  per  year.  These  offers  being  severally  objected 
to  as  immaterial,  were  each  excluded  ;  and  to  the  ruling  excluding 
them  the  defendant  duly  excepted.  The  Court  directed  the  jmy  to 
find  a  verdict  for  the  plaintiff  for  the  amount  claimed.  The  jury  ren- 
dered a  verdict  as  directed. 

J.  Welling,  for  the  appellant. 

Wm.  Clark,  for  the  respondent.1 

Gray,  C.  The  next  and  only  remaining  question  arises  upon  the 
exclusion  of  the  defendant's  offer,  which,  in  substance,  was,  that  after 
the  rent  sued  for  had  become  due,  and  an  action  was  maintainable  for 
its  recovery,  the  plaintiff,  in  consideration  of  an  assignment  to  him  of 

1  The  arguments  of  counsel  are  omitted,  together  with  the  part  of  opinion  not 
relating  to  suretyship.  —  Ed. 


SECT.  IX.]  KINGSBUKY   V.   WESTFALL.  265 

the  lessees'  unexpired  term  in  the  premises,  released  them  from  the 
payment  of  the  rent  thereafter  to  accrue  ;  and  thus,  as  the  defendant 
insists,  so  changed  the  agreement  for  the  payment  of  rent  guaranteed 
by  him,  as  to  discharge  him  not  only  from  the  payment  of  the  rent 
thereafter  to  accrue,  but  from  that  which  was  then  overdue,  and  for  the 
recover}*  of  which  this  action  was  brought.  It  is  now  too  well  settled 
to  admit  of  a  doubt,  that  a  guarantor,  like  a  surety,  is  bound  only  by 
u  the  strict  letter  or  precise  terms"  of  the  contract  of  his  principal, 
whose  performance  of  it  he  has  guaranteed,  that  he  is  in  this  respect 
'•  a  favorite  of  the  law,"  and  that  a  claim  against  him  is  strictissimi 
juris.  Wright  v.  Johnson.1  If  an  alteration  be  made  in  a  contract 
"  in  a  point  so  material  as  in  effect  to  make  a  new  contract,"  without 
the  consent  of  a  guarantor,  he  is  discharged.  Grant  v.  Smith.2  And 
if  he  be  then  sued  on  the  original  contract  a  good  answer  is,  "that 
such  contract  no  longer  exists,  it  having  been  legall}*  terminated  b}*  the 
altered  or  substituted  contract  made  by  the  parties."  The  People  v. 
Vilas.3  These  are  authoritative  statements  in  varied  form,  of  a  conceded 
cardinal  principle,  established  to  save  a  guarantor  from  being  made 
liable  upon  a  substituted  contract  to  which  he  never  assented.  This 
just  principle  is  now  invoked  b}*  the  defendant  and  sought  to  be  inter- 
posed by  him  as  a  shield  against  the  plaintiff's  right  to  recover,  not 
upon  any  portion  of  the  contract  upon  which  a  liability  was  to  accrue 
when  the  change  was  made,  or  upon  any  portion  of  it  changed  b}r  the 
new  arrangement,  but  because,  as  he  says,  the  parties,  the  one  by  re- 
leasing to  the  lessor  the  residue  of  the  term  in  the  demised  premises, 
and  the  other  releasing  to  the  lessees  the  rent  to  accrue  therefor  for  the 
same  unexpired  term,  have,  without  his  consent,  changed  the  contract, 
the  performance  of  which  on  the  part  of  the  lessees  he  had  guaranteed. 
It  is  true  the  contract  was  changed,  but  the  obligation  which  the  lessees 
undertook  to  perform,  so  far  as  it  relates  to  the  payment  of  the  rent 
which  had  then  accrued,  was  not  changed;  it  remained  in  the  precise 
terms  it  was  before  ;  it  was,  as  to  the  then  future,  the  executory  portion 
of  it  that  was  abrogated. 

It  is  not  pretended  that  the  right  of  the  defendant  to  be  put  in  pos- 
session of  the  vacant  lot,  for  the  unexpired  term,  in  the  place  of  the 
lessees,  could,  by  any  possibility,  have  resulted  to  his  advantage.  The 
case,  then,  stands  in  principle  as  if  the  plaintiff  had,  mainly  as  a 
charity  to  the  lessees,  released  them  from  the  hard  fate  of  an  acciden- 
tal fire,  changed  the  contract  by  releasing  them  from  their  obligation 
any  longer  to  pay  rent  upon  a  property  that  had  by  accident  become 
nearly  worthless  to  them.  This,  though  it  should  come  within  the  letter 
of  the  rule,  would,  should  it  be  applied  as  the  defendant  insists  it 
should  be,  do  injustice  to  its  spirit.  The  obligation  to  pay  the  rent  for 
which  judgment  has  been  recovered  has  not,  in  letter  or  spirit,  been 

1  8  Wend.  512,  516.  3  35  N.  Y.  459,  460. 

2  46  N.  Y.  93,  96. 


266  CALVERT   V.    THE    LONDON   DOCK   COMPANY.  [CHAP.  II. 

changed  ;  nor  is  it  pretended  that  any  right  of  the  defendant  growing 
out  of  the  contract  is,  so  far  as  it  relates  to  that  obligation,  in  any  re- 
spect altered  or  impaired. 

The  judgment  appealed  from  should  be  affirmed. 

All  concur.  Judgment  affirmed} 


CALVERT,   Executor,   v.  THE   LONDON   DOCK  COMPANY. 

In  Chancery,  before  Lord  Langdale,  M.  R.,  February  13,  1838. 

[Reported  in  2  Keen,  638.] 

The  following  were  the  circumstances  of  the  case :  B\-  contract, 
in  writing,  dated  the  29th  day  of  September,  1829,  Robert  Streather, 
a  builder,  agreed  with  James  Warre,  the  treasurer  of  the  London  Dock 
Company,  on  behalf  of  the  company,  to  perform  certain  works,  which 
were  to  be  commenced  twenty  days  after  notice,  and  to  be  completed 
in  twelve  months  from  the  commencement.  Streather  was  to  provide 
all  materials  and  labor,  in  consideration  of  £52,200,  and  being  allowed 
to  appropriate  certain  materials  mentioned.  The  engineer  of  the  com- 
pany was  to  be  the  sole  judge  of  the  works,  and  was  to  emplo}7  com- 
petent persons  to  perform  the  works,  if  Streather  failed  to  do  so  ;  and 
in  that  case,  the  costs  thereof  were  to  be  deducted  from  the  sum  to 
become  due  to  Streather  under  the  contract.  A  provision  was  made 
for  varying  the  price,  on  any  variation  being  made  in  the  work  specified 
in  the  contract ;  and  Mr.  Ware,  for  the  compan}^,  agreed  to  pay  the 
£52,200  by  instalments, — viz.,  three-fourths  of  the  cost  of  the  work 
certified  to  be  done  every  two  months,  and  the  remaining  one-fourth 
after  the  full  completion  of  the  contract. 

On  the  3d  of  November,  1829,  Streather,  and  Warburton  and  Lay- 
cock,  as  his  sureties,  executed  to  James  Warre,  as  treasurer  of  the 
company,  their  joint  and  several  bond  for  the  sum  of  £5,000,  condi- 
tioned to  be  void  if  Streather  should  well  and  truly  observe,  perform, 
and  keep  the  promises  and  agreements  contained  in  the  contract,  which, 
on  the  part  of  Streather,  were  and  ought  to  be  performed,  according  to 
the  true  intent  and  meaning  of  the  contract. 

Notice  having  been  given,  Streather  commenced  the  works  on  the 
28th  of  December,  1829,  but  did  not  complete  them  in  twelve  months, 
or  before  the  28th  of  March,  1831,  to  which  day  the  time  for  com- 
pleting the  works  was  enlarged,  with  the  consent  of  Warburton  and 
Lay cock. 

The  time  having  expired,  the  London  Dock  Company  gave  notice  to 
the  sureties  that  they  would  be  called  upon  to  pay  the  £5,000,  under 
the  bond. 

1  Kingsbury  v.  Williams,  53  Barb.  142,  Accord 

Harberton  v.  Bennett,  Beatty,  386  (real  surety),  Contra.  —  Ed. 


BECT.  IX.]    CALVERT  V.    THE  LONDON  POCK  COMPANY.         267 

On  the  13th  of  April,  1831,  Streather  quitted  the  works,  and  soon 
afterwards  became  bankrupt. 

The  company  alleged  that  they  had  sustained  damage  to  the  amount 
of  more  than  £7,000,  by  the  default  of  Streather ;  and  in  January,  1835, 
they  caused  actions  to  be  brought  against  the  sureties,  to  recover  the 
full  penalty  of  the  bond  ;  and  in  the  particulars  of  their  demand  they 
stated  that  they  had  made  payments  on  account  of  the  contract,  to  the 
amount  of  £49,619  5s. ,  and  in  completing  the  works  £18,875  3s.  2<7., 
making  together  £68,494  8s.  2d. :  that  there  had  become  due  to  Streather, 
on  the  contract,  £52,200;  for  varied  and  increased  work,  £3,721  16s. 
Sd.  ;  and  for  the  implements,  engines,  and  materials  he  had  left,  £4,857 
3s.  9(7.,  —  making,  in  all,  £60,779  0s.  5(7.  /  and  they  represented  the  dif- 
ferences as  the  amount  of  their  loss  sustained  by  the  non-performance  of 
the  works  by  Streather. 

Under  these  circumstances  the  plaintiffs  filed  their  bill ;  and  after 
alleging  that  the  referee  in  the  action  against  the  company  had  stated, 
that  although  the  payments  made  to  Streather  amounted  to  £49,619, 
the  value  of  the  work  done  by  Streather  was  only  £36,429,  they 
charged,  that  in  executing  the  bond,  the  sureties  considered,  and  had 
a  right  to  consider,  that  the  company,  until  the  entire  performance  of 
the  contract,  would  have  retained  in  their  hands  so  much  of  the  con- 
tract price  as  by  the  contract  the}'  were  entitled  to  retain,  as  a 
security  for  the  performance  of  the  rest  of  the  contract ;  and  that  by 
advancing  to  Streather  more  than  the}*  were  bound  to  do,  the  company 
deprived  the  plaintiffs  of  the  benefit  of  that  security,  and  thereby,  in 
equity,  released  them  from  the  bond  ;  or,  at  least,  could  not  equitably 
recover  against  the  plaintiffs  any  loss  which  the}'  might  have  sustained 
by  making  such  advances  ;  and  ought  not  to  be  permitted  to  sue  the  plain- 
tiffs on  the  bond,  for  if  they  had  not  made  such  advances,  they  would 
not  have  sustained  any  loss  by  the  non-performance  of  the  contract. 

The  common  injunction,  for  want  of  answer,  was  obtained. 

The  actions  were  tried  on  the  20th  of  February,  1836.  The  plaintiffs 
there  obtained  a  verdict,  with  only  nominal  damages. 

It  was  now  asked  that  the  common  injunction  which  has  been 
granted  might  be  made  perpetual,  and  that  the  defendants  might  pay 
the  costs  of  suit.1 

Mr.   Tinney,  Mr.  Kindersley,  and  Mr.  Roupell,  for  the  plaintiffs. 

Mr.  Pemberton,  Mr.  Phillimore,  Mr.  Blunt,  for  the  defendants, 
insisted  that  nothing  had  been  done  in  this  case  to  release  the  sureties  ; 
that  the  company  had  made  the  extra  advances  to  the  contractor,  not 
under  the  contract,  but  as  loans,  which  they  were  entitled  to  do,  and 
had  thereby  greatly  facilitated  the  performance  of  the  work.  That  so 
far  from  prejudicing  the  sureties,  the  company  had  diminished  their 
liability  ;  for,  but  for  these  timely  advances,  the  contract  would  long 
before  have  been  abandoned,  and  the  bond  forfeited. 

1  The  statement  of  the  case  is  abridged  and  the  argument  for  the  plaintiffs  is 
mitted.  —  Ed. 


268         CALVEKT  V.   THE  LONDON'  DOCK  COMPANY.    [CHAP.  II 

On  the  point  of  costs  they  said  that  the  plaintiff's  remedy  was  at  law  ; 
and  it  was  no  justification  for  the  prosecution  of  this  suit,  and  no  rea- 
son for  the  interference  of  this  Court,  because  nominal  damages  only 
were  recoverable  at  law.  That  the  costs  of  the  action  had  been  pro- 
vided for  at  law,  and  no  costs  ought  to  be  given  in  this  suit ;  for  the 
point  in  litigation  between  the  parties  having  been  already  decided  by 
the  Court  of  King's  Bench,  there  was  no  ground  for  now  making  any 
decree. 

The  Master  of  the  Rolls  (after  stating  the  case)  proceeded  :  — 

The  defendants  do  not  dispute  the  fact  that  their  advances  to 
Streather  exceeded  the  sums  which  the}'  were  bound  to  advance  under 
the  contract,  but  they  say,  that  the  increased  advances  were  made  for 
the  purpose  of  giving  Streather  greater  facility  to  perform  the  con- 
tract. It  is  said  that  the  performance  of  the  work  by  Streather  was 
impeded  by  his  want  of  funds  ;  and  that  by  the  advances  made  to  him 
he  was  enabled  to  do  more  than  he  otherwise  could  have  done,  and 
that  to  assist  him  was  to  assist  his  sureties ;  and  it  was  only  for  the 
purposes  of  affording  that  assistance  that  the  com  pan}'  did  more  than 
they  were  obliged  to  do. 

The  argument,  however,  that  the  advances  beyond  the  stipulations 
of  the  contract  were  calculated  to  be  beneficial  to  the  sureties,  can  be 
of  no  avail.  In  almost  every  case  where  the  surety  has  been  released, 
either  in  consequence  of  time  being  given  to  the  principal  debtor,  or  of 
a  compromise  being  made  with  him,  it  has  been  contended,  that  what 
was  done  was  beneficial  to  the  surety,  —  and  the  answer  has  always 
been,  that  the  surety  himself  was  the  proper  judge  of  that, — and  that 
no  arrangement,  different  from  that  contained  in  his  contract,  is  to  be 
forced  upon  him  ;  and  bearing  in  mind  that  the  surety,  if  he  pays  the 
debt,  ought  to  have  the  benefit  of  all  the  securities  possessed  by  the 
creditor,  the  question  always  is,  whether  what  has  been  done  lessens, 
that  security. 

In  this  case,  the  company  were  to  pay  for  three-fourths  of  the  work 
done  every  two  months  ;  the  remaining  one-fourth  was  to  remain  un- 
paid for  till  the  whole  was  completed  ;  and  the  effect  of  this  stipulation 
was,  at  the  same  time,  to  urge  Streather  to  perform  the  work,  and  to 
leave  in  the  hands  of  the  company  a  fund  wherewith  to  complete  the  work 
if  he  did  not ;  and  thus  it  materially  tended  to  protect  the  sureties. 

What  the  company  did  was  perhaps  calculated  to  make  it  easier  for 
Streather  to  complete  the  work,  if  he  acted  with  prudence  and  good 
faith  ;  but  it  also  took  away  that  particular  sort  of  pressure  which,  by 
the  contract,  was  intended  to  be  applied  to  him.  And  the  company, 
instead  of  keeping  themselves  in  the  situation  of  debtors,  having  in 
their  hands  one-fourth  of  the  value  of  the  work  done,  became  creditors 
to  a  large  amount,  without  any  security  ;  and  under  the  circumstances 
I  think  that  their  situation  with  respect  to  Streather  was  so  far 
altered,  that  the  sureties  must  be  considered  to  be  discharged  from 
their  suretyship. 


SECT.  IX.]  WATTS   V.    SHUTTLE  WORTH.  269 

I  think,  therefore,  that  the  plaintiffs  are  entitled  to  have  the  injunc- 
tion made  perpetual,  and  that  they  are  also  entitled  to  the  costs  of 
this  suit. 

The  plaintiffs  appear  not  to  have  had  a  complete  legal  defence, 
though  they  had  a  case  which  reduced  the  damages  to  a  nominal 
amount.  They  could  not,  however,  anticipate  the  result  of  the  action. 
They  had  an  equitable  defence;  and,  under  the  circumstances  of  this 
case,  if  an  application  had  been  made  for  the  purpose,  I  do  not 
think  that  the  plaintiff  in  equity  would  have  been  ordered  to  give 
judgment ;  and,  after  the  verdict  with  nominal  damages,  the  applica- 
tion to  the  Court  of  King's  Bench  made  by  the  plaintiffs  at  law  made 
it  important  for  the  defendants  there  to  proceed  with  their  bill  in 
equity.1 


WATTS   v.    SFIUTTLEWORTH. 

In  the  Exchequer,  January  31,  1860. 

In  the  Exchequer  Chamber,  June  19,  1861. 

[Reported  in  5  Hurlstone  <f-  Norman,  235,  7  Hmistone  tip  Norman,  355.] 

The  judgment  of  the  Court  was  now  delivered  by 

Pollock,  C.  B.*  This  is  a  rule  obtained  by  the  defendant  to  enter 
a  verdict  upon  the  issue  joined  on  the  sixth  plea.  The  action  is  on  a 
guaranty,  and  the  breach  alleged  is  that  one  Harrap  had  not  completed 
certain  fittings  in  accordance  with  an  agreement  entered  into  by  him 
with  the  plaintiff.  The  sixth  plea  is  an  equitable  one  ;  and  the  questions 
which  have  been  argued  before  us  are,  first,  whether  there  is  a  defence 
to  the  action  ;  and,  secondly,  whether  the  sixth  plea  was  proved,  that 
is,  whether  upon  the  evidence  the  verdict  on  the  issue  raised  lw  the  sixth 
plea  ought  to  be  entered  for  the  defendant.  The  facts  proved  or  ad- 
mitted are  as  follows  :  By  articles  of  agreement,  dated  the  6th  of 
February,  1857,  made  between  the  plaintiff  and  Harrap,  the  latter 
agreed,  in  consideration  of  £3,450,  to  execute  the  fittings  of  the  first 

i  Navigation  Co.  v.  Holt,  6  C.  B.  n.  s.  550;  Prairie  Hank  v.  U.  S.,  164  U.  S.  227; 
Board  v.  Branham,  57  F.  R.  179;  Bragg  v.  Shain,  49  Cal.  131  ;  Kiessig  v.  Allspaugh, 
91  Cal.  231;  Chester  v.  Leonard,  68  Conn.  495;  Gato  v.  Warrington,  37  Fla.  542; 
Finney  v.  Condon,  86  111.  78;  St.  Mary's  College  v.  Meaglier  (Kentucky,  1889),  11  S. 
W.  R.  609  ;  Backus  v.  Archer  (Michigan,  1896),  67  N.  W.  R.  913  ;  Simonson  v.  Grant, 
36  Minn.  439;  Taylor  v.  Jeter,  23  Mo.  244;  Evans  v.  Graden,  125  Mo.  72;  Bell  v. 
Paul,  35  Neb.  240;  O'Rourke  v.  Burke,  44  Neb.  821  ;  Truckee  v.  Lodge,  14  Nev.  293: 
Smith  v.  Molleson,  148  N.  Y.  241  ;  Mayor*;.  Brady,  151  N.  Y.  611  (semble) ;  Slicker  v. 
Schuchert,  179  Pa.  401  (semble) ;  Nat.  Association  v.  Fink,  182  Pa.  52  (semble)  ;  City 
Council  v.  Ormand  (South  Carolina,  1897 ),  28  S.  E.  R.  147  ;  Bell  v.  Trimby  (Tennessee, 
1896),  38  S.  W.  R.  100;  Ryan  v.  Morton,  65  Tex.  258  ;  Sanders  v.  Hambrick  (Tex 
Civ.  Ap.  1897),  41   S.  W.  R.  883  ;  Bell  v.  Moffat,  18  New  Br.  406,  Accord  —Ed. 

2  Only  the  opinions  of  the  Court  are  given.  —  Ed. 


270  WATTS   V.    SHUTTLEWOUTH.  [CHAP.  II. 

and  second  floors  of  a  warehouse  in  Manchester,  and  complete  the  same 
on  or  before  the  29th  of  September,  1857,  according  to  the  drawings 
and  specifications  prepared  by  Messrs.  Travis  and  Mangnall,  architects. 
After  a  variety  of  stipulations  relative  to  the  contract,  there  was  one  as 
follows:    "•That  the  said  Samuel  Watts  (the  plaintiff)  shall  and  may 
insure  the  fittings  from  risk  or  accident  by  fire  at  such  time  and  to  such 
amount  as  the  architects  aforesaid  may  consider  necessary,  and  deduct 
the  cost  of  such  insurance  for  the  time  during  which  the  works  are 
unfinished  from  the  amount  of  the  contract."     Also,  "  that  the  said  GL 
Harrap  should  and  would  provide  to  the  satisfaction  of  the  architects  a 
good,  diy,  well  heated,  and  sufficient  store,  for  the  express  purpose  and 
no  other,  of  the  reception  of  the  fittings  from  time  to  time  as  each  and 
every  of  them  are  completed  and  until  they  can  be  received  at  the  said 
warehouse."      The    agreement    afterwards   provided  that  the  plaintiff 
should  pay  Harrap  £1,800  during  the  making  of  the  fittings,  between 
the  date  of  the  agreement  and  the  loth  of  August  then  next.      On  the 
9th  of  February  the  defendant  signed  the  guaranty.     It  recited  in  part 
the  contract  between  the  plaintiff  and  Harrap  ;  and  the  defendant  bound 
himself  to  guarantee  to  the  plaintiff  the  due  performance  of  the  contract 
in  accordance  in  all  respects  with  the  said  agreement,  conditions,  draw- 
ings, and  specifications,  and  such  further  drawings  as  might  from  time 
to  time  be  provided  b}'  the  architects,  in  a  good,  substantial,  and  work- 
manlike manner,  and  to  the  satisfaction  of  the  architects,  in  the  sum  of 
£4,000  ;  and  that  if  Harrap  should  neglect  or  omit  to  complete  the  said 
fittings  in  accordance  with  the  said  agreement,  conditions,  drawings, 
and  specifications  to  the  satisfaction  of  the  plaintiff  and  his  architects, 
then  the  plaintiff  should  be  at  liberty  to  recover  the  said  sum  of  £3,450, 
or  such  portion  thereof  as  might  be  required  to  complete  the  work  con- 
tracted for.      We   have  stated  the  guaranty  at  some  length,  because  it 
was  contended  on  behalf  of  the  plaintiff  that  it  extended  to  a  guaranty 
that  Harrap  should  provide  a  store  for  the  reception  of  the  fittings  until 
they  were  taken  to  the  warehouse.     It  seems  to  us  that  this  is  not  so, 
and  that  the  guaranty  merely  extended  to  the  doing  and  completing 
the  work.     The  defendant  was  examined  at  the  trial,  and  stated  that 
he  went  to  the  office  of  the  architects  to  execute  the  guaranty ;  that  a 
clerk  there  read  to  him  the  articles  of  agreement  between  the  plaintiff 
and  Harrap,  and  stated  to  him  that  he  incurred  no  risk  in  consequence 
of  the  stipulation  as  to  the  insurance  ;   and  that,  thereupon,  he  signed 
the  guaranty.     The  further  facts  were  :  that  the  plaintiff  advanced  to 
Harrap  £1,800  ;  that  a  number  of  fittings  to  the  value  of  £2,300  were 
made  and  placed  in  a  room  in  Harrap's  workshop,  where  they  were 
destroyed  by  an  accidental  fire ;  that  the  fittings  were  never  put  up, 
Harrap  having  become  insolvent ;  that  the  plaintiff  had  not  been  repaid 
the  £1,800,  and  had  been  obliged  to  pay  £340  beyond  the  sum  of  £3,450 
to  another  builder  to  do  the  work.     It  was  admitted  that  the  fittings 
destroyed  were  of  the  value  before  stated,  and  had  not  been  insured  by 
the  plaintiff.     A  verdict  was  entered  for  the  plaintiff  for  £2,140,  and 


BECT.  IX.  j  WATTS   V.   SHUTTLE  WORTH.  271 

leave  was  given  to  the  defendant  to  move  to  enter  it  for  him  upon  the 
sixth  plea ;  and  also  that  he  should  be  at  liberty  to  amend  the  plea. 

The  substantial  question  in  the  case  is,  whether  the  omission  to  insure 
discharges  the  defendant,  the  surety.  The  rule  upon  the  subject  seems 
to  be  that  if  the  person  guaranteed  does  any  act  injurious  to  the  surety, 
or  inconsistent  with  his  rights,  or  if  he  omits  to  do  any  act  which  his 
duty  enjoins  him  to  do,  and  the  omission  proves  injurious  to  the  surety, 
the  latter  will  be  discharged.  Story's  Equity  Jurisprudence,  sect.  325. 
The  same  principle  is  enunciated  and  exemplified  by  the  Master  of  the 
Rolls  in  Pearl  v.  Deacon,1  where  he  cited  with  approbation  the  opinion 
of  Lord  Eldon,  in  Craythorne  v.  Swinburne,'2  that  the  rights  of  a  surety 
depend  rather  on  principles  of  equity  than  upon  the  actual  contract ; 
that  there  may  be  a  quasi  contract ;  but  that  the  right  of  the  surety 
arises  out  of  the  equitable  relation  of  the  parties.  The  Master  of  the 
Rolls  also  referred  to  the  judgment  of  Vice-Chancellor  Wood  in  Newton 
v.  Chorlton,8  where  he  laid  down  that  a  creditor  is  bound  to  give  the 
surety  the  benefit  of  every  security  he  holds  at  the  time  of  the  contract ; 
that  the  surety  has  a  complete  right  to  the  benefit  of  it,  and  if  the  benefit 
be  lost  he  would  be  discharged.  It  was  argued  on  behalf  of  the  plain- 
tiff, that  until  the  fittings  were  put  into  a  store  provided  for  the  express 
purpose  of  their  reception,  the  obligation  of  the  plaintiff  to  insure  did 
not  attach.  We  think  that  is  not  so.  In  our  opinion  the  contract  to 
insure  was  an  independent  one  ;  it  precedes  the  contract  as  to  the  store 
in  the  agreement,  and  it  is  in  no  way  made  to  depend  upon  it.  Indeed 
there  is  evidence  that  the  fittings  were  in  a  place  satisfactory  to  the 
architects  ;  and,  as  between  the  plaintiff  and  the  defendant,  the  surety, 
we  think  that  the  plaintiff  ought  to  have  been  active  to  see  that  a  proper 
store  had  been  provided.  The  architects  were  his  agents.  It  was  also 
argued  that  the  stipulation  to  insure  was  not  obligatory.  But  we  can- 
not adopt  this  view.  We  think  the  plaintiff  ought  to  have  insured.  It 
therefore  seems  to  us  that  the  plaintiff  has  omitted  to  do  an  act  which 
his  duty  towards  the  defendant  required  him  to  do  ;  that  if  he  had  done 
it  the  defendant  would  have  been  relieved  to  the  extent  of  the  insurance  ; 
that  the  omission  therefore  was  injurious  to  him,  and  that  he  has  been 
thereby  discharged  from  the  suret}ship. 

No  distinction  was  taken  in  the  argument  between  the  £1,800  and  the 
£340  paid  to  the  new  contractor.  It  was  also  argued  that  the  statement 
of  the  architects'  clerk  to  the  defendant  before  the  signing  the  guaranty 
was  not  admissible  in  evidence.  We  rather  think  it  was  ;  but  whether 
or  not  is  quite  immaterial.  The  articles  of  agreement  were  read  to  the 
defendant.  This  evidence  was  clearly  properly  receivable,  and  was 
quite  sufficient  evidence  of  the  averment  in  the  plea  to  which  the  state- 
ment of  the  clerk  is  applicable.  Indeed  the  whole  of  this  evidence 
becomes  immaterial  because,  according  to  the  cases  of  Pearl  v.  Deacon 
and  Newton  v.  Chorlton,  the  right  of  the  surety  exists  whether  he  knew 
pf  the  stipulation  to  insure  or  not. 

l  24  Beav.  186,  191.  2  14  Vesey,  164,  169.  3  10  Hare,  651. 


272  WATTS   V.    SHUTTLEWORTH.  [CHAP.  IL 

The  remaining  question  is  merely  whether  the  sixth  plea  is  proved. 
It  has  been  slightly  amended  in  pursuance  of  the  leave  reseived.  We 
are  of  opinion  that  the  evidence  given  at  the  trial  is  sufficient  to  entitle 
the  defendant  to  have  the  verdict  entered  for  him  on  the  issue  on  the 
sixth  plea,  as  amended.  The  rule  will  therefore  be  absolute  to  enter  the 
verdict  for  the  defendant  upon  the  sixth  plea.  Rule  absolute. 

The  judgment  of  the  Court  of  Exchequer  Chamber  was  now  deliv- 
ered b}T 

Williams,  J.  —  In  this  case  the  Court,  at  the  close  of  the  argument, 
was  unanimous  in  thinking  that  the  defendant,  as  suret}-,  was  dis- 
charged by  the  plaintiff's  omission  to  insure.  But  some  doubts  were 
felt  whether  the  discharge  ought  to  be  regarded  as  total,  or  only  to  the 
extent  of  the  damage  which  could  be  shown  to  have  been  sustained  by 
the  suret}'  in  respect  of  that  omission.  In  support  of  the  latter  view, 
it  was  contended,  on  behalf  of  the  plaintiff,  that  the  present  case  is 
analogous  to  that  of  a  creditor  who  has  lost  or  given  up  to  his 
debtor  a  security  which  he  has  in  his  hands,  where  the  surety  is  held  to 
be  thereby  discharged,  because  of  the  rule  that  a  surety  is  entitled  to 
the  benefit  of  all  the  securities  which  the  creditor  has  against  the 
principal ;  not  however  in  toto,  but  only  to  the  extent  of  the  security 
so  lost  or  given  up. 

But  on  consideration  we  are  all  of  opinion  that,  in  the  present  in- 
stance, the  discharge  of  the  surety,  being  effected  by  reason  of  his 
position  having  been  deteriorated  in  respect  of  having  been  made 
responsible  for  an  uninsured  principal,  in  lieu  of  an  insured  one,  the 
case  is  analogous  to  those  where  a  suret}-  has  been  held  discharged  by 
time  having  been  given  to  the  debtor,  as  in  Samuel  v.  Howaith,  and 
other  cases,  such  as  Eyre  v.  Bartrop,1  Calvert  v.  The  London  Dock 
Company,  and  The  General  Steam  Navigation  Company  v.  Rolt,2 
where  the  creditor  had  so  conducted  himself  as  to  alter  the  situation  of 
surety,  and  the  surety  was  held  to  be  thereby  totally  discharged.  We 
are  therefore  of  opinion  that  the  judgment  of  the  Court  of  Exchequer 
must  be  affirmed.  Judgment  affirmed.3 

1  3  Madd.  221.  -  6  C.  B.  n.  s.  550. 

3  In  the  following  cases,  as  in  the  principal  case,  a  breach  of  contract  by  the  creditor 
nad  the  effect  of  discharging  the  surety.  Watson  v.  Alcock,  4  J).,  M.  &  G.  242  ; 
Lawrence  v.  Walmesley,  12  C.  B.  n.  s.  799  ;  Pioneer  Co.  v.  Freeburg,  59  Minn.  230; 
Morrison  v.  Arons,  65  Minn.  321  ;  Carson  Association  v.  Miller,  16  Nev.  327;  Belfast 
Co.  v.  Stanley,  Ir.  R.  1  C.  L.  693,  698  (semble).  —  Ed. 


SECT.  IX.]  STATE   V.   SWTNNEY.  273 


THE    STATE,   Use   op   HOLMES   COUNTY,   v.  S.  W. 
SWINNEY   and  Otiieks. 

In  the  Supreme  Court,  Mississippi,  October,  1882. 

[Reported  in  60  Mississippi  Reports,  39.] 

Appeal  from  the  Circuit  Court  of  Holmes  County. 

Hon.  C.  H.  Campbell,  Judge. 

On  the  13th  of  March,  1882,  an  action  was  brought  in  the  name  ol 
the  State,  suing  for  the  use  of  Holmes  County,  against  J.  S.  Hoskins 
and  his  sureties,  on  his  bond  as  tax  collector  of  that  county,  for  two 
several  sums  of  money,  for  the  years  1876  and  1877  respectively, 
which,  it  was  declared,  he  had  collected  and  failed  to  pay  over  to  the 
treasurer  of  the  county  as  the  law  required  of  him  and  as  he  was 
bound  b}'  the  terms  of  his  bond  to  do. 

The  third  plea  set  up  the  defence  of  the  sureties  that,  "  after  the 
signing  of  said  bond  by  said  defendants,  the  said  plaintiff,  without  the 
consent  of  the  said  defendants,  on  the  twelfth  day  of  January,  1877, 
by  an  act  of  the  Legislature  of  the  State  of  Mississippi,  approved  on 
3aid  day,  and  entitled  'An  Act  to  provide  for  the  collection  of  the  out- 
standing revenue  for  the  fiscal  year  1876,'  altered,  changed,  and  ex- 
tended the  time  for  the  collection  of  taxes  due  the  State  of  Mississippi 
and  the  county  of  Holmes,  and  the  time  for  the  payment  thereof  by  the 
said  Hoskins  to  the  State  and  county  treasuries  ;  whereby  said  defend- 
ants were  released  as  sureties  on  said  bond."  1  The  plaintiff  declined 
to  plead  over  and  appealed  to  this  court. 

C.   V.  Gicin,  for  the  appellant. 

H.  S.  Hooker,  for  the  appellees. 

Campbell,  C.  J.,  delivered  the  opinion  of  the  Court. 

We  decline  to  follow  the  courts  of  Illinois,  Tennessee,  and  Missouri, 
in  their  views  that  sureties  on  the  bond  of  a  tax-collector  are  discharged 
by  an  act  of  the  Legislature  passed  after  the  execution  of  the  bond, 
without  their  consent,  giving  further  time  for  the  collection  of  taxes  and 
settlement  by  the  officer,  and  we  embrace  and  declare  the  more  just 
and  politic  doctrine  of  the  courts  of  Virginia,  Maryland,  and  North 
Carolina,  and  hold  that  the  official  bond  of  the  tax-collector  is  given 
with  a  full  knowledge  of  the  right  of  the  Legislature  to  alter  the  dates 
fixed  by  law  for  the  collection  of  taxes  and  the  settlement  of  the  col- 
lector, and  subject  to  the  exercise  of  that  right  at  the  pleasure  of  the 
Legislature,  without  the  assent  of  the  sureties.  The  Commonwealth  v. 
Holmes,2  Smith  v.  The  Commonwealth,3  The  State  v.  Carleton,4  Prairie 

1  The  statement  is  abridged  and  the  arguments  of  counsel  are  omitted.  —  Ed. 

2  25  Gratt.  771.  3  25  Gratt.  780. 
*  1  Gill,  249. 

28 


£74  STATE   V.   SWINNEY.  ("CHAP.  II. 

v.  Worth.1     See  also  Smith  v.  Peoria,2  Bennett  v.  The  Auditor  ;8  Cooley 
on  Tax.  502. 

The  demurrer  to  the  third  plea  should  have  been  sustained.4 

l  78  N.  C.  169.  2  59  111.  412.  3  2  W.  Va.  441. 

*  State  v.  Carleton,  1  Gill,  249;  Prairie  v.  Worth,  78  N.  C.  169;  Worth  v.  Cox,  89 
N.  C.  44;  Commonwealth  v.  Holmes,  25  Grat.  771 ;  Smith  v.  Commonwealth,  25  Grat. 
780;  Bennett  v.  Auditor,  2  W.  Va.  441,  Accord. 

Davis  v.  People,  6  111.  409 ;  People  v.  McHatton,  7  111.  638 ;  State  v.  Roberts,  68 
Mo.  234;  Schuster  v.  Weiss,  114  Mo.  158,  169;  Johnson  v.  Hacker,  8  Heisk.  388, 
Contra.  —  Ed 


6ECT.  X.]         SMITH  V.   BANK  OF  SCOTLAND.  275 


SECTION  X. 

Non- disclosure  by  Obligee  of  Facts  which  Tie  ought  to  reveal 

to  the  Surety. 

SMITH    and   Others,    Appellants,  v.   GOVERNOR   AND   COM- 
PANY  OF  THE  BANK  OF   SCOTLAND,   Respondents. 

In  the  House  op  Lords,  June  9,  1813. 

[Reported  in  1  Dow,  272.] 

The  appellants  had  bound  themselves  in  a  bond  of  cautionry  to  the 
Bank  of  Scotland,  for  one  Paterson,  the  bank  agent  at  Thurso.  Pater- 
son  having  mismanaged  the  affairs  of  the  bank,  and  become  bankrupt, 
the  respondents  proceeded  to  enforce  the  bond.  The  appellants  resisted 
payment,  presented  a  bill  of  suspension  against  a  threatened  charge, 
and  raised  an  action  of  reduction  of  the  bond.  In  both  questions  the 
Court  of  Session  pronounced  against  the  cautioners  (appellants) ,  who 
thereupon  lodged  their  appeals. 

The  appellants  alleged  that  the  bond  had  been  obtained  b}^  conceal- 
ment and  fraud,  inasmuch  as  the  bank  company  at  the  time  of  its  exe- 
cution were  aware  of,  or  had  strong  reason  to  suspect,  the  misconduct 
and  insolvency  of  Paterson.  The  Court  below  rejected  the  evidence 
offered  in  support  of  this  allegation.1 

Sir  S.  Bomilly  and  Mr.  Brougham,  for  the  appellants. 

Mr.  Adam  and  Mr.  Horner,  for  the  respondents. 

Lord  Eldon,  C.  The  next  question  related  to  the  materiality  and 
effect  of  the  circumstances  offered  to  be  given  in  evidence  in  regard  to 
this  bond.  If  an  agent  had  been  guilty  of  embezzlement,  or  other  im- 
proper conduct  unknown  to  his  employer,  the  cautioner  would  be  liable. 
But  if  a  man  found  that  his  agent  had  betrayed  his  trust,  that  he  owed 
him  a  sum  of  money,  or  that  it  was  likely  he  was  in  his  debt ;  if  under 
such  circumstances  he  required  sureties  for  his  fidelity,  holding  him  out 
as  a  trustworthy  person,  knowing,  or  having  ground  to  believe,  that  he 
was  not  so,  then  it  was  agreeable  to  the  doctrines  of  equity,  at  least  in 
England,  that  no  one  should  be  permitted  to  take  advantage  of  such 
conduct,  even  with  a  view  to  security  against  future  transactions  of  the 
agent. 

One  case,  similar  to  the  present,  had  come  before  himself  (Maltby's 
case).     A  clerk  to  the  Fishmongers'  Company  had  incurred  a  consider- 

1  The  case  has  been  materially  abridged ;  the  arguments  of  counsel  and  the  concm* 
ring  opinion  of  Lord  Redesdale  are  omitted.  —  Ed. 


276  riucocK  v.  bishop.  [chap,  il 

able  debt.  The  deficit  had  been  increasing  from  year  to  year,  and  was 
at  length  carried  beyond  what  the  company  were  likely  to  recover. 
They  demanded  additional  security,  which  be  procured.  The  case  had 
come  before  him  only  upon  motion,  but  he  had  thought  a  good  deal 
upon  it,  and  the  light  in  which  it  appeared  to  him  was  this  :  If  he  knew 
himself  to  be  cheated  b}T  an  agent,  and  concealing  that  fact,  applied  for 
security  in  such  a  manner  and  under  such  circumstances  as  held  him 
out  to  others  as  one  whom  he  considered  as  a  trustworthy  person,  and 
any  one,  acting  under  the  impression  that  the  agent  was  so  considered 
by  his  employer,  had  become  bound  for  him,  it  appeared  to  him  that  he 
could  not  conscientiousl}*  hold  that  security.  He  was  then  of  opinion 
that  the  Fishmongers'  Company  could  not  hold  their  security.  He  did 
not  know  what  had  become  of  the  case  afterwards,  but  he  believed  that 
his  opinion  was  submitted  to,  and  that  no  further  proceedings  were  had. 
He  had  since  reconsidered  the  matter,  and  still  retained  his  former 
opinion,  and  would  act  upon  it  judicially,  if  occasion  offered.  He  there- 
fore thought  that  an  opportunity  ought  to  be  afforded  to  these  caution- 
ers to  prove  the  facts  which  they  alleged  and  offered  to  substantiate  by 
evidence. 


JOHN   PIDCOCK   and  Others   v.    BISHOP. 

In  the  King's  Bench,  January  29,  1825. 
[Reported  in  3  Law  Journal  Reports,  King's  Bench,  109. J] 

Declaration  :  In  assumpsit  on  a  guarantee. 

Plea :  General  issue. 

It  appeared,  at  the  trial  before  Mr.  Baron  Hullock.  at  the  Spring 
Assizes,  1824,  for  the  county  of  Warwick,  that  the  plaintiffs  were  man- 
ufacturers of  pig-iron  at  Lightmoor,  in  Shropshire  ;  that  the  defendant 
was  a  dealer  in  iron,  residing  at  Bankside,  London  ;  and  that  the  guar- 
antee was  contained  in  a  letter  dated  16th  December,  1822,  and  ad- 
dressed by  the  defendant  to  the  plaintiffs  in  the  following  words :  — 

"At  the  request  of  Mr.  Thomas  Tickell,  I  beg  to  inform  you  that  I 
will  guarantee  you  in  the  payment  of  £200,  value  to  be  delivered  to 
him  in   Lightmoor  pig-iron." 

It  further  appeared  that  Tickell  had  been  supplied  with  20  tons  of 
Lightmoor  pig-iron,  of  the  value  of  £82  10s.,  and  was  unable  to  pa}\ 

It  also  appeared  that  Tickell  had  been  a  bankrupt,  and  was  indebted 
to  John  Pidcock,  one  of  the  plaintiffs  ;  that  after  the  bankruptcy,  in 
December,  1822,  John  Pidcock  agreed  with  him,  that  if  he  could  find  a 
guarantee,  the  plaintiffs  should  supply  him  with  pig-iron,  in  an  under- 
standing known  to  all  the  plaintiffs,  that  he  should  pay  ten  shillings  per 
ton  more  than  the  market  price,  which  excess  should  go  in  liquidation 

1  s.  c.  3  B.  &  C.  605.  — Ed. 


SECT.  X.]  RAILTON    V.    MATHEWS.  277 

of  the  old  debt  due  to  John  Pidcock  ;  that  such  agreement  was  not  com- 
municated to  the  defendant ;  but  a  bill  of  parcels  was  sent  to  Tickell 
thus:  "To  20  tons  of  Lightmoor  pig-iron,  £82  10s.  To  Mr.  Pidcock, 
debt,  £10.     Total,  £92  10s." 

On  the  part  of  the  defendant  it  was  said  that  this  agreement  was  a 
fraud  upon  the  defendant,  and  vitiated  the  guarantee. 

The  learned  judge  overruled  the  objection,  and  the  jury  found  a  ver- 
dict for  the  plaintiffs  for  £82  lOs. ;  but  leave  was  given  to  move  to  enter 
a  nonsuit. 

Mr.  Clarke  and  JV.  /?.  Clarke  showed  cause  against  a  rule  nisi,  for 
entering  a  nonsuit,  and  endeavored  to  distinguish  this  case  from  Jack- 
son v.  Duchaire.1 

P/y  the  Court.  We  are  all  of  opinion  that  a  person  giving  a  guaran- 
tee ought  to  be  informed  of  every  circumstance  which  ma}'  vary  the 
degree  of  his  responsibility.  The  defendant  might  reasonabby  suppose 
that  the  iron  would  be  supplied  to  Tickell  at  the  market  price  ;  but  by 
this  bargain  he  was  to  pay  ten  shillings  beyond  the  market  price,  in 
liquidation  of  his  debt  to  John  Pidcock,  and  thus  he  would  appropriate 
to  the  pajment  of  the  old  debt  a  fund  which  the  surety  might  reasonably 
suppose  would  discharge  the  debt  for  which  he  was  collaterally  respon- 
sible. It  is  clear,  as  in  the  case  of  a  composition  deed,  that  a  contract 
which  is  a  fraud  upon  a  third  person  is  void  on  that  account  as  between 
the  parties  to  it. 

The  object  of  a  person  becoming  a  surety  for  another  is  to  do  him  a 
service  ;  but  in  this  case  this  private  bargain  would  defeat  that  intention. 

Mule  absolute.2. 


E.   RAILTON,  Appellant,   v.  T.  G.   MATHEWS   and   Others, 

Respondents. 

In  the  House  of  Lords,  June  14,  1844. 
[Reported  in  10  Clark  $•  Finnelly,  934.] 

"  The  appellant  became  surety  in  a  bond  for  the  fidelity  of  one 
Hickes  to  his  employers,  the  respondents.  Hickes  being  in  default, 
an  action  was  brought  against  the  surety,  who  raised  an  action  for  re- 
duction of  the  bond,  on  the  ground  that  the  respondents,  although  well 
aware  of  the  fraudulent  misconduct  of  Hickes  in  a  previous  employ- 
ment bv  them,  failed  to  make  known  this  fact  to  the  surety  at  the  time 
he  executed  the  bond.  An  issue  was  directed  "  "  Whether  the  pursuer, 
E.  Railton,  was  induced  to  subscribe  the  bond  by  undue  concealment 
or  deception  on  the  part  of  the  defenders,  or  either  of  them  ?  " 

The  Lord  Justice  Clerk  directed  the  jury  that  under  this  issue  "  the 

1  3  Term  Rep.  551. 

•  See  Ex  parte  Sharp,  3  M.,  D.  &  D.  490,  504,  per  Knight  Bruce,  C.  J.  — Ed. 


278  RAILTON   V.    MATHEWS.  [CHAP.  II. 

concealment  must  be,  first,  of  things  known  to  the  defenders,  or  which 
the}-  had  strong  and  grave  ground  to  suspect ;  secondly,  that  the  con- 
cealment therefore  being  undue,  must  be  wilful  and  intentional,  with  a 
view  to  the  advantage  they  were  thereby  to  receive." 

The  jury  found  a  verdict  in  favor  of  the  respondents,  and,  in  effect, 
sustained  the  bond  ;  whereupon  the  appellant's  counsel  took  an  excep- 
tion to  the  learned  judge's  direction  to  the  jury. 

The  bill  of  exceptions  was  argued  before  the  Lords  of  the  Second 
Division,  who,  by  the  interlocutor  of  the  31st  of  January,  1844,  dis- 
allowed the  same,1  and  refused  to  grant  a  new  trial,  and  appointed 
judgment  to  be  entered  up  on  the  verdict. 

The  appeal  was  against  that  interlocutor.2 

Lord  Cottenham.  It  has  not  been  contended,  and  it  is  impossible 
to  contend,  after  what  Lord  Eldon  lays  down  in  the  case  of  Smith  v. 
The  Bank  of  Scotland,  that  a  case  ma}'  not  exist  in  which  a  mere 
non-communication  would  invalidate  a  bond  of  suretyship.  Lord  Eldon 
states  various  cases  in  which  a  party  about  to  become  surety  would 
have  a  right  to  have  communicated  to  him  circumstances  within  the 
knowledge  of  the  party  acquiring  the  bond  ;  and  he  states  that  it  is  the 
duty  of  the  party  acquiring  the  bond  to  communicate  those  circum- 
stances, and  that  the  non-communication,  or,  as  he  uses  the  expres- 
sion, the  concealment  of  those  facts,  would  invalidate  the  obligation 
and  release  the  surety  from  the  obligation  into  which  he  had  entered. 

Now,  when  the  issue  in  this  case  was  tried,  such  being  the  points 
raised  between  the  parties,  we  have  nothing  to  do  with  the  evidence 
in  the  cause,  or  the  facts  proved,  or  the  conclusion  to  which  the  jury 
might  or  might  not  have  come  under  the  circumstances,  but  with  the 
question  whether  the  charge  which  was  made  to  them  was  such  a  charge 
as  we  conceive  ought  to  have  been  made  to  them.  The  issue  for  their 
consideration  was,  as  a  matter  of  fact,  "  whether  the  pursuer,  Edward 
Railton,  was  induced  to  subscribe  the  bond  of  caution  or  surety  by  un- 
due concealment  or  deception  on  the  part  of  the  defenders,  or  either  of 
them  ;  "  raising  these  two  propositions  which  were  raised  in  the  plead- 
ings in  the  cause,  either  of  which,  if  found  in  the  affirmative,  would  lead 
to  the  conclusion  of  the  cause. 

The  question  —  looking  at  the  tei'ms  in  which  the  matter  was  left  to 
the  jury,  and  the  mode  in  which  the  learned  judge  informed  the  jury 
the}'  ought  to  perform  their  duty — is  whether  there  may  not  have  been 
a  case  brought  before  the  jury  for  their  consideration  of  improper  and 
undue  concealment  (which  I  understand  to  mean  a  non-communication 
of  facts  which  ought  to  have  been  communicated),  which  would  lead  to 
the  relief  of  the  surety,  although  the  non-communication  might  not  be 
wilful  and  intentional,  and  with  a  view  to  the  advantage  which  the  party 

1  6  Bell,  Murray,  Young,  &  Teuuant,  pp.  540-565;  s.  c.  16  Dunbar,  Beveridge,  & 
Fordyce,  252. 

2  The  statement  of  the  case  has  been  abridged,  and  the  arguments  and  portions  of 
the  opinions  are  omitted.  —  Ed. 


SECT.  X.]  KAILTON   V.   MATHEWS,  279 

was  thereby  to  receive.  That  which  I  find  here  extracted  from  the 
charge  of  the  learned  judge,  I  understand  to  be  one  proposition.  The 
learned  judge  lays  it  down  distinctly*  that  the  concealment,  to  be  undue, 
must  be  wilful  and  intentional,  with  a  view  to  the  advantage  they  were 
thereby  to  receive.  In  my  opinion  there  ma}'  be  a  case  of  improper 
concealment  or  non-communication  of  facts  which  ought  to  be  commu- 
nicated, which  would  affect  the  situation  of  the  parties,  even  if  it  was 
not  wilful  and  intentional,  and  with  a  view  to  the  advantage  the  parties 
were  to  receive.  The  charge,  therefore,  I  conceive,  was  not  consistent 
with  the  rule  of  law  ;  I  think  that  it  narrowed  the  question  for  the  con- 
sideration of  the  jury  beyond  the  limits  which  the  rights  of  the  parties 
required  to  have  submitted  to  the  consideration  of  the  jury. 

Lord  Campbell.  The  question  really  is,  What  is  the  issue  which 
the  Court  directed  in  this  case?  "  Whether  the  pursuer,  Edward  Rail- 
ton,  was  induced  to  subscribe  the  said  bond  of  caution  or  surety  by  un- 
due concealment  or  deception  on  the  part  of  the  defenders,  or  either  of 
them?"  The  material  words  are,  "undue  concealment  on  the  part 
of  the  defenders."  What  is  the  meaning  of  those  words?  I  apprehend 
the  meaning  of  those  words  is,  whether  Railton  was  induced  to  subscribe 
the  bond  by  the  defenders  having  omitted  to  divulge  facts  within  their 
knowledge  which  they  were  bound  in  point  of  law  to  divulge.  If  there 
were  facts  within  their  knowledge  which  they  were  bound  in  point  of 
law  to  divulge,  and  which  they  did  not  divulge,  the  suret}T  is  not  bound 
by  the  bond  ;  there  are  plenty  of  decisions  to  that  effect,  both  in  the  law 
of  Scotland  and  the  law  of  England.  If  the  defenders  had  facts  within 
their  knowledge  which  it  was  material  the  surety  should*be  acquainted 
with,  and  which  the  defenders  did  not  disclose,  in  my  opinion  the  con- 
cealment of  those  facts,  the  undue  concealment  of  those  facts,  dis- 
charges the  surety  ;  and  whether  they  concealed  those  facts  from  one 
motive  or  another,  I  apprehend  is  wholly  immaterial.  It  certainly  is 
wholly  immaterial  to  the  interest  of  the  surety,  because  to  say  that  his 
obligations  shall  depend  upon  that  which  was  passing  in  the  mind  of 
the  party  requiring  the  bond  appears  to  me  preposterous  ;  for  that  would 
make  the  obligation  of  the  surety  depend  on  whether  the  other  part}* 
had  a  good  mernoiy,  or  whether  he  was  a  person  of  good  sense,  or 
whether  he  had  the  motive  in  his  mind,  or  whether  he  was  aware  that 
those  facts  ought  to  be  disclosed.  The  liability  of  a  suret}'  must  depend 
upon  the  situation  in  which  he  is  placed,  upon  the  knowledge  which  is 
communicated  to  him  of  the  facts  of  the  case,  and  not  upon  what  was 
passing  in  the  mind  of  the  other  party,  or  the  motive  of  the  other  party. 
If  the  facts  were  such  as  ought  to  have  been  communicated,  if  it  was 
material  to  the  surety  that  they  should  be  communicated,  the  motive 
for  withholding  them,  I  apprehend,  is  wholly  immaterial. 

Then  we  come  to  the  direction  given  by  the  learned  judge.  He  says, 
"  The  concealment,  therefore,  being  undue,  must  be  wilful  and  inten- 
tional, with  a  view"  (and  that  is  with  reference  to  the  motive)  "  to  the 
advantage  they  were  thereby  to  receive."    Now,  according  to  my  notion 


280         NORTH  BRITISH  INSURANCE  CO.  V.   LLOYD.    [dlAP.  II. 

of  the  issue,  that  is  an  entire  misconception  of  it ;  according  to  this 
direction,  although  the  parties  acquiring  the  bond  had  been  aware  of 
the  most  material  facts  which  it  was  their  duty  to  disclose,  and  the 
withholding  of  which  would  avoid  the  bond,  if  they  did  not  wilfully  and 
intentionally  withhold  them,  —  that  is  to  sa}',  if  they  had  forgotten 
them,  or  if  tke}T  thought  b}-  mistake  that  in  point  of  law  or  morality 
they  were  not  bound  to  disclose  them,  —  then,  according  to  the  holding 
of  the  learned  judge,  it  would  not  be  a  concealment.  But  the  learned 
judge  does  not  stop  there  ;  he  goes  on,  "  with  a  view  to  the  advantage 
they  were  thereby  to  receive  ;  "  introducing  those  words  conjunctively, 
and,  in  effect,  saying  that  it  was  not  an  undue  concealment  unless  they 
had  their  own  particular  advantage  in  view.  That  appears  to  me  a 
misconception.  I  will  suppose  that  their  motive  was  kindness  to 
Hickes,  —  to  keep  back,  from  those  who  it  was  material  to  him  should 
continue  to  have  a  good  opinion  of  him,  the  knowledge  of  those  facts; 
that  it  was  a  pure  kindness  on  their  part,  to  prevent  those  parties  en- 
tertaining a  bad  opinion  of  him,  and  not  from  airy  selfishness,  this  con- 
cealment took  place.  Although  that  might  be  the  motive,  yet  the  fact 
that  he  was  in  arrear  and  had  been  guilty  of  fraudulent  conduct,  and 
that  he  was  a  defaulter,  were  facts  which  it  was  most  material  for  the 
suret}'  to  be  acquainted  with.  If  those  were  held  back  merely  from  a  kind 
motive  to  Hickes,  and  not  at  all  from  any  selfish  motive  on  the  part  of 
those  to  whom  the  bond  was  to  be  executed,  the  effect  in  point  of  law 
would  be  the  same  as  if  the  motive  were  merely  the  personal  benefit  of 
the  parties  to  receive  the  bond.  It  appears  to  me,  therefore,  that  the 
learned  judge  has  misunderstood  the  meaning  of  the  issue,  and  that 
having  told  the  jury  that  a  concealment  to  be  undue  must  be  wilful  and 
intentional  with  a  view  to  the  advantage  which  the  parties  were  thereby 
to  receive,  that  was  a  misdirection,  and  that  it  had  a  tendency  to 
mislead  the  jury  ;  that  it  was  wrong  in  point  of  law,  and  that  the  ex- 
ception to  that  direction  ought  to  be  allowed. 

Interlocutor  complained  of  reversed;  bill  of  exceptions  allowed  ; 
and  a  new  trial  directed. 


THE  NORTH   BRITISH   INSURANCE   CO.  v.  LLOYD. 

In  the  Exchequer,  November  25,  1854. 
[Reported  in  10  Exchequer  Reports,  523.]     . 

The  judgment  of  the  Court  was  delivered  by 

Pollock,  C.  B.1  The  plaintiffs  in  this  case  had  lent  £10,000  to  Sir 
T.  Brancker  on  the  26th  of  August,  1846,  payable  in  a  year,  on  the 
deposit  of  some  shares,  with  a  stipulation  that,  if  the  market  value  of 

1  Only  the  opinion  of  the  Court  is  given.  —  Ed. 


SECT.  X.J  NORTH   BRITISH   INSURANCE   CO.   V.   LLOYD.  281 

the  shares  should  fall  £20  per  cent  below  £10,000,  he  should  furnish 
new  shares,  or  pay  their  value,  so  as  to  leave  a  surplus  of  £20  per  cent. 
The  shares  having  fallen  in  value  below  that  amount,  the  defendant 
and  three  others,  in  consideration  of  the  plaintiffs  not  requiring  a 
deposit  of  shares  to  secure  the  deficiency,  guaranteed  the  plaintiffs  to 
the  amount  of  the  deficiency,  each  being  liable  for  a  certain  share  — 
the  defendant  to  the  amount  of  £500. 

The  action  was  founded  on  this  guaranty.     There  was  a  plea  of  fraud. 

On  the  trial  before  my  Brother  Crowder,  the  evidence  in  support  of 
the  plea  was,  that,  when  the  loan  was  due,  a  new  agreement  was  made, 
to  forbear  to  call  for  the  £10,000  for  six  months  more,  on  having  the 
additional  security  of  Sir  Thomas  Brancker's  brother,  James  Brancker, 
for  £2,000,  which  was  given  to  the  plaintiffs.  In  January,  1848,  James 
Brancker  wrote  to  the  plaintiffs'  manager,  to  inform  him  they  were 
making  arrangements  to  replace  his  security  by  the  guaranty  on  which 
this  action  is  brought ;  mentioned  the  terms  of  it  and  the  proposed 
names  of  the  sureties  ;  and  the  manager  received  the  proposed  security 
as  a  substitute.  The  defendant  knew  nothing  of  this  arrangement 
with  James  Brancker.  Sir  Thomas  Brancker  called  on  him  and  in- 
formed him  of  the  loan  to  him  and  its  terms,  and  told  him,  that,  unless 
he  could  procure  security,  the  plaintiffs  would  sell  his  shares  ;  and  then 
the  defendant  and  others  gave  the  guaranty  (the  subject  of  this  action) 
drawn  by  the  plaintiffs'  attorney. 

Mr.  Knowles  submitted  that  the  plea  of  fraud  was  proved ;  that,  in 
case  of  a  surety,  all  material  circumstances  known  to  the  creditor  must 
be  disclosed  ;  that  the  non-disclosure  of  the  fact  that  Sir  Thomas 
Brancker's  brother  had  withdrawn  his  guaranty  and  substituted  the 
one  in  question  was  the  undue  concealment  of  a  material  fact,  and 
therefore  a  constructive  fraud.  My  Brother  Crowder  was  of  opinion 
that  the  non-disclosure  of  material  circumstances  was  not  constructive 
fraud,  but  proposed  to  reserve  the  point.  But,  in  the  first  instance, 
he  left  the  question  to  the  jury,  whether  this  circumstance,  that  the 
debtor's  brother  had  been  a  surety  for  him  to  the  plaintiffs  and  with- 
drawn his  suretyship,  was  a  material  matter,  which  ought  to  have  been 
disclosed  by  him.  The  defendant  swore  that  he  would  not  have  given 
his  guaranty  had  he  been  informed  of  the  substitution. 

The  jury  found  that  the  substitution  was  not  a  circumstance  matei'ial 
to  be  disclosed,  and  therefore  the  question  proposed  to  be  reserved  did 
not  arise.  But,  notwithstanding  that  finding,  Mr.  Knowles  still  con- 
tended that  it  was  material,  and  that  in  the  case  of  sureties  the  non- 
disclosure of  such  a  circumstance  was  a  constructive  fraud. 

We  are  all  of  opinion  that  it  was  not.  It  seems  to  us  an  incorrect 
proposition,  that  the  same  rule  prevails  in  the  case  of  guaranties  as  in 
assurances  upon  ships  or  lives,  in  which  it  is  a  settled  rule  that  all 
material  circumstances  known  to  the  assured  are  to  be  disclosed, 
though  there  be  no  fraud  in  the  concealment.  This  is  peculiar  to  the 
nature  of  such  contracts,  in  which  in  general  the  assured  knows,  and 


282  NORTH    BRITISH   INSURANCE   CO.    V.    LLOYD.  [CHAP.  II 

the  underwriter  does  not  know,  the  circumstances  of  the  vojage  or  the 
state  of  health. 

The  cases  decided  by  Lord  Eldon,  and  afterwards  by  Lord  Cotten- 
hani,  which  were  cited  by  Mr.  Knowles  as  containing  the  doctrine  that 
there  is  an  obligation  on  the  part  of  the  person  guaranteed  to  disclose 
all  material  matters,  proceeded  on  the  ground  of  actual  fraud. 

Iu  Smith  v.  The  Bank  of  Scotland,  decided  by  Lord  Eldon  and  Lord 
Redesdale,  they  evidently  proceeded  on  the  ground  of  a  representation 
to  the  surety  of  trustworthiness  in  the  principal  known  or  believed  by 
the  bank  to  be  untrue  ;  and  in  Railton  v.  Mathews,  the  point  decided 
by  the  concurrent  opinion  of  Lord  Campbell  and  Lord  Cottenham  was, 
in  effect,  that  it  was  not  necessary,  in  order  to  render  a  concealment 
by  a  person  fraudulent,  that  it  should  be  made  with  a  view  to  the  ad- 
vantage that  person  was  thereby  to  receive,  the  Lord  Justice  Clerk 
having  left  that  to  the  jury,  as  part  of  a  more  complex  definition  of 
fraud. 

Again,  in  Pidcock  v.  Bishop  (which  was  cited  by  Mr.  Knowles), 
though  some  expressions  were  used  by  Mr.  Justice  Bayley  as  to  the 
necessity  of  communicating  to  the  surety  all  material  facts  likely  to 
affect  the  degree  of  his  responsibility,  these  expressions  must  be  under- 
stood with  respect  to  the  facts  of  the  case,  which  was  decided  on  the 
ground  of  actual  fraud.  But  that  the  mere  relationship  of  creditor 
and  surety  requires  in  all  cases  a  full  disclosure  of  all  material  circum- 
stances was  distinctly  denied  by  the  Lords,  in  the  case  of  Hamilton  v. 
Watson,1  relative  to  an  advance  by  bankers,  and  particularly  by  Lord 
Campbell,  who  declares,  that  if  the  principles  contended  for,  that  every- 
thing should  be  disclosed  by  the  creditor  that  is  material  for  the  surety 
to  know  it  would  knock  up  transactions  in  giving  securit}'  on  a  cash 
account,  because  no  bankers  would  rest  satisfied  that  they  had  a 
security  for  the  advance  they  made.  "  If  such  was  the  rule,  it  would 
be  indispensably  necessaiy  for  the  bankers  to  whom  the  security  is  to 
be  given  to  state  how  the  account  has  been  kept  —  whether  the  debtor 
was  in  the  habit  of  overdrawing  —  whether  he  was  punctual  in  his  deal- 
ings—  whether  he  performed  his  promises  in  an  honorable  manner;  for 
all  these  things  are  extremely  material  for  the  surety  to  know.  But, 
unless  questions  be  particularly  put  by  the  surety  to  gain  this  informa- 
tion, I  hold  that  it  is  quite  unnecessary  for  the  creditor  to  whom  the 
suretyship  is  to  be  given  to  make  any  such  disclosure."  Lord  Truro, 
who,  in  the  case  of  Owen  v.  Homan,2  says  that  he  thinks  the  principles 
which  govern  assurances  are  applicable  to  sureties,  stated  it  under  the 
impression  that  neither  the  text-books  nor  decisions  defined  the  nature 
of  the  obligation  of  the  creditor  with  regard  to  the  circumstances  to  be 
disclosed.  His  Lordship  apparently  was  not  aware  of  the  decision 
above  referred  to  of  Hamilton  v.  Watson. 

We  think  the  doctrine  laid  down  by  Lord  Campbell  perfectly  correct 

1  12  CI.  &  F.  109.  2  3  Mac,  &  G>  378. 


BECT.  X.]  LEE    V.    JONES.  28 


•■> 


and  applicable  to  the  guaranty  in  question.  The  non-disclosnre  of 
the  circumstance  of  the  change  of  security,  even  if  it  had  been  material, 
would  not  have  vitiated  the  guaranty  unless  it  had  been  fraudulently 
kept  back  ;  and  there  was  no  ground  to  impute  fraud  in  fact  to  the 
plaintiffs  or  their  agents.  They  might  well  have  supposed  that  the 
desire  of  Mr.  J.  Brancker  to  get  rid  of  his  own  guaranty  did  not  indi- 
cate any  bad  opinion  of  his  brother's  character  or  solvency,  but  arose 
from  a  wish  on  other  grounds  to  contract  his  liabilities, 

The  rule  must  therefore  be  refused.  Rule  refused.1 


LEE   and   Another   v.   JONES. 

In  the  Exchequer  Chamber,  Trinity  Vacation,  1864. 

[Reported  in  17  Common  Bench  Reports,  New  Series,  482.] 

The  facts  were  as  follows :  Under  an  agreement  of  the  1st  of  No- 
vember, 1856,  James  Packer  had  been  for  five  years  a  commission-agent 
of  the  plaintiffs  for  the  sale  of  coals  to  be  delivered  by  them  to  his 
order,  on  the  terms  that  he  should  from  time  to  time  give  to  the  plain- 
tiffs his  bills  for  the  amount  of  the  coals  so  delivered,  and  pay  to  them 
within  six  days  of  its  receipt  all  money  received. by  him  from  customers 
for  such  coals,  to  be  taken  off  and  credited  upon  the  bill  so  to  be  given 
by  him.  And  by  an  agreement  of  the  same  date,  between  the  plaintiffs 
and  Sarah  Tinson,  the  mother  of  Packer,  she  had  become  surety  to  the 
plaintiffs  to  the  extent  of  £300  for  the  due  performance  by  Packer  of  his 
agreement.  Packer,  not  having  for  a  very  considerable  time  "carried 
out  his  agreement  by  settling  for  and  paying  up  his  bills  at  the  expira- 
tion of  the  months  during  which  the\^  were  current,"  had  become  debtor 
to  the  plaintiffs  in  the  sum  of  £1,332,  and  Sarah  Tinson  on  her  guaranty 

1  In  the  following  cases  the  surety  was  not  exonerated  although  the  creditor  failed 
to  disclose  to  him  certain  facts  which,  if  known,  might  well  have  deterred  him  from 
becoming  surety :  — 

Non-disclosure  to  a  surety  for  a  borrower  that  the  latter  was  already  indebted  in  a 
large  amount  to  the  lender.  Hamilton  v.  Watson,  12  CI.  &  F.  109.  See  also  Guardi- 
ans v.  Strother,  22  Law  Times,  84. 

Non-disclosure  to  surety  for  lessee  that  lessee  was  in  arrears  on  a  prior  lease. 
Roper  v.  Cox,  L.  R.  10  Ir.  200  ;  Wythes  v.  Labouchere,  3  DeG.  &  J.  592,  608-9 ;  Pala- 
tine Co.  v.  Crittenden,  18  Mont.  413. 

Non-disclosure  to  the  surety  that  the  principal  was  financially  weak  or  insolvent. 
Magee  v.  Manhattan  Co.,  92  U.  S.  93 ;  Van  Arsdale  v.  Howard,  5  Ala.  596 ;  Ham  v. 
Greve,  34  Ind.  18 ;  Farmers'  Bank  v.  Braden,  145  Pa.  473. 

Non-disclosure  that  principal  was  gambling.     Atlas  Bank  v.  Brownell,  9  R.  I.  168. 

Non-disclosure  to  surety  od  a  note  for  a  prior  debt  of  the  principal  that  creditor 
was  taking  a  note  for  the  residue  without  a  surety.     Booth  v.  Storrs,  75  111.  438. 

Non-disclosure  to  surety  for  a  purchaser  of  land  that  there  was  to  be  no  vender's 
lien,  if,  as  was  the  fact,  that  was  no  fraudulent  motive  on  the  part  of  the  seller. 
Warren  v.  Branch,  15  W.  Va.  21.  —  Ed. 


2S4  LEE   V.   JONES.  [CHAP.  II. 

for  him  bad  become  their  debtor  to  the  extent  of  £300,  when  the  plain- 
tiffs informed  Packer  that  they  wanted  further  security,  and  could  not 
without  it  continue  him  in  their  employment,  and  stipulated  with  him 
that  the  defendant  and  the  other  parties  sureties  with  him  in  the  agree- 
ment sued  upon,  should  by  their  several  and  continuing  guaranties  give 
the  plaintiffs  further  security  to  the  extent  of  £300  against  the  said  James 
Packer.  In  pursuance  of  this  stipulation,  the  plaintiffs  caused  the  agree- 
ment sued  upon  to  be  prepared.  Although,  in  legal  construction,  it  ex- 
tends to  defaults  already  made,  as  well  as  to  defaults  which  might  be  in 
the  future  made,  it  gives  no  intimation  in  airy  part  of  it  of  an  intention 
that  it  should  operate  retroactively,  or  of  any  ascertained  default  on 
which  it  could  so  operate.  It  is  silent  on  the  fact  of  the  breach  by 
Packer  of  his  agreement  that  he  would  for  the  coals  delivered  to  his 
order  give  from  time  to  time  his  acceptances,  and  take  them  up  at  the 
expiration  of  the  months  during  which  they  were  current ;  on  the  fact 
that,  by  not  having  done  so,  he  had  incurred  a  debt  to  the  plaintiffs  of 
£1,332,  and  involved  Sarah  Tinson  in  a  liability  for  £300  ;  on  the  fact 
that  the  plaintiffs  had  informed  him  that  he  must  give  them  further  se- 
curity or  relinquish  their  employment ;  on  the  fact  that  the  defendant, 
on  his  signature  of  the  agreement,  would,  not  contingently  only  on  future 
defaults,  but  at  once,  become  liable  for  £100  :  and  none  of  these  facts, 
of  which  the  defendant  was  entirely  ignorant,  were  communicated  to  him 
by  the  plaintiffs.  Nor  was  an}-  opportunity  for  inquiry  of  them,  or  of 
those  who  represented  them,  afforded  to  the  defendant.  The  plaintiffs 
personally  had  no  communication  with  him,  and  never  saw  him  :  it  was 
left  to  Packer,  whose  employment  and  livelihood,  as  well  as  the  liability 
of  Sarah  Tinson,  were  at  stake,  to  obtain  the  consent  of  the  defendant 
and  of  the  other  sureties,  in  the  best  way  he  could,  and  as  he  thought 
proper ;  and  the  collector  of  the  plaintiffs,  who  was  sent  round  with  the 
agreement  to  procure  the  signatures  of  the  defendant  and  of  the  other 
sureties,  had  no  authorit}7  to  answer  questions.1 

Blackburn,  J.  I  am  of  opinion  that  in  this  case  the  decision  of  the 
Court  below  should  be  affirmed. 

The  question  is,  whether,  under  the  circumstances  stated  in  the  case, 
there  was  evidence  to  go  to  the  jury  in  support  of  the  averment  of  fraud  ; 
for  I  think  that  the  averments  of  undue  concealment  carry  the  case  no 
further,  and  that,  unless  actual  fraud  was  proved,  the  substance  of  the 
issue  was  not  proved. 

It  was  decided  in  The  North  British  Insurance  Company  v.  Llojd, 
ihat  the  rule  that  all  material  circumstances  known  to  the  assured  must 
be  disclosed,  is  peculiar  to  contracts  of  insurance,  and  that  it  does  not 
extend  to  contracts  of  guarant}'. 

I  concur  in  this,  which  I  think  founded  upon  principle  as  well  as 
authority.  It  was  pointed  out  by  the  Chief  Baron  in  the  argument  in 
the  present  case,  that  a  surety  is  in  general  a  friend  of  the  principal 

1  This  statement  of  the  case  is  taken  from  the  opinion  of  Shee,  J.  —  Ed. 


SECT.  X.J  LEE    V.    JONES.  285 

debtor,  acting  at  his  request,  and  not  at  that  of  the  creditor ;  and,  in 
ordinary  cases,  it  ma}'  be  assumed  that  the  suret}-  obtains  from  the 
principal  all  the  information  which  he  requires  :  and  I  think  that  great 
practical  mischief  would  ensue  if  the  creditor  were  by  law  required  to 
disclose  everything  material  known  to  him,  as  in  a  case  of  insurance. 
If  it  were  so,  no  creditor  could  rel}'  upon  a  contract  of  guaranty,  unless 
he  communicated  to  the  proposed  sureties  everything  relating  to  his 
dealings  with  the  principal,  to  an  extent  which  would  in  the  ordinary 
course  of  things  be  so  vexatious  and  annoying  to  the  principal  and  his 
friends,  the  intended  sureties,  that  such  a  rule  of  law  would  practically 
prohibit  the  obtaining  of  contracts  of  suretyship  in  matters  of  business. 
This  is  well  pointed  out  by  Lord  Campbell  in  his  judgment  in  Hamilton 
v.  Watson.1  But  I  think,  both  on  authority  and  on  principle,  that,  when 
the  creditor  describes  to  the  proposed  sureties  the  transaction  proposed 
to  be  guaranteed  (as  in  general  a  creditor  does),  that  description  amounts 
to  a  representation,  or  at  least  is  evidence  of  a  representation,  that  there 
is  nothing  in  the  transaction  that  might  not  naturally  be  expected  to 
take  place  between  the  parties  to  a  transaction  such  as  that  described 
And  if  a  representation  to  this  effect  is  made  to  the  intended  suret}'  by 
one  who  knows  that  there  is  something  not  naturally  to  be  expected  to 
take  place  between  the  parties  to  the  transaction,  and  that  this  is  un- 
known to  the  person  to  whom  he  makes  the  representation,  and  that,  if 
it  were  known  to  him,  he  would  not  enter  into  the  contract  of  surety- 
ship, I  think  it  is  evidence  of  a  fraudulent  representation  on  his  part. 

I  think  that  it  appears  in  Hamilton  y.  Watson  that  such  was  the 
opinion  of  Lord  Campbell ;  and  I  think  that  on  this  principle  are  founded 
the  judgments  of  Lord  Eldon  in  Smith  v.  The  Bank  of  Scotland,  and  of 
the  Court  of  King's  Bench  in  Pidcock  v.  Bishop. 

In  the  present  case  the  plaintiffs  had  no  personal  communication  with 
the  defendant,  the  surety  ;  and  when  they  sent  the  agreement  to  him 
for  execution,  the}-  sent  it  by  an  agent  who  had  no  authorit}'  from  the 
plaintiffs  to  make  any  statement  whatever,  or  to  do  anything  more  than 
obtain  the  defendant's  signature  to  the  agreement  thus  sent. 

The  argument  for  the  plaintiffs  before  us  was,  in  substance,  that, 
under  such  circumstances,  though  there  might  be  a  concealment  or  non- 
disclosure of  material  facts,  there  was  not  and  could  not  be  any  misrep- 
resentation on  the  plaintiffs'  part ;  and  that,  without  it,  there  could  be 
no  fraud  :  and  during  the  argument  I  was  inclined  to  be  of  that  opinion  ; 
but,  on  consideration,  I  have  come  to  the  conclusion  that  in  this  case 
there  was  evidence  of  intentional  deceit,  by  a  false  representation  of  the 
kind  I  have  above  referred  to,  amounting  to  actual  fraud. 

The  written  agreement  which  before  it  was  executed  the  plaintiffs 
sent  to  the  defendant,  recites  that  Packer,  the  principal,  had  been  for 
some  time  salesman  to  the  plaintiffs  on  terms  b}-  which  he  was,  in  sub- 
stance, to  be  a  del  credere  agent,  settling  and  paying  for  what  he  had 
sold  monthly,  and  that  they  had  required  from  him  security  to  induce 

1  12  CI.  &  F.  109. 


286  LEE  V.   JONES.  [CHAP.  IL 

them  to  continue  him  in  the  employment,  and  stipulated  that  the  defend- 
ant and  others  should  give  them  a  floating  and  continuing  guaranty 
for  the  term  of  three  }-ears  from  the  date  thereof,  to  secure  the  amount 
of  any  balance  which  might  at  any  time  be  due  to  them  on  the  coal 
account. 

I  think  this  was  evidence  of,  or  rather,  if  not  qualified  by  other  mat- 
ters, amounted  to  a  representation  that  there  was  nothing  in  the  trans- 
action between  the  plaintiffs  and  Packer  which  might  not  in  the  ordinary 
course  of  affairs  be  expected  to  have  taken  place  between  them  as  par- 
ties to  such  a  transaction. 

It  is  stated  in  the  case  (par.  8)  that,  at  the  time  when  this  agreement 
was  sent  to  the  defendant,  a  balance  of  £1,332  was  actually  then  due 
from  Packer,  he  not  having  for  a  very  considerable  time  settled  for  and 
paid  up  at  the  expiration  of  the  current  months,  as  stipulated  by  the 
agreement.  It  is,  however  (in  favor  of  the  plaintiffs),  further  stated 
that  there  was  no  evidence  that  the  plaintiffs  were  aware  that  Packer 
had  actually  received  the  money  from  the  customers. 

Now,  whether  the  handing  the  agreement  by  the  plaintiffs  to  the  de- 
fendant amounted  to  an  inaccurate  representation  or  not,  depends,  as  I 
think,  on  the  question  whether  in  such  a  transaction  as  that  described 
in  the  agreement,  it  might  or  might  not  naturally  be  expected  that  the 
masters  might  have  allowed  a  balance  of  this  extent  to  accumulate,  and 
might  have  allowed  the  account  to  stand  over  unsettled  for  so  long  a 
time.  In  Hamilton  v.  "Watson  the  transaction  was  a  security  for  a 
banker's  cash  account ;  and  the  decision  of  the  House  of  Lords  was, 
that,  in  such  a  case,  it  might  be  so  naturally  expected  that  the  proposed 
principal  had  already  overdrawn  his  account,  that  there  was  no  evidence 
of  a  representation  that  he  had  not. 

In  Smith  v.  The  Bank  of  Scotland,  where  the  security  was  given  for 
the  good  behavior  of  a  bank  agent,  it  was  held  that  an  allegation  that 
the  bank  knew  that  the  principal  had  misconducted  himself  in  his  office, 
and  that  this  fact  was  concealed  from  the  sureties,  ought  to  have  been 
admitted  to  proof  in  the  court  below.  I  think  the  effect  of  Lord  Eldon's 
judgment  in  that  case  is,  that  it  was  so  little  to  be  expected  that  a  bank 
would  continue  in  their  service  an  agent  who  had  already  by  breach  of 
trust  run  into  their  debt,  that  the  application  for  security  amounted,  as 
he  says,  to  "  holding  him  forth  to  the  sureties  as  a  trustworthy  person." 1 

I  think  that  it  must  in  every  case  depend  upon  the  nature  of  the 
transaction,  whether  the  fact  not  disclosed  is  such  that  it  is  impliedly 
represented  not  to  exist ;  and  that  must  generally  be  a  question  of  fact 
proper  for  a  jury.  If  in  this  case  the  amount  of  the  balance  already 
due  had  been  small,  or  the  period  during  which  the  accounts  were  left 
unsettled  short,  there  would  in  m}'  opinion  have  been  such  a  mere  scin- 
tilla of  evidence  as  would  not  have  warranted  the  jury  in  finding  the 
verdict  of  fraud ;  and  the  judge  would  have  been  justified  in  withdraw- 
ing the  question  from  their  consideration.     But,  as  it  is,  the  amount  of 

'   1  Dow,  292. 


SECT.  X.]  LEE   V.   JONES.  287 

the  balance  already  due  being,  relatively  to  the  amount  of  the  security,, 
so  large,  and  the  period  during  which  no  settlement  had  taken  place 
being  so  considerable,  I  think  the  judge  could  not  have  withdrawn  the 
case  from  the  consideration  of  the  jury,  who  might  well  come  to  th6 
conclusion  that  the  sending  of  the  agreement  in  these  terms  amounted 
to  an  inaccurate  representation.  This  would  not  be  enough  to  support 
the  verdict  on  the  plea  of  fraud,  unless  it  was  further  established  that 
the  plaintiffs  made  the  inaccurate  representation,  intending  to  deceive  the 
defendant,  and  induce  him  to  enter  into  the  contract  in  the  belief  that 
what  was  represented  did  exist,  whilst  the  plaintiffs  knew  it  did  not 
exist.     But  of  that  also  I  think  there  was  sufficient  evidence. 

The  improbability  that  any  one  could  suppose  that  sureties  would 
have  entered  into  such  an  agreement  if  they  had  known  the  truth,  is  so 
great  that  the  jury  might  well  think  that  the  plaintiffs  knew  that  tha 
defendant  was  in  ignorance  of  it :  and  if  the  jury  so  thought,  they  might 
from  that  alone  draw  the  inference  that  the  representation  was  fraudu- 
lently intended  to  deceive.  This  is  strengthened  by  the  facts  that  the 
plaintiffs  apparently  avoided  having  any  personal  communication  with 
the  proposed  sureties,  and  sent  the  agreement  for  execution  by  an 
agent  who  had  no  authority  from  them  to  make  any  statements ;  from 
which  the  jury  might  perhaps  draw  the  further  inference  that  the  plain- 
tiffs took  pains  to  avoid  the  risk  of  the  sureties  asking  questions  and 
being  undeceived. 

It  is  not  essential,  to  constitute  fraud,  that  there  should  be  any  mis- 
leading by  express  words  ;  it  is  sufficient  if  it  appears  that  the  plaintiffs 
knowingly  assisted  in  inducing  the  defendant  to  enter  into  the  contract, 
by  leading  him  to  believe  that  which  the  plaintiffs  knew  to  be  false,  the 
plaintiffs  knowing  that,  if  he  had  not  been  thus  misled,  he  would  not 
have  entered  into  the  contract. 

For  the  reasons  above  given,  I  think  there  was  in  this  case  evidence 
to  support  the  verdict ;  and  consequently  the  judgment,  in  my  opinion, 
should  be  affirmed.1  Judgment  affirmed? 

1  The  concurring  opinions  of  Shee,  J.,  Crompton,  J.,  and  Channell,  B.,  and  the 
dissenting  opinions  of  Pollock,  C.  B.,  and  Bramwell,  B.,  are  omitted.  —  Ed. 

2  Lawder  v.  Lawder,  Ir.  R.  7  C.  L.  57  (s*—^),  Accord.  —  Ed. 


288  sooy  ads.  state  of  new  jersey.  [chap,  il 


J.  SOOY  and  Others   ads.  THE   STATE   OF  NEW  JERSEY. 

In  the  Supreme  Court,  New  Jersey,  February  Term,  1877. 
[Reported  in  39  New  Jersey  Reports,  135.] 

Beasley,  C.  J.1  The  next  plea  to  which  the  demurrer  is  addressed 
sets  up,  as  a  defence  to  the  action,  the  non-communication  on  the  part 
of  the  State  of  certain  facts  within  its  knowledge,  touching  the  position 
and  standing  of  the  treasurer,  and  which  it  is  alleged  ought,  in  good 
faith,  to  have  been  disclosed  to  the  sureties  at  or  before  the  execution 
of  the  bond. 

The  allegations  in  the  plea  on  this  score  are  to  this  effect :  that  for 
a  long  time  prior  to  the  making  and  delivery  of  the  bond,  the  said 
Josephus  Soo}',  Junior,  had  at  various  times  embezzled  and  wasted 
divers  sums  of  the  money  of  the  State  which  had  been  committed  to 
his  custody,  and  had  applied  them  to  his  own  use,  and  had  therein  been 
guilty  of  defalcation  in  his  office,  and  that  such  misdeeds  were  known 
to  the  State. 

There  are  other  statements  in  the  plea  which  will  be  considered  in 
the  sequel,  the  foregoing  averments  being  separated  from  these  with  a 
view  of  considering  the  naked  question  whether  the  failure  on  the  part 
of  the  State  to  disclose  the  circumstance  stated  will,  per  se,  illegalize 
the  bond. 

Upon  turning  to  the  authorities  it  will  be  found  that  there  has  been 
some  contvariet}"  in  judicial  opinions  touching  this  subject.  That  the 
obligee  is  bound,  in  morals  and  in  law,  to  disclose  to  the  suret}*,  before 
he  takes  his  guaranty,  certain  conditions  of  the  transaction,  does  not 
appear  to  have  been  doubted  ;  but  the  extent  of  such  obligation  has 
been  the  matter  in  disagreement.  Lord  Truro,  in  expressing  his  views 
in  Owen  v.  Homan,2  said  :  "  I  am  not  aware  that  either  the  text-books 
or  the  decisions  distinctby  define  the  extent  of  the  obligation  and  re- 
sponsilulit}r  which  rest  upon  the  creditor  in  regard  to  the  suret}-  being 
vnade  acquainted  with  all  the  material  circumstances  connected  with  the 
transactions  to  which  the  suretyship  is  to  be  applied.  The  cases  which 
are  reported  have  generally  arisen  out  of  transactions  in  which  there 
lias  been  personal  communication  between  the  creditor  and  the  surety  ; 
and  the  clear  law  deducible  from  these  decisions  is,  that  the  creditor 
must  make  a  full,  fair,  and  honest  communication  of  every  circumstance 
calculated  to  influence  the  discretion  of  the  surety  in  entering  into  the 
required  obligation.  Lord  Cranworth,  while  sitting  as  Lord  Commis- 
i.ioner,  well  observed  that  applications  for  special  injunctions  are  very 
much  governed  by  the  same  principles  which  govern  insurances,  where 
the  assured  is  bound  to  give  to  the  underwriter  all  the  information  in 
tiy  power,  to  enable  him  to  estimate  the  character  of  the  risk  he  is  in- 

1  Only  a  portion  of  the  opinion  of  the  Court  is  given.  —  Ed. 

2  3  Mac.  &  G.  378. 


SECT.  X.]        SOOY  ads.    STATE  OF  NEW  JERSEY.  289 

vited  to  undertake.  I  think  the  same  principle  is  applicable  to  the  case 
of  sureties,  and  that  when  communication  does  take  place  between  the 
creditor  and  surety,  the  duty  of  the  creditor  cannot  better  be  illustrated 
than  b}r  the  case  of  the  assured."  But  this  view  of  the  Lord  Chancellor 
has  been  entirety  exploded.  In  the  course  of  the  argument  in  the  case 
of  the  North  British  Insurance  Co.  v.  Lloyd,  Baron  Parke  says  that 
the  decision  in  Owen  v.  Homan  was  carried  to  the  House  of  Lords,  and 
the  opinion  above  cited,  of  Lord  Truro,  was  not  acquiesced  in  ;  and  in 
Hamilton  v.  Watson  1  the  doctrine  is  still  more  distinctlj-  rejected.  In 
this  last  case  Lord  Campbell  shows,  to  the  point  of  demonstration,  the 
impracticability  of  applying  the  rule  of  disclosure  which  obtains  in  favor 
of  the  underwriter,  to  the  formation  of  suretyships. 

But  while  it  is  thus  settled  that  the  principles  of  insurance  and  guar- 
anty, in  this  respect,  are  not  to  be  assimilated,  and  although  the  de- 
cisions have  put  the  doctrine,  so  far  as  it  regulates  the  relation  of 
principal  and  suret}-,  on  the  footing  that  fraud  must  exist  to  invalidate 
the  obligation  of  the  latter,  nevertheless  it  seems  to  me  that  the  facts 
set  forth  in  this  plea  must  be  deemed  a  sufficient  defence  to  this  action. 
I  justify  this  result  by  the  assumption  that  if  these  facts  thus  stated  are 
true,  a  fraud  has  been  committed  which  will  invalidate  the  bond  sued  on. 
The  gravamen  alleged  in  this  plea  is,  that  Mr.  Sooy  had  antecedent^ 
been  in  the  employment  of  the  State  as  treasurer  ;  and  that  during  such 
term  he  had  been  guilty  of  defalcations  and  embezzlements  which  were 
known  to  the  State  ;  and  that  no  disclosure  of  such  malpractices  had 
been  made  to  the  sureties,  the}*  being  ignorant  of  them.  Such  a  state- 
ment describes  a  fraud  ;  at  all  events,  a  fraud  in  law.  A  person  called 
in  as  a  guarantor  of  the  honest}7  of  an  employee  has  the  right  to  infer 
that  the  continuance  of  such  employee  in  the  service  of  the  master  is 
a  tacit  assertion,  on  the  part  of  the  latter,  that  there  has  at  least  been 
nothing  criminal  in  the  past  conduct  of  the  servant  in  the  course  of  his 
employment.  Such  an  inference  is  the  natural  and  reasonable  result  of 
the  circumstances  ;  and  hence  the  obligee  is  chargeable  with  the  knowl- 
edge that  the  surety  is  acting  on  that  basis,  and  with  such  knowledge  it 
is  impossible  to  acquit  him  of  bad  faith  if  he  allows  the  surety-ship  to 
take  effect.  Where  silence  is  reasonabl}'  sure,  in  the  ordinary  course 
of  things,  to  produce  the  effect  of  deceit,  silence  must  be  culpable  ;  and 
in  law  the  one  should  be  regarded  as  the  equivalent  of  the  other.  In 
the  present  instance  the  duty  of  disclosure  was  of  the  most  impera- 
tive character ;  it  is  the  case  of  an  officer  who  had  violated  his  official 
oath  and  defrauded  the  public,  and  had  thus  committed  crimes  of  a  na- 
ture highly  penal.  It  was  therefore  obvious  that,  in  becoming  bound 
for  the  honest  conduct  of  such  an  officer,  the  sureties  were  acting  under 
a  delusion  as  to  the  real  facts  of  the  transaction.  Neither  in  morals 
nor  in  law  can  an  obligee  stand  by  and  knowingly  allow  an  obligor  to 
take  a  risk  which  the  former  knows  the  latter  has  no  intention  to  assume. 
Whatever  else  may  be  in  doubt  on  this  subject,  it  appears  to  me  that 

l  12  CI.  &  Fin.  109. 
19 


290  sooy  ads.  STATE  of  new  jeksey.  [chap.  II, 

the  authorities  have  settled  that,  under  such  circumstances,  not  to  dis- 
abuse the  guarantor  of  the  obvious  mistake  on  which  he  is  about  to  in- 
cur the  obligation  is  suppressio  veri,  because  good  faith  calls  for  the 
disclosure  requisite  to  give  to  the  contract  the  effect  which  the  one 
party  knows  the  other  party  expects  it  to  have.  The  leading  case  upon 
this  point  is  that  of  Smith  y.  The  Governor  and  Company  of  the  Bank 
of  Scotland.  .  .   ,1 

In  nry  opinion,  the  law  should  be  regarded  as  at  rest  upon  this  sub- 
ject, to  the  extent  that  it  is  the  dut}'  of  a  person  taking  a  guaranty  for 
the  good  conduct  of  an  employee  to  disclose  the  past  malpractices  of 
such  employee  in  the  course  of  the  business  to  which  the  guaranty  re- 
lates, and  that  if  such  duty  is  not  performed,  the  instrument  so  taken 
is,  ipso  facto,  invalid.  The  continuance  of  an  agent  in  an  employment 
is  an  act  so  expressive  of  trust  and  confidence  that  it  is  tantamount  to 
an  express  declaration  to  that  effect;  and  hence  it  must,  under  usual 
circumstances,  have  all  the  effect  of  a  meditated  fraud,  if  the  person  so 
retaining  the  agent  can  be  permitted  to  disown  the  implications  inevi- 
tably arising  from  his  own  conduct. 

The  conclusion  from  this  view  is,  that  the  facts  set  out  in  this  plea, 
and  which  are  admitted  by  the  demurrer,  are  a  legal  defence  to  the 
present  action.2 

Argued  at  November  Term,  1876,  before  Beasley,  Chief  Justice, 
and  Justices  Scudder,  Dixon,   and  Reed. 

1  The  learned  judge  here  discussed  the  cases,  Smith  v.  Bank  of  Scotland,  Railton 
v.  Mathews,  Phillips  v.  Foxall,  and  Franklin  Bank  v.  Cooper.  —  Ed. 

'-'  Guardian  Co.  v.  Thompson,  68  Cal.  208;  Anaheim  Co.  v.  Parker,  101  Cal.  483 
(semble);  Wilson  v.  Monticello,  85  Ind.  10;  Bank  v.  Anderson  Co.,  65  Iowa,  692; 
Bellevue  Association  v.  Jeckel  (Kentucky,  1898),  46  S.  W.  R.  482;  Franklin  Bank  v. 
Moore,  39  Me.  542  ;  36  Me.  179  ;  Traders'  Co.  v.  Herber.  67  Minn.  106 ;  Third  Bank  v. 
Owen,  101  Mo.  558  ;  Harrison  v.  Lumbermen  Co.,  8  Mo.  Ap.  37 ;  Wells  v.  Walker  (New 
Mexico,  1897),  50  Pac.  R.  353  ;  Howe  Co.  v.  Farrington,  82  N.  Y.  121  (semble) ;  Ludekeus 
v.  Pscherhofer,  76  Hun,  548  ;  U.  S.  Co.  v.  Salmon,  91  Hun,  535  ;  Dinsmore  v.  Tidball, 
34  Ohio  St.  411 ;  Smith  v.  Josselyn,  40  Ohio  St.  409  ;  Wayne  v.  Commercial  Bank,  52  Pa. 
343  {semble.) ;  Atlas  Bank  v.  Brownell,  9  R.  I.  168  ;  Wilmington  v.  Ling,  18  S.  Ca.  116 ; 
Screwmen  v.  Smith,  70  Tex.  168  (semble)  ;  Cashin  v.  Perth,  7  Grant,  Ch.  340;  East 
Zorra  v.  Douglas,  17  Grant,  Ch.  462;  Peers  v.  Oxford,  17  Grant,  Ch.  472  (semble). 
Accord. 

Roper  v.  Sangamon  Lodge,  91  111.  518;  Cawley  v.  People,  95  111.  249;  iEtna  Co.  v. 
Mabbett,  18  Wis.  667,  Contra. 

Importance  was  attached,  in  the  cases  cited  in  the  preceding  paragraph,  to  the  fact 
that  the  obligee  did  not  procure  the  surety's  signature,  and  was  not  present  when  he 
signed  the  obligation.     See  also,  on  this  point,  Magee  v.  Manhattan  Co.,  92  U.  S.  93. 

Non-disclosure  after  Inquiry  by  Surety.  If  a  surety  asks  the  creditor  for  information 
as  to  the  subject-matter  of  the  proposed  suretyship,  the  creditor  must,  if  he  answers  at 
all,  make  a  full  disclosure  of  everything  within  his  knowledge  that  would  naturally 
influence  the  decision  of  the  surety  to  sign  or  not  to  sign  the  instrument.  Bank  v. 
Anderson  Co.,  65  Iowa,  692 ;  Remington  Co.  v.  Kezertee,  49  Wis.  409. 

Sureties  for  Public  Officers.  The  doctrine  of  the  principal  case  has  been  held  in  a 
few  cases,  but  for  differing  reasons,  to  be  inapplicable  in  cases  of  suretyship  for  mu- 
nicipal or  State  officers.  State  v.  Rushing,  17  Fla.  226  ;  State  v.  Dunn,  1 1  La.  An.  549  ; 
Frownfelter  v.  State,  66  Md.  80 ;  Lawder  v.  Lawder,  Ir.  R.  7  C.  L.  57 ;  Byrne  v.  Mnzio, 
L.  R.  8lr.  396.  —  Ed. 


SECT.  X.]  BOSTWICK   V.   VAN    VOOKHIS.  291 


H.  BOSTWICK,  Respondent,  v.  S.  L.  VAN  VOORHIS,  Appellant. 

In  the  Court  of  Appeals,  New  Yoke,  February,  1883. 

[Reported  in  91  New  York  Reports,  353.] 

Earl,  J.1  This  action  was  brought  by  plaintiff,  as  receiver  of  the 
National  Bank  of  Fishkill,  against  the  defendant,  as  sole  executor  of 
Coert  A.  Van  Voorhis,  deceased,  who  was  one  of  the  sureties  upon  the 
official  bond  of  Alexander  Bartow,  cashier  of  the  bank. 

Bartow  was  teller  of  the  bank  before  he  was  appointed  cashier 
thereof,  and  it  is  claimed  that  the  directors,  before  his  appointment  as 
cashier,  were  aware  of  certain  misconduct  of  his  as  teller,  which  they 
concealed  from  the  sureties,  and  which  they  were  bound,  acting  in 
good  faith,  to  have  made  known  to  them.  It  is  undoubtedly  true  that 
if  the  directors  had  knowledge  that  Bartow  had  been  dishonest  and 
unfaithful  in  his  office  as  teller,  they  were  bound  to  apprise  the  sureties 
of  that  fact,  otherwise  they  could  not  hold  them.  But  mere  irregu- 
larities or  omissions  of  duty  on  the  part  of  Bartow  while  he  was  acting 
as  teller,  which  did  not  affect  his  moral  character  or  his  official  integ- 
rity and  fidelity,  even  if  known  to  the  directors,  would  not  enable  the 
sureties  to  defend  upon  the  ground  that  they  had  been  deceived.  Sure- 
ties are  supposed  to  know  the  character  of  their  principal,  and  to  be 
willing  to  be  bound  for  his  fidelit}-.  They  must  inquire  and  inform 
themselves  of  all  the  facts  they  desire  to  know,  and  if  they  omit  to 
seek  for  or  obtain  the  requisite  information,  they  cannot  easily  avoid 
the  bond  upon  inferential  or  unsatisfactory  proof  that  they  were  drawn 
into  signing  it  Irv  bad  faith  on  the  part  of  the  obligee.  Before  a  bond 
in  such  a  case  can  be  avoided,  the  fraud  and  bad  faith  should  be 
brought  home  to  the  obligee  by  quite  clear  and  decisive  evidence, 
otherwise  bonds  of  this  character  will  furnish  a  very  precarious  security 
to  the  parties  who  take  them.  In  Tapley  v.  Martin  -  it  was  said  :  "  The 
object  of  the  bond  is  to  guarantee  to  the  bank  the  faithful  performance 
by  the  cashier  of  his  duties.  His  duties  and  obligations  are  not 
affected  by  the  negligence  of  the  officers  or  agents  of  the  bank,  and 
such  negligence  does  not  discharge  the  sureties  ;  "  and  it  was  held  that 
the  surety  upon  the  bond  of  the  cashier  of  a  national  bank  is  not  dis- 
charged by  the  fact  that  the  cashier  had,  before  the  bond  was  given, 
committed  frauds  upon  the  bank,  if  such  frauds  were  unknown  to  the 
officers  of  the  bank,  although  the}*  were  guilt}'  of  gross  negligence 
in  not  discovering  them.3  In  Atlantic  &  Pacific  Telegraph  Co.  v. 
Barnes4  it  was  held  that  "  the  sureties  upon  a  bond  given  by  an  em- 

1  Only  a  portion  of  the  opinion  of  the  Court  is  given.  —  Ed. 

2  116  Mass.  275. 

3  Anaheim  Co.  v.  Parker,  101  Cal.  483  ;  Tapley  v.  Martin,  116  Mass.  275  ;  Bowne  v. 
Mt.  Holly  Bank,  45  N.  J.  360;  Wayne  v.  Commercial  Bank,  52  Pa.  343,  Accord.  —  Ed. 

*  64  N.  Y.  385. 


292  BOSTWICK    V.    VAN    VOORHIS.  [CHAP.  II 

ployee  to  bis  employer,  conditioned  that  the  former  will  faithfully 
account  for  all  moneys  and  property  of  the  latter  coming  into  his 
hands,  are  not  discharged  from  subsequent  liability  by  an  omission  on 
the  part  of  the  employer  to  notify  them  of  a  default  on  the  part  of 
their  principal,  known  to  the  employer,  and  a  continuance  of  the  em- 
ployment after  such  default,  in  the  absence  of  evidence  of  fraud  and 
dishonesty  on  the  part  of  the  employee."  In  Board  of  Supervisors  v. 
Otis1  it  was  held  that  kt  mere  laches  on  the  part  of  an  obligee  or 
creditor,  or  non-performance  of  some  act  which  might  prevent  loss  to 
a  surety,  will  not,  in  the  absence  of  some  express  covenant  or  condi- 
tion, discharge  the  surety.  To  be  available  to  him  as  a  defence,  the 
neglect  must  be  some  positive  duty  owing  to  him."  In  Atlas  Bank  v. 
Brownell,2  an  action  on  a  cashier's  bond,  it  was  held,  that  to  avoid  a 
bond  on  the  ground  of  fraud  on  the  part  of  the  bank,  or  its  directors, 
there  must  be  a  fraudulent  concealment  of  something  material  for  the 
surety  to  know.  A  concealment  which  will  avoid  a  guaranty  must  be 
a  fraudulent  one.  If  not  fraudulent  in  fact  or  in  law  the  defence  is 
not  made  out;  and  in  Story's  Equity  Jurisprudence  (§  204),  it  is  said 
that  "  the  concealment  to  make  void  a  contract  must  amount  to  the 
suppression  of  facts  which  one  party  is  bound  in  conscience  and  duty 
to  disclose  to  the  other,  and  in  respect  to  which  he  cannot  innocently 
be  silent."  It  is  perceived  from  these  authorities  that  the  law  simply 
requires  from  the  obligee  to  sureties  upon  a  bond  good  faith.  He  must 
not  intentionally  mislead  them  by  what  he  says  or  does,  or  omits  to 
say  or  do,  and  bad  faith  onl}'  on  his  part,  which  has  misled  the  surety 
to  his  damage,  will  enable  the  surety  to  defend  against  the  bond. 

In  this  case,  the  claim  is  that  the  cashier  who  preceded  Bartow  had 
for  some  years  been  a  defaulter  to  the  bank,  and  that  Bartow,  as  teller, 
aided  in  concealing  and  covering  up  the  defalcation  for  years.  The 
answer  to  this  is  that  it  does  not  appear,  and  was  not  found  by  the 
referee,  that  in  anything  Bartow  did  in  reference  to  the  accounts  and 
transactions  of  the  former  cashier  he  acted  dishonestly  or  fraudulently, 
or  that  he  knew  the  bank  was  to  suffer  an}-  wrong  or  injury  from  the 
cashier's  conduct.  There  was  nothing  in  what  Bartow  did  as  a  subor- 
dinate of  the  cashier,  in  reference  to  the  cashier's  accounts  and  trans- 
actions with  the  bank,  showing  that  he  was  intentionally  dishonest  or 
unfaithful  to  the  trust  reposed  in  him  by  the  bank ;  and  such  evidently 
was  the  view  of  the  facts  taken  Iry  the  directors  when,  with  full  knowl- 
edge of  all  the  facts,  they  appointed  him  cashier.  Upon  such  facts  it 
is  quite  clear  that  the  sureties  upon  the  bond  are  unable,  within  any 
authority  that  can  be  found,  to  avoid  the  bond  on  the  ground  of  fraud. 

Judgment  affirmed.* 

1  62  N.  Y.  88.  2  9  E.  I.  168. 

3  Home  Co.  v.  Holway,  55  Iowa,  571  ;  Howe  Co.  v.  Farrington,  82  N.  Y.  121; 
Ludekens  v.  Pscherhofer,  76  Hun,  548  (semble)  ;  Screwman  v.  Smith,  70  Tex.  168; 
Peers  ».  Oxford,  17  Grant,  Ch.  472,  Accord. 

Smith  v.  Josselyn,  40  Ohio  St.  409,  Contra.  —  Ed. 


S^CT.  X.  '  POWERS   DRY-GOODS   CO.    V.    HARLIN.  293 


POWERS  DRY-GOODS  CO.  v.  M.  J.  HARLIN  and  Others. 

In  the  Supreme  Court,  Minnesota,  May  10,  1897. 

{Reported  in  68  Minnesota  Reports,  193. J 

Collins,  J.1  After  defendants  Harlin  Bros,  had  made  an  assign- 
ment for  the  benefit  of  their  creditors,  among  whom  was  plaintiff,  a 
corporation,  a  composition  agreement  was  made  and  entered  into  be- 
tween the  debtors  and  each  of  their  creditors  upon  a  basis  of  33 £  per 
cent  of  the  entire  indebtedness.  In  accordance  with  this  agreement, 
plaintiff  accepted  and  received  the  debtors'  promissory  notes,  with 
sureties. 

Upon  trial  by  the  Court  without  a  jury,  the  Court  found  that,  before 
the  composition  agreement  was  signed  by  any  of  the  creditors,  plain- 
tit!',  as  a  condition  to  its  signing  the  same,  and  without  the  knowledge 
of  any  of  the  other  creditors  of  Harlin  Bros.,  and  without  the  knowl- 
edge of  any  of  the  parties  who  became  sureties,  demanded  that  Harlin 
Bros,  give  their  written  promise  to  pay  plaintiff  a  larger  percentage 
than  was  to  be  paid  to  the  other  creditors,  and  that  pursuant  to  this 
demand,  and  before  plaintiff  signed  the  composition  agreement,  and  as 
a  condition  to  said  signing,  Harlin  Bros,  acceded  to  the  demand,  and 
thereupon  executed  and  delivered  to  plaintiff  three  promissory  notes  , 
for  the  balance  due,  66§  per  cent  of  plaintiff's  entire  claim,  taking  back 
from  the  plaintiff  its  written  stipulation  to  discharge  and  surrender  the 
note  last  mentioned  upon  payment  of  25  per  cent  of  the  same. 

The  question  in  this  case  is,  must  this  secret  agreement  between  the 
plaintiff  creditor  and  the  defendant  debtors  be  held  to  have  discharged 
the  sureties  upon  the  notes  given  in  accordance  with  the  terms  of  the 
composition  agreement?  The  answer  to  this  question  turns,  we  think, 
upon  whether  or  not  the  composition  agreement  itself  was  rendered 
invalid  by  the  execution  of  the  secret  agreement.2 

The  duty  of  a  creditor  to  a  surety  is  thus  stated  in  Doughty  v. 
Savage : 3  — 

"It  is  a  clear  and  well-settled  principle  that  a  security  given  by  a 
surety  is  voidable  on  the  ground  of  fraud  if  there  is,  with  the  knowl- 
edge or  assent  of  the  creditor,  such  a  misrepresentation  to  or  conceal- 
ment from  the  surety  of  the  transaction  between  the  creditor  and  his 
debtor  that,  but  for  the  same  having  taken  place,  either  the  suretyship 
would  not  have  been  entered  into  at  all,  or,  being  entered  into,  the 
extent  of  the  suretj-'s  liability  might  be  thereby  increased." 

A  number  of  cases  are  cited  in  support  of  this  doctrine.  It  has  also 
been  approved  in  this  court  recently,   in  Trader's  v..  Herber.*    The 


1  Onlv  a  portion  of  the  opinion  of  the  Court  is  given.  —  Ed. 

2  This  question  the  Court  answered  in  the  affirmative.  —  Ed. 
8  68  Minn.  155.  *  67  Minn.  106. 


294  POWERS   DEY-GOODS   CO.   V.   HAELIN.  [CHAF.  i« 

remaining  inquiry  is,  would  knowledge  of  the  existence  of  the  secret 
agreement  have  been  calculated  to  materially  influence  the  sureties 
when  determining  whether  they  would  enter  into  their  contracts  of 
suretyship  on  the  composition  notes?  The  object  of  that  agreement 
was  to  release  the  debtors  from  a  portion  of  their  indebtedness,  and 
the  sureties  entered  into  their  contract  for  this  purpose,  induced  so  to 
do  by  the  representations  and  belief  that  the  debtors  were  to  be  freed 
and  released  from  any  further  liability.  In  this  they  were  deceived., 
and  through  the  concealment  of  the  plaintiff,  payee  of  the  notes,  the 
object  was  not  attained.  By  reason  of  the  fraud  it  was  within  the 
power  of  the  innocent  creditors  to  ignore  the  composition,  and  recover 
the  balance  due  upon  their  claims.  The  ability  of  the  debtors  to  meet 
their  notes,  or  to  indemnify  the  sureties,  was  hazarded  and  impaired  at 
once  by  the  contingency.  That  the  extent  of  the  sureties'  liability  and 
the  risk  they  had  assumed  were  materially  increased  is  obvious.  The 
concealment  was  a  fraud  upon  them,  and  exonerated  them  from  their 
obligations.  Order  affirmed.1 

1  In  Jungk  v.  Reed,  9  Utah,  49,  and  Jungk  v.  Holbrook  (Utah,  1897),  49  Pac.  E. 
305,  the  surety  for  the  performance  of  an  undertaking  by  one  firm  in  favor  of  another 
firm  was  exonerated  by  reason  of  the  non-disclosure  by  the  obligee  firm  that  one  X  was 
a  common  member  of  both  firms.  —  Ed. 


SECT.  XI.]  PHILLIPS    V.   FOXALL.  295 


SECTION   XI. 

Retention  of  Principal  in  Service  after  Knowledge  of  his  Dishonesty* 

PHILLIPS   v.  FOXALL. 

In  the  Queen's  Bench,  July  6,  1872. 

[Reported  in  Law  Reports,  7  Queen's  Bench,  666.] 

The  judgment  of  Cockburn,  C.  J.,  Lush  and  Quain,  JJ.,  was  de- 
livered by 

Quain,  J.1  This  is  an  action  brought  by  the  plaintiff  on  a  contract 
whereby  the  defendant  guaranteed  the  honesty  of  one  John  Smith,  a 
servant  in  the  employ  of  the  plaintiff,  to  the  extent  of  £50.  The  con- 
tract is  set  out  in  the  declaration,  and  recites  the  employment  of  Smith, 
and  that  it  was  his  duty  to  collect  money  for  the  plaintiff  and  account 
to  her  for  all  sums  of  mone}^  so  collected ;  and  that  the  plaintiff  had 
before  the  giving  of  the  guaranty  held  in  her  hands  a  sum  of  money 
belonging  to  Smith,  as  a  security  for  the  proper  performance  by  Smith 
of  his  duty,  which  sum  the  plaintiff  had  agreed  to  pay  back  to  Smith 
on  receiving  the  defendant's  guaranty.  The  declaration  then  proceeds 
to  allege  that  in  consideration  that  the  plaintiff  would  pa}' over  to  Smith 
the  money  so  held,  and  continue  him  in  the  service  of  the  plaintiff  in 
the  same  capacity  as  before,  the  defendant  guaranteed  and  promised  the 
plaintiff  to  make  good  and  be  answerable  to  her  for  any  loss,  not  ex- 
ceeding £50,  which  she  might  at  any  time  sustain  through  any  breach 
by  Smith  of  his  duty  during  the  continuance  of  such  service  ;  and  it 
alleges  a  breach,  in  the  usual  form,  that  Smith  failed  to  pay  over  sums 
of  money  to  the  amount  of  £50,  which  he  had  collected  on  behalf  of  the 
plaintiff. 

In  answer  to  this  declaration  the  defendant  divides  the  time  during 
which  the  service  lasted,  and  during  which  the  loss  was  sustained,  into 
two  periods:  first,  from  the  8th  of  June,  1869,  when  the  contract  was 
made,  to  the  20th  of  November,  1869  ;  and,  secondly,  from  the  last- 
mentioned  day  to  the  4th  of  April,  1871,  when  the  service  termi- 
nated. As  to  the  first  period,  the  defendant  admits  his  liability  for 
loss  incurred  by  the  acts  of  the  servant  during  that  period,  and  he 
has  paid  £10  into  court,  which  he  alleges  is  sufficient  to  reimburse  the 
plaintiff  for  such  loss.  As  to  the  second  period,  he  pleads  a  plea  on 
equitable  grounds,  which  is  to  this  effect :  that  the  servant  had  been 
guilty  of  defalcations  in  the  course  of  his  service  between  the  8th  of 
June  and  the  20th  of  November,  1869,  which  the  plaintiff  had  discovered 
on  the  latter  day,  and  that  the  plaintiff  then,  without  communicating 

1  Only  the  opinion  delivered  by  Quain,  J.,  is  given.  —  Ed. 


296  PHILLIPS    V.   FOXALL.  [CHAP.  IL 

such  discovery  to  the  defendant,  and  while  the  defendant  was  ignorant 
of  the  servant's  dishonesty,  agreed  with  the  servant  to  continue  him 
in  her  emplo}'  as  before,  and  the  servant  on  the  other  hand  agreed 
to  pa}*  to  the  plaintiff  £3  a  month  on  account  of  the  previous  defalca- 
tions. The  plea  then  alleges  that  the  servant  was  continued  in  the 
plaintiff's  service  accordingly  on  these  terms.  The  plea  then  goes  on 
to  state  that  the  loss  in  respect  of  which  the  plea  is  pleaded  was  occa- 
sioned by  acts  of  dishonesty  committed  by  the  servant  during  the  con- 
tinuance of  the  service,  as  so  agreed  on,  after  the  20th  of  November, 
and  between  that  time  and  the  termination  of  the  service,  the  defendant 
during  that  time  being  wholly  ignorant  of  the  previous  defalcations  of 
the  servant ;  and  that  by  reason  of  the  plaintiff  not  having  given  the 
defendant  notice  of  such  defalcations  he  was  prevented  from  revoking 
the  guaranty. 

To  this  plea  the  plaintiff  has  demurred,  and  the  question  argued  be- 
fore us  was  whether  the  plea  afforded  a  good  defence  to  so  much  of  the 
cause  of  action  as  it  was  pleaded  to  ;  namely,  the  loss  occasioned  by  the 
defalcations  of  the  servant  committed  between  the  20th  of  November 
and  the  end  of  the  service. 

We  are  of  opinion  that  the  plea  is  good. 

"We  think  that  in  the  case  of  a  continuing  guaranty  for  the  honesty 
of  a  servant,  if  the  master  discovers  that  the  servant  has  been  guilty  of 
acts  of  dishonesty  in  the  course  of  the  service  to  which  the  guaranty 
relates,  and  if  instead  of  dismissing  the  servant,  as  he  may  do  at  once 
and  without  notice,  he  chooses  to  continue  in  his  employ  a  dishonest 
servant,  without  the  knowledge  and  consent  of  the  surety,  express  or 
implied,  he  cannot  afterwards  have  recourse  to  the  surety  to  make  good 
any  loss  which  may  arise  from  the  dishonest}7  of  the  servant  during  the 
subsequent  service. 

Suppose  that  the  state  of  facts,  which  has  arisen  here  in  the  course 
of  the  service,  had  existed  before  or  at  the  time  when  the  guaranty 
was  given,  —  in  other  words,  that  the  servant  had  previously  committed 
defalcations  in  the  plaintiff's  service,  and  had  agreed  to  repay  them  at 
the  rate  of  £3  a  month,  —  and  that  this  fact  had  been  concealed  b}-  the 
master  from  the  defendant  when  he  gave  the  guarant}',  it  cannot,  we 
think,  be  doubted  that  a  fraud  would  have  been  committed  on  the 
surety  which  would  have  relieved  him  from  all  liability  on  the  con- 
tract. This  we  think  is  established  by  the  judgments  in  the  House 
of  Lords  in  Smith  v.  Bank  of  Scotland,  and  in  Eailton  v.  Mathews. 
In  the  former  case  Lord  Eldon  sajs,  "  If  a  man  found  that  his  agent 
had  betrayed  his  trust,  that  he  owed  him  a  sum  of  money,  or  that  it 
was  likely  he  was  in  his  debt ;  if  under  such  circumstances  he  required 
sureties  for  his  fidelity,  holding  him  out  as  a  trustwortlvy  person,  know- 
ing or  having  ground  to  believe  that  he  was  not  so,  then  it  was  agree- 
able to  the  doctrines  of  equity,  at  least  in  England,  that  no  one  should 
be  permitted  to  take  advantage  of  such  conduct,  even  with  a  view  to 
security  against  future  transactions  of  the  agent."    In  the  latter  case 


SECT.  XI.]  PHILLIPS   V.    FOXALL.  297 

Lord  Cottenham  cites  with  approbation  the  opinion  of  Lord  Eldon  in 
Smith  v.  Bank  of  Scotland;  and  Lord  Campbell  adds,  k'If  the  de- 
fenders had  facts  within  their  knowledge  which  it  was  material  the 
sureties  should  be  acquainted  with,  and  which  the  defenders  did  not 
disclose,  in  my  opinion  the  concealment  of  those  facts  —  the  undue  con- 
cealment of  those  facts  —  discharges  the  surety." 

We  do  not  think  that  the  principles  of  law  as  laid  down  in  these  cases 
have  been  materially  altered  by  the  decision  of  the  House  of  Lords  in 
the  subsequent  case  of  Hamilton  v.  Watson,1  or  by  that  of  the  Court  of 
Exchequer  in  the  North  British  Insurance  Co.  v.  Lloyd.  In  the  former 
case  the  principle  above  mentioned  was  not  denied,  but  the  question 
that  arose  was  as  to  its  application  to  the  facts  of  that  particular  case ; 
and  Lord  Campbell  states  that  the  criterion  for  the  necessity  of  volun- 
tarily disclosing  any  particular  fact  in  cases  of  this  kind  may  be,  whether 
the  fact  not  communicated  was  one  that  could  "  not  naturally  be  ex- 
pected to  have  taken  place  between  the  parties  who  are  concerned  in 
the  transaction."  In  North  British  Insurance  Co.  v.  Lloyd,  the  Court 
of  Exchequer  held  that  the  rule  as  to  the  effect  of  concealment  in  ma- 
rine insurance  cases  did  not  apply  to  contracts  of  suretyship,  and  that 
in  the  latter  cases  the  concealment  must  be  fraudulent  in  order  to  avoid 
the  contract.  In  Lee  v.  Jones,  the  majority  of  the  judges  in  the  Ex- 
chequer Chamber  held  that  a  concealment  by  the  creditor,  that  at  the 
time  of  the  contract  the  principal  debtor  was  already  indebted  to  the 
creditor  in  a  considerable  amount, —  of  which  the  surety  was  ignorant, — 
was  evidence  to  go  to  the  jury  of  such  a  fraud  on  the  surety  as  would 
discharge  him  from  liability.  It  must  depend  (as  observed  by  Black- 
burn, J.,  in  the  case  last  cited)  "upon  the  nature  of  the  transaction  in 
every  case,  whether  the  fact  not  disclosed  is  such  that  it  is  impliedly 
represented  not  to  exist."  We  cannot  doubt  but  that  previous  acts  of 
dishonesty  by  the  servant  in  the  same  service,  known  to  the  master, 
would  be  such  a  fact,  and  if  concealed  from  the  surety  would  avoid  the 
contract.     Vide  Story's  Equity  Jurisprudence,  vol.  i.  §§215  and  324. 

If,  therefore,  it  is  correct,  as  we  think  it  is  on  these  authorities,  to 
say  that  such  a  concealment  as  is  here  pleaded,  if  it  had  been  practised 
at  the  time  when  the  contract  was  first  entered  into,  would  have  dis- 
charged the  surety,  we  think  that  in  the  case  of  a  continuing  guarant}7 
a  similar  concealment  made  during  the  progress  of  the  contract  ought 
to  have  a  similar  effect  as  regards  the  future  liability  of  the  surety  un- 
less his  assent  has  been  obtained,  after  knowledge  of  the  dishonesty, 
that  his  guaranty  should  hold  good  during  the  subsequent  service. 
One  of  the  reasons  usually  given  for  holding  that  such  a  concealment 
as  we  are  here  considering  would  discharge  the  suret}'  from  his  obliga- 
tions is,  that  it  is  only  reasonable  to  suppose  that  such  a  fact,  if  known 
to  him,  must  necessariry  have  influenced  his  judgment  as  to  whether  he 
would  enter  into  the  contract  or  not ;  and  in  the  same  manner  it  seems 
to  us  equally  reasonable  to  suppose  that  it  never  could  have  entered 

i  12  CI.  &  F.  109. 


298  PHILLIPS   V.   FOXALL.  [CHAP.  IL 

into  the  contemplation  of  the  parties  that,  after  the  servant's  dishonesty 
in  the  service  had  been  discovered,  the  guaranty  should  continue  to 
apply  to  his  future  conduct,  when  the  master  chose  for  his  own  purposes 
to  continue  the  servant  in  his  employ,  without  the  knowledge  or  assent 
of  the  surety.  If  the  obligation  of  the  surety  is  continuing,  we  think 
the  obligation  of  the  creditor  is  equally  so,  and  that  the  representation 
and  understanding  on  which  the  contract  was  originally  founded  con 
tinue  to  apply  to  it  during  its  continuance  and  until  its  termination. 

If  the  guaranty  at  its  inception  was  founded,  as  suggested  by  Lord 
Eldon  in  Smith  v.  Bank  of  Scotland,  on  the  trustworthiness  of  the  ser- 
vant, so  far  as  that  was  known  to  both  parties,  as  soon  as  his  dishonesty 
is  discovered  and  becomes  known  to  the  master  the  whole  foundation 
for  the  continuance  of  the  contract,  as  regards  the  surety,  fails  ;  and  it 
seems  to  us  in  accordance  with  the  plainest  principles  of  equity  and  fair 
dealing  that  the  master  should,  on  making  such  discovery,  either  dis- 
miss the  servant,  or,  if  he  chooses  to  continue  him  in  his  employ  without 
the  knowledge  or  assent  of  the  surety,  that  he  must  himself  stand  the 
risk  of  loss  arising  from  any  future  dishonest}-.  "It  is  the  clearest  and 
most  evident  equity  "  (says  Lord  Loughborough,  in  Rees  v.  Berring- 
ton  l)  "  not  to  cany  on  any  transaction  without  the  knowledge  of  him 
(the  surety)  who  must  necessarily  have  a  concern  in  eveiy  transaction 
with  the  principal  debtor.  You  cannot  keep  him  bound  and  transact  his 
affairs  (for  they  are  as  much  his  as  your  own)  without  consulting  him. 
You  must  let  him  judge  whether  he  will  give  that  indulgence  contrary  to 
the  nature  of  his  engagement."  Thus,  in  the  present  case  the  conduct 
of  the  master  in  retaining  the  servant  in  his  employ,  when  he  might 
have  discharged  him  for  dishonest}-,  seems,  in  the  words  of  Lord 
Loughborough,  an  indulgence  granted  to  the  servant  without  the  as- 
sent of  the  surety,  and  contrary  to  the  nature  of  his  engagement.  The 
time  at  which  the  surety  will  be  discharged  from  further  liability  in  cases 
of  this  kind  will  vary  according  to  the  circumstances  of  each  case  ;  but 
we  intend  our  judgment  to  apply  only  to  cases  like  the  one  now  before 
the  Court,  where  the  master,  having  the  power  of  at  once  discharging 
the  servant  for  dishonest}*,  deliberately  continues  him  in  his  service 
after  he  becomes  aware  of  the  dishonesty,  and  without  the  assent  or 
knowledge  of  the  surety. 

No  case  directly  in  point,  either  in  favor  of  this  plea  or  against  it,  has 
been  cited  before  us.  In  Peel  v.  Tatlock,2  a  question  arose  how  far  the 
concealment  of  the  servant's  embezzlement  for  three  years  after  the  ter- 
mination of  the  service  would  affect  the  liability  of  the  surety.  No  de- 
cision was,  however,  given  on  that  point,  and  the  case  contains  only  a 
dictum  of  Eyre,  C.  J.,  that  an  industrious  (by  which  we  presume  he  meant 
an  intentional  or  fraudulent)  concealment  might  have  an  effect  on  the 
liability  of  the  guarantor.  In  Smith  v.  Bank  of  Scotland  3  there  is  an 
observation  of  Lord  Redesdale,  made  in  the  course  of  the  argument, 

1  2  Ves.  540,  543.  2  1  B.  &  P.  419,  423  ;  and  see  p.  421. 

3  1  Dow,  at  p.  287. 


SECT.  XI.]  PHILLIPS    V.    FOXALL.  299 

which  has  a  closer  bearing  on  the  present  question.  In  that  case 
Paterson,  the  bank  agent,  seems  to  have  given  security  to  the  bank, 
apparently  at  the  comminencement  of  his  service ;  afterwards,  and 
while  the  service  continued,  and  after  his  accounts  had  been  inspected 
and  reported  on  by  an  oilicer  of  the  bank,  he  was  called  on  to  give  ad- 
ditional security,  and  Smith,  the  appellant,  gave  a  bond  as  such  addi- 
tional security.  Smith  raised  an  action  of  reduction  of  this  bond,  and 
in  that  action  insisted  on  his  right  to  inspect  the  above  report  of  the 
officer  of  the  bank.  On  this  Lord  Redesdale  observed:  "Supposing 
the  report  showed  that  Paterson  was  no  longer  trustworthy,  and  the 
bank  had  trusted  him  notwithstanding,  upon  decided  cases  the  prior 
security  would  be  discharged  from  all  the  consequences  of  subsequent 
transactions,  as  contrary  to  the  faith  of  the  contract.  And  then  it  might 
be  a  question  what  bearing  this  circumstance  might  have  on  the  new 
sureties."  The  cases  to  which  Lord  Redesdale  alludes  are  not  men- 
tioned, but  it  seems  pretty  clearly  to  have  been  his  opinion  that  if  the 
master  discovers  the  dishonesty  of  his  servant  during  the  service,  and 
afterwards  continues  to  trust  him  notwithstanding,  the  surety  for  the 
servant  would  be  discharged  from  all  liability  for  subsequent  losses.  In 
the  case  of  Shepherd  v.  Beecher,1  before  Lord  Chancellor  King,  a  father, 
on  binding  his  son  apprentice,  gave  a  bond  for  his  fidelity.  Some  years 
afterwards  the  apprentice  embezzled  £200  of  the  master's  money, 
of  which  the  master  gave  notice  to  the  father,  and  demanded  the 
mone}'.  The  father  paid  the  amount,  but  sent  a  letter  requesting 
the  master  not  to  trust  the  apprentice  with  cash  in  the  future,  or  at 
least  to  do  so  very  sparingly.  The  apprentice  continued  afterwards 
with  the  master  for  several  years,  and  committed  further  embezzle- 
ments, of  which  the  father  had  no  notice  until  two  years  after  the 
expiration  of  the  apprenticeship,  when  the  bond  was  put  in  suit.  The 
Lord  Chancellor  held  that  the  father  continued  bound,  stating  appar- 
ently as  the  ground  of  his  judgment  "  that  the  father  ought  not  to 
have  satisfied  himself  with  sending  the  letter  and  taking  no  further 
care  of  the  matter,  but  should  have  endeavored  to  make  some  end  with 
the  master,  and  to  have  got  up  the  bond."  This  decision  seems  to  us  to 
rest  on  the  fact  that  the  father,  instead  of  taking  measures  to  have  the 
bond  delivered  up,  as  he  might  have  done,  assented  to  continue  bound 
after  he  had  notice  of  the  first  embezzlement,  and  that  the  other  em- 
bezzlements were  not  actually  ascertained  until  after  the  expiration  of 
the  apprenticeship. 

It  is  well  established  that  a  surety,  after  he  has  been  discharged 
from  his  contract  by  the  act  of  the  creditor,  may  revive  his  liability 
by  a  subsequent  promise  or  assent.  Mayhew  v.  Crickett ; 2  Smith  v. 
Winter.3  In  the  present  plea  it  is  alleged  as  a  conclusion  of  law  that, 
by  reason  of  the  concealment,  the  defendant  was  prevented  from  re- 
voking the  guarant}-  and  compelling  Smith  to  pay  the  money  for  which 

i  2  P.  Wms.  288,  290.  2  2  Swan.  185.  3  4  M.  &  W.  454. 


300  PHILLIPS    V.   FOXALL.  [CHAP.  IL 

the  defendant  was  liable.  The  discharge  of  the  suret}-  in  the  present 
case  seems  to  us  to  arise  rather  out  of  the  nature  and  equity  of  the  con- 
tract between  the  parties  than  upon  any  assumed  right  of  revocation. 
We  think  the  surety  is  discharged  unless  he  assents  or  agrees,  after  he 
has  had  knowledge  of  the  dishonesty,  that  the  guaranty  shall  hold 
good  for  the  subsequent  service  ;  but,  as  a  revocation  of  the  guaranty 
as  soon  as  the  dishonesty  has  come  to  his  knowledge  will  be  the  best 
evidence  of  dissent,  whether  his  discharge  from  the  contract  is  founded 
on  express  revocation,  or  want  of  assent  after  notice  of  the  dishonesty, 
seems  rather  a  question  of  words  than  of  substance. 

In  Parsons  on  Contracts,  vol.  ii.  p.  31,  the  rule  as  to  the  right  to  re- 
voke a  guaranty  like  the  present  is  thus  stated  :  "If  the  guaranty  be  to 
indemnify  for  misconduct  of  an  officer  or  servant,  the  promise  is  revo- 
cable, provided  the  circumstances  are  such  that,  when  it  is  revoked,  the 
promisee  may  dismiss  the  servant  without  injury  to  himself  on  his  fail- 
ure to  provide  new  and  adequate  sureties."  No  judicial  authority  is 
cited  in  support  of  this  proposition,  and  therefore  it  can  only  be  cited  as 
the  opinion  of  the  writer.  It  will  be  seen  that  he  confines  the  right  of 
the  surety  to  revoke  his  guaranty  to  those  cases  where  the  master  may, 
on  the  revocation  being  made,  dismiss  the  servant  without  injury  to 
himself.  The  present  case  is  distinctly  within  the  limitation,  and  there 
can  be  no  doubt  but  that  the  right  of  the  master  at  once  to  discharge 
the  servant  on  discovering  his  dishonesty,  and  so  place  himself  in 
statu  quo,  is  a  most  material  ingredient  in  the  consideration  of  the 
question. 

Since  the  argument  of  this  case,  the  judgment  of  Malins,  V.  C,  in  Bur- 
gess v.  Eve,1  has  been  published.  The  chief  question  in  that  case  was 
whether  the  contract  before  the  Court  was  or  was  not  a  continuing  guar- 
anty ;  but  in  the  course  of  his  judgment  the  Vice-chancellor  expresses 
an  opinion  which  directly  applies  to  the  present  case.  "  My  opinion 
is  "  (he  says),  "  and  I  have  no  hesitation  in  expressing  it,  that  a  person 
who  gives  a  guaranty  would  have  a  right  to  say  to  the  person  taking  it, 
'  You  will  continue  at  your  own  peril  to  employ  the  person  on  whose 
behalf  I  gave  the  guarant}','  provided  that  the  clerk  or  other  person 
has  been  guilty  of  embezzlement  or  gross  misconduct,  or  has  turned  out 
to  be  unworthy  of  the  confidence  reposed  in  him  b}r  the  persons  giving 
that  guaranty  for  him.  If  the  employer  under  such  circumstances  re- 
fused to  give  the  guaranty  up,  the  person  giving  it  would  have  a  right 
to  file  a  bill  in  this  court,  and  in  my  opinion  would  succeed  in  the  con- 
test, because  the  Court  would  direct  the  bond  to  be  delivered  up  to  be 
cancelled."  And  the  same  opinion  is  repeated  in  other  parts  of  his 
judgment.  It  may  be  said  that  this  opinion  was  not  necessary  for  the 
decision  of  the  case  before  the  Vice-Chancellor,  and  is  not,  therefore,  a 
binding  authority.  That  may  be  so.  but  the  opinion  seems  to  us  to  be 
founded  on  equity  and  good  sense,  and  as  such  we  adopt  it  as  directly 

1  Law  Eep.  13  Eq.  450,  458. 


SECT.  XI.]  PHILLIPS   V.   FOXALL.  301 

applicable  to  the  case  now  before  us.     For  these  reasons  we  think  that 
the  plea  is  good,  and  that  the  defendant  is  entitled  to  our  judgment.1 

1  Blackburn,  J.,  concurred,  but  upon  somewhat  different  reasoning  from  that  of 
the  other  judges.  The  following  extract  gives  the  gist  of  his  opinion.  "  But  there  is 
a  ground  on  which  I  think  he  may  have  a  ground  for  being  discharged  in  equity,  which 
I  will  now  state.  A  surety,  as  soon  as  his  principal  makes  default,  has  a  right  in  equity 
to  require  the  creditor  to  use  for  his  benefit  all  his  remedies  against  the  debtor  ;  and 
as  a  consequence,  if  the  creditor  has  by  any  act  of  his  deprived  the  surety  of  the  benefit 
of  anv  of  those  remedies,  the  surety  is  discharged.  The  authorities  for  this,  as  far  as 
known  to  me,  are  collected  in  the  judgment  to  Bailey  v.  Edwards,  4  B.  &  S.  770;  34  L.J. 
(Q.  B.)  41 ;  and  this  equitable  principle  has,  at  least  in  the  case  where  time  has  been 
given  to  the  principal  without  the  consent  of  the  surety,  been  adopted  to  some  extent 
at  least,  although  whether  to  its  full  extent  has  been  doubted.  See  Pooley  v.  Harradine, 
7  E.  &  B.  431 ;  26  L.  J.  (Q.  B.)  156.  But  it  is  not  now  material  to  decide  that.  Now 
the  law  gives  the  master  the  right  to  terminate  the  employment  of  a  servant  on  his 
discovering  that  the  servant  is  guilty  of  fraud.  He  is  not  bound  to  dismiss  him,  and  if 
he  elects,  after  knowledge  of  the  fraud,  to  continue  him  in  his  service,  he  cannot  at  any 
subsequent  time  dismiss  him  on  account  of  that  which  he  has  waived  or  condoned.  This 
right  the  master  may  use  for  his  own  protection.  If  this  right  to  terminate  the  em- 
ployment is  one  of  those  remedies  which  the  surety  has  a  right  to  require  to  have  ex- 
ercised for  the  surety's  protection,  it  seems  to  follow  that,  by  waiving  the  forfeiture  and 
continuing  the  employment  without  consulting  the  surety,  the  principal  has  discharged 
him." 

The  doctrine  of  the  principal  case  obtains  generally.  Saint  v.  Wheeler,  95  Ala.  362 ; 
Roberts  v.  Donovan.  70  Cal.  108 ;  Rapp  v.  Phoenix  Co.,  1 13  HI.  390;  Donnell  Co.  v.  Jones, 
66  111.  Ap.  327  (semble) ;  La  Rose  v.  Logansport  Bank,  102  Ind.  332  (sembJe) ;  Com- 
mercial Co.  v.  Scott,  81  Ky.  540;  Lake  v.  Thomas,  84  Md.  608  (semble);  Colby  Co. 
v.  Coon  (Michigan,  1898),  74  N.  W.  R.  519  ;  Newark  v.  Stout,  52  N.  J.  35  (semble); 
Enright  v.  Falvey,  L.  R.  4  Ir.  397  (but  rule  not  applicable  unless  the  creditor  has  the 
power  of  removing  the  principal  obligor:  Lawder  v.  Lawder,  Ir.  R.  7  C.  L.  57 ;  Byrne  v. 
Muzio,  L.  R.  8  Ir.  396)  ;  Corporation  v.  McElroy,  9  Ont.  580. 

But  see,  contra,  Taylor  v.  Bank  of  Kentucky,  2  J.  J.  Marsh.  564  ;  Pittsburg  Co.  v. 
Shaeffer,  59  Pa.  350;  Bank  v.  Tumbler  Co.,  172  Pa.  609,  626  (semble). 

Reprehensible  Ignorance  of  Principal's  Dishonesty.  If  the  dishonesty  of  the  principal 
is  not  known  to  the  obligee,  the  surety  continues  liable  for  subsequent  defaults  of  the 
principal.  He  cannot  exonerate  himself  by  showing  gross  neglect  on  the  part  of  the 
obligee  in  not  discovering  the  dishonesty  of  the  principal.  Freliughuysen  v.  Baldwin, 
16  Fed.  R.  452  ;  Phillips  v.  Bossard,  35  Fed.  R.  99  ;  Planters'  Bank  v.  Lamkin,  R.  M 
Charlt.  29;  Colby  Co.  v.  Coon  (Michigan,  1898),  74  N.  W.  R.  519 ;  Newark  v.  Stout, 
52  N.  J.  35 ;  Atlas  Bank  v.  Brownell,  9  R.  I.  168 ;  Enright  v.  Falvey,  L.  R.  4  Ir  397. 

Immorality  Independent  of  Suretyship  Transaction.  Retention  by  the  obligee  of  the 
principal  after  knowledge  of  his  immorality  in  matters  foreign  to  the  subject-mattei 
of  the  suretyship  does  not  release  the  surety.  La  Rose  v.  Logansport  Bank,  102  lad. 
332.  —  Ed. 


■0 


302  WATEBTOWN    FIRE    IXS.    CO.    V.    SIMMONS.  [CHAP.  II 


WATERTOWN   FIRE   INSURANCE   CO.  v.  G.  W.  SIMMONS 

and  Others. 

In  the  Supreme  Judicial  Court,  Massachusetts,  April  6,  1881. 

[Reported  in  131   Massachusetts  Reports,  85.] 

Morton,  J.  This  is  an  action  against  the  defendants  as  sureties 
upon  a  bond  given  by  George  L.  Dix,  conditioned  for  the  faithful  per- 
formance of  his  duties  as  agent  of  the  plaintiff,  "  according  to  the  by- 
laws, rules,  and  regulations  of  said  company." 

One  of  the  by-laws  of  the  company  required  that  the  agents  should 
render  monthly  accounts,  and  should  pay  each  month  the  balance  due 
to  the  company.  It  appeared  that  Dix  rendered  his  monthly  accounts 
regularly,  but  that  in  December,  1877,  he  failed  to  pa}T  the  whole  bal- 
ance due  by  him  ;  and  that  thereafter  his  indebtedness  to  the  company 
increased  from  month  to  month  until  his  death  in  March,  1879,  when 
ne  owed  a  balance  larger  than  the  penal  sum  of  the  bond.  The  plain- 
tiff did  not  notify  the  sureties  of  his  default  until  after  his  death.  The 
defendants  contend  that  they  were  discharged  from  their  liability  as 
sureties  by  these  facts. 

It  is  too  well  settled  to  be  questioned,  that  the  delay  of  the  plaintiff 
to  colleet  the  monthly  payments  due  by  Dix  would  not  of  itself  dis- 
charge the  sureties.  Mere  delay  by  the  creditor  to  proceed  against  the 
debtor,  unaccompanied  b}*  fraud  or  an  agreement  to  give  time,  does 
not  discharge  the  sureties.  Hunt  v.  Bridgham.1  The  defendants 
contend  that  the  by-law,  being  referred  to  in  the  bond,  "amounts 
to  a  contract  between  the  plaintiff  and  the  sureties  that  the  plaintiff 
will  not  knowingly  permit  the  agent  to  depart  from  the  duty  there 
recited."  The  sole  object  of  the  bond  was  to  secure  the  performance 
b}7  Dix  of  his  duties  under  the  by-laws,  and  they  are  referred  to  only 
for  the  purpose  of  defining  these  duties.  The}'  cannot  be  construed  as 
importing  a  stipulation  with  the  sureties  that  the  plaintiff  shall  cause 
them  to  be  observed  and  kept,  under  the  penalty  of  discharging  the 
sureties.  Such  by-laws  are  directory  merely,  and  a  failure  to  observe 
them  by  the  plaintiff  or  its  managing  officers  will  not  discharge  the 
sureties.     Amherst  Bank  v.  Root ;  2  Locke  v.  United  States.3 

But  the  principal  ground  of  defence  is  that  it  was  the  duty  of  the 
plaintiff,  within  a  reasonable  time,  to  notify  the  sureties  of  any  default 
of  the  agent,  and  that  the  failure  to  do  so  was  laches  which  discharged 
them.  It  may  be  questioned  whether,  if  there  was  negligence  of  the 
other  officers  or  agents  amounting  to  laches,  the  corporation  would  be 
affected  by  it,  as  the  object  of  the  bond  was  to  give  the  stockholders 
the  double  security  of  the  supervision  of  its  officers  and  the  obligation 
of  the  sureties.     Amherst  Bank  v.  Root,  ubi  supra.     But  treating  this 

1  2  Pick.  581.  2  2  Met.  522.  8  3  Mason,  446. 


SECT.  XI.]  WA.TERTOWN    FIRE    INS.    CO.    V.   SIMMONS.  30 


Q 


case  as  if  it  were  the  case  of  an  individual  obligee,  we  are  of  opinion 
that  there  is  no  rule  of  law  which  makes  it  a  duty  which  the  creditor, 
under  the  circumstances  of  this  case,  owes  to  the  surety,  either  to  dis- 
miss its  agent  or  to  notify  the  surety  of  his  default.  If  a  creditor  does 
any  act  which  injuriously  affects  the  situation  and  rights  of  the  surety, 
such  as  giving  time  to  the  debtor,  or  relinquishing  security  which  he 
holds  for  the  debt,  he  discharges  the  surety  either  in  whole  ox  pro  tantu. 
But  the  creditor  owes  no  duty  of  active  diligence  to  take  care  of  the 
interest  of  the  surety.  It  is  the  business  of  the  surety  to  see  that  his 
principal  performs  the  duty  which  he  has  guaranteed,  and  not  that  of 
the  creditor.  Wright  v.  Simpson  ; 1  Adams  Bank  v.  Anthony  ; 2  Taft 
v.  Gifford;3  Tapley  v.  Martin.4  The  surety  is  bound  to  inquire  for 
himself;  and  cannot  complain  that  the  creditor  does  not  notify  him  of 
the  state  of  the  accounts  between  him  and  his  agent,  for  whom  the 
surety  is  liable.  Mere  inaction  of  the  creditor  will  not  discharge  the 
surety  unless  it  amounts  to  fraud  or  concealment. 

The  defendants  rely  upon  the  cases  of  Phillips  v.  Foxall,  Enright  v. 
Falvey,5  and  Sanderson  /;.  Aston.  In  the  first  two  cases  it  was  held 
that,  in  the  case  of  a  continuing  guaranty  for  the  honesty  of  a  servant, 
if  the  master  discovers  acts  of  dishonesty  in  the  servant  and  afterwards 
continues  him  in  his  service  without  notice  to  the  sureties,  the  latter 
are  discharged.  We  have  no  occasion  to  discuss  these  cases  further  than 
to  say  that  the}'  have  no  application  to  the  case  before  us,  because  it  is 
not  contended  that  the  agent  Dix,  for  whom  the  defendants  were  bound, 
was  guilty  of  an}'  defalcations  or  other  dishonest  or  fraudulent  conduct. 
In  Sanderson  v.  Aston,  the  declaration  was  on  a  bond  guaranteeing 
that  one  J.,  a  clerk  of  the  plaintiff,  should  pay  over  all  money  he  re- 
ceived on  the  plaintiff's  account ;  the  plea  was,  that,  before  the  defaults 
sued  for,  J.  had  committed  other  defaults  of  the  same  kind,  and  the 
plaintiff,  knowing  this,  continued  to  employ  him  without  notice  to  the 
defendant.  On  demurrer,  this  plea  was  held  good.  Chief  Baron  Kelly, 
in  delivering  his  opinion,  says,  "  The  case  of  Phillips  v.  Foxall  clearly 
shows  that,  if  any  defaults  or  breaches  of  duty,  whether  by  dishonesty 
or  not,  have  been  committed  by  the  employed  against  the  employer, 
under  such  circumstances  that  the  employer  might  have  dismissed  the 
employed,  the  surety  is  entitled  to  call  on  the  employer  to  dismiss 
him."  This  decision  does  not  seem  to  be  sustained  by  Phillips  v.  Fox- 
all, which  was  a  case  of  criminal  embezzlement  by  the  servant,  and  we 
are  not  aware  of  any  other  decisions  sustaining  it,  at  least  in  this 
country.  Its  effect  would  be  to  impose  upon  the  creditors  the  duty  of 
notifying  the  sureties  whenever  there  are  any  arrears  in  the  accounts 
of  the  agent  or  servant  for  whom  the}*  were  bound,  from  whatever 
cause  arising.  We  do  not  think  that  any  such  active  duty  of  diligence 
to  protect  the  sureties  grows  out  of  the  relations  of  the  parties,  and  are 

1  6  Ves.  714.  2  18  Pick.  238.  3  13  Met  187. 

*  116  Mass.  275.  MLR.  Ir.  397. 


304  AYATERTOWN    FIRE    INS.    CO.    V.    SIMMONS.  [CHAP.  II. 

not  able  to  agree  with  the  decision  in  Sanderson  v.  Aston,  regarding  it 
as  in  conflict  with  the  general  current  of  authorities. 

This  question  was  considered  in  Atlantic  &  Pacific  Telegraph  Co.  v. 
Barnes,1  and  it  was  held  that  continuing  an  agent  in  service  after  a 
default  is  known,  without  notice  to  the  surety,  does  not  discharge  him, 
no  fraud  or  dishonesty  being  shown.     See  also  McKecknie  v.  Ward.2 

Upon  the  whole  case,  therefore,  we  are  of  opinion  that,  upon  the 
facts  as  stated  in  the  bill  of  exceptions,  the  sureties  were  not  discharged  ; 
and  that  the  Superior  Court  rightly  found  for  the  plaintiff. 

^Exceptions  overruled.3 

I  64  N.  Y.  385.  2  58  N.  Y.  541. 

8  Wilkersou  v.  Crescent  Co.,  64  Ark.  80 ;  Charlotte  Co.  v.  Gow,  59  Ga.  685  ;  Home 
Co.  v.  Hoi  way,  55  Iowa,  571 ;  Phoenix  Co.  v.  Findley,  59  Iowa,  591  ;  .ZEtna  Co.  v. 
Fowler,  108  Mich.  557;  Lancashire  Co.  v.  Callahan,  68  Minn.  277;  Manchester  Co.  v. 
Redfield  (Minnesota,  1897),  71  N.  W.  R.  709  ;  Atlantic  Co.  v.  Barnes,  64  N.  Y.  385  ; 
Wilmington  Co.  v.  Ling,  18  S.  Ca.  116;  Richmond  Co.  v.  Kasey,  30  Grat.  218,  A ccord. 

Knowledge  of  misconduct  outside  of  subject-matter  of  the  suretyship  need  not  be 
communicated.     La  Rose  v.  Logausport  Bank,  102  Ind.  332.  —  Ed. 


SECT.  XII.]  WARD   V.   HACKETT.  305 

SECTION  XII. 

Fraud  or  other  Misconduct  of  Principal  towards  Surety. 

ALBERT   L.  WARD   v.   SAMUEL   HACKETT  and  Others. 

In  the  Supreme  Court,  Minnesota,  January  10,  1883. 

[Reported  in  30  Minnesota  Reports,  150.] 

Mitchell,  J.1  Defendant  Elwis  signed  a  negotiable  promissory  note 
as  surety  for  defendant  Hackett,  and  delivered  it  to  Hackett,  upon  con- 
dition that  he  should  not  deliver  it  to  plaintiff,  the  payee,  until  he  pro- 
cured the  signature  of  one  Johnson  as  co-surety.  Hackett  failed  to  get 
Johnson's  signature,  but,  without  the  knowledge  or  consent  of  Elwis, 
got  defendant  Rice  to  sign  it,  and  then  delivered  it  to  plaintiff,  who 
took  it  in  the  ordinary  course  of  business  for  a  valuable  consideration, 
without  any  notice  of  the  facts  hereinbefore  stated  and  now  set  up  by 
way  of  defence.  Elwis  now  claims  that  he  is  not  liable,  first,  because 
the  note  was  delivered  without  Johnson's  signature,  contrary  to  the 
condition  upon  which  he  signed  it  and  left  it  with  Hackett;  second, 
that  the  addition  of  the  name  of  Rice  to  the  note,  without  his  knowl- 
edge or  consent,  amounted  to  a  material  alteration  of  the  instrument, 
which  discharged  him.  These  two  questions  we  will  consider  in  the 
order  named. 

1.  The  form  of  the  note,  when  Elwis  signed  it  and  gave  it  to  Hack- 
ett, was  such  that  it  was  apparently  complete.  There  was  nothing  on 
the  face  of  the  paper  indicating  that  any  other  co-surety  was  expected 
to  become  a  party  to  the  instrument,  and  no  fact  was  brought  to  the 
knowledge  of  the  plaintiff,  before  he  accepted  the  note,  calculated  to 
put  him  on  his  guard,  or  which  should  have  induced  inquiry.  Elwis  by 
his  acts  clothed  Hackett  with  apparent  authority  to  launch  the  note  as 
it  then  was.  The  surety  having  thus  placed  the  instrument,  perfect  on 
its  face,  in  the  hands  of  the  proper  person  to  pass  it  to  the  payee,  the 
law  justly  holds  that,  as  against  the  pa3ree  who  takes  it  in  good  faith, 
for  value,  without  any  notice  of  this  condition,  the  apparent  authority 
with  which  the  suret}'  has  clothed  his  principal  shall  be  regarded  as  the 
real  authority,  and  in  such  case  the  condition  shall  not  avail  the  suret}'. 
This  is  too  well  settled  to  require  discussion.2  Brandt  on  Suret3'ship, 
§  354,  and  cases  cited. 

2.  The  second  point  is  more  important.     It  has  been  very  fully  and 

1  Only  the  opinion  of  the  Court  is  given.  —  P^d. 

2  Dair  v.  United  States,  16  Wall.  1;  Butler  v.  United  States,  21  Wall.  272;  State 
i>.  Churchill,  48  Ark.  426;  Tidhall  v.  Halley,  48  Cal.  610;  Byers  v.  Gilmore  (Colorado, 
1897),  50  Pac.  R.  370;  Bonner  v.  Nelson,  57  Ga.  433;  Clark  v.  Bryce,  64  Ga.  486; 
Mathis  v.  Morgan,  72  Ga.  517  (but  see  Crawford  v.  Foster,  6  Ga.  202;  Cleghorn  v. 
Robison,  8  Ga.  559;  and  Riley  v.  Johnson,  10  Ga.  414);  Comstock  v.  Gage,  91  111.  328; 

2« 


306  WAKD    V.    HACKETT.  [CHAP.  IL 

ably  argued  by  appellant,  but,  unfortunately  for  us,  the  respondent  has 
not  deemed  it  necessary  to  discuss  the  question  at  any  considerable 
length.  The  position  of  appellant  is  that  the  fact. of  Hackett's  obtain- 
ing the  name  of  another  surety  upon  the  note  without  his  knowledge 
or  consent,  although  done  before  the  note  was  delivered  to  plaintiff, 

Rhode  v.  McLean,  101  111.  467;  Deardorff  v.  Foresman,  24  Ind.  481  ;  Webb  v.  Baird, 
27  Ind.  368;  State  v.  Pepper,  31  Ind.  76  (overruling  s.  c.  22  Ind.  399) ;  Hunt  v.  State, 
53  Ind.  323 ;  Mowbray  v.  State,  88  Ind.  324 ;  Carroll  Co.  v.  Ruggles,  69  Iowa,  2G9 ; 
Micklewait  v.  Noel,  69  Iowa,  344 ;  Benton  Bank  v.  Boddicker  (Iowa,  1898),  75  N.  W.  R. 
632  ;  Smith  v.  Moberly,  10  B.  Mon.  266  ;  Millett  v.  Parker,  2  Met.  (Ky.)  608 ;  Jackson 
v.  Cooper  (Kentucky,  1897),  39  S.  W.  R.  39  ;  York  Co.  v.  Brooks,  51  Me.  506  ;  State  v. 
Peck,  53  Me.  284;  Lewiston  v.  Gagne,  89  Me.  395;  Thomas  v.  Bleakie,  136  Mass.  568, 
571  ;  McCormick  v.  Bay  City,  23  Mich.  457  ;  Gibbs  v.  Johnson,  63  Mich.  671 ;  Crystal 
Lake  Tp.  v.  Hill,  109  Mich.  246;  First  Bank  v.  Compo-Board  Co.,  61  Minn.  274;  Mo. 
Bank  v.  Phillips,  17  Mo.  29;  State  v.  Potter,  63  Mo.  212  (explaining  earlier  Missouri 
cases) ;  State  v.  Modrel,  69  Mo.  152;  Wolff  v.  Schaeffer,  74  Mo.  154;  North  Atchison 
Bank  v.  Gay,  114  Mo.  203;  Cutler  v.  Roberts,  7  Neb.  4;  Owen  v.  Udall,  39  Neb.  14; 
Brumback  v.  German  Bank,  46  Neb.  540 ;  Merriam  v.  Rockwood,  47  N.  H.  81 ;  Ordinary 
v.  Thatcher,  41  N.  J.  403  (semble)  ;  Russell  v.  Freer,  56  N.  Y.  67  ;  Singer  Co.  v.  Drum- 
mond,  40  Hun,  260;  Bangs  v.  Bangs,  41  Hun,  41  (People  v.  Bostwick,  32  N.  Y.  445, 
contra,  is  virtually  overruled  ;  Grimwood  v.  Wilson,  31  Hun,  215,  is  distinguishable); 
Gwyn  v.  Patterson,  72  N.  Ca.  189  ;  Vass  v.  Riddick,  89  N.  Ca.  6,  8  ;  Xander  v.  Common- 
wealth, 102  Pa.  434  ;  Whitaker  u.  Richards,  134  Pa.  191  ;  Jordan  v.  Jordan,  10  Lea,  124 ; 
Dun  v.  Garrett,  93  Tenn.  650 ;  Davis  v.  Gray,  61  Tex.  506  ;  Ballon  v.  Wichita  Co.,  74 
Tex.  339  ;  McFarlane  v.  Howell  (Texas  Civil  Appeals,  1897),  43  S.  W.  R.  315  ;  CarletoH 
v.  Cowart  (Texas  Civil  Appeals,  1898),  45  S.  W.  R.  749  (semble) ;  Passumpsic  Bank  v. 
Goss,  31  Vt.  315 ;  Dixon  v.  Dixon,  31  Vt.  450;  Probate  Court  v.  St.  Clair,  52  Vt.  24 ; 
Nash  v.  Fugate,  24  Grat.  202,  32  Grat.  595;  Lyttle  v.  Cozad,  21  W.  Va.  183;  Belden 
v.  Hurlbut,  94  Wis.  562  (commenting  on  earlier  Wisconsin  cases) ;  Corporation  v. 
Armstrong,  27  Up.  Can.  Q.  B.  553,  Accord. 

Bibb  v.  Reid,  3  Ala.  88  (bond) ;  Robertson  v.  Coker,  11  Ala.  466  (bond) ;  Guild  v. 
Thomas,  54  Ala.  414  (bond) ;  King  v.  State,  81  Ala.  92  (bond) ;  Smith  v.  Kirkland,  81 
Ala.  345  (bond);  Evans  v.  Daughtry,  84  Ala.  68  (bond) ;  Sharp  v.  Allgood,  100  Ala. 
183  (bond),  (citing  earlier  Alabama  cases) ;  Sessions  v.  Jones,  7  Miss.  123  (bond)  (but 
see  Graves  v.  Tucker,  18  Miss.  9  (bond) ;  State  v.  Allen,  69  Miss.  508,  bond),  Contra. 

Absence  of  Signature  of  one  named  as  Co-surety  in  Body  of  Instrument.  If,  however, 
a  surety  signs  an  obligation,  and  delivers  it  to  the  principal  on  condition  that  it  shall 
not  he  given  to  the  obligee  until  another  person,  whose  name  appears  in  the  body  of 
the  instrument,  also  signs  it,  he  will  not  be  liable  unless  that  other  person  also  signs ; 
for  the  obligee,  being  apprised  by  the  form  of  the  instrument  that  all  persons  named 
were  contemplated  as  parties,  is  treated  as  having  constructive  notice  of  the  conditional 
delivery.  Pawling  v.  United  States,  4  Cranch,  219;  Duncan  r.  United  States,  7  Pet. 
435;  Sharp  v.  Algood,  100  Ala.  183;  State  v.  Churchill,  48  Ark.  426;  Allen  v.  Mar- 
aey,  65  Ind.  398 ;  Markland  Co.  v.  Kimmel,  87  Ind.  560 ;  Johnson  v.  Weatherwax,  9 
Kas.  75  {semble)  ;  Hall  v.  Smith,  14  Bush,  604  (but  see  Jones  i\  Shelbyville  Co.,  1  Met. 
Ky.  58) ;  Readfield  r\  Shaver,  50  Me.  36  (semble)  ;  Thomas  v.  Bleakie,  136  Mass.  568, 
571  (semble);  Hessell  v.  Johnson,  63  Mich.  623;  State  Bank  v.  Evans,  15  N.  J.  155; 
Ordinary  v.  Thatcher,  41  N.  J.  403 ;  State  v.  Lewis,  73  N.  Ca.  138  (semble) ;  Fertig  v. 
Bucher,  3  Barr,  308;  Whitaker  v.  Richards,  134  Pa.  191  (semble);  Fletcher  v.  Austin, 
11  Vt.  4+7;  Ward  v.  Churn,  18  Grat.  801. 

But  the  absence  of  the  signature  of  one  named  as  surety  creates  no  presumption  that 
there  was  in  fact  a  conditional  delivery  by  the  surety  who  signed.  The  latter  must  ad- 
duce satisfactory  evidence  of  such  a  delivery.  City  v.  Melius,  59  Cal.  444  ;  Towns  v. 
Kellett,  11  Ga.  286;  Johnson  v.  Weatherwax,  9  Kas.  75 ;  Readfield  v.  Shaver,  50  Me. 
36;  State  v.  Moore,  46  Mo.  377  ;  Gay  v.  Murphy,  134  Mo.  98,  106  (semble) ;  Mullen  v. 
Morris,  43  Neb.  596  ;  Blume  v.  Bowman,  2  Ired.  338 ;  Williams  v.  Springs,  7  Ired.  384 


SECT.   XII.]  WARD    V.   HACKETT.  307 

amounted  to  a  material  alteration  of  the  instrument,  which  discharged 
him,  even  although  plaintiff  had  no  notice  of  the  facts  when  he  took  the 
note.  If  this  be  the  law,  we  are  satisfied  its  announcement  would  be  a 
surprise  to  the  business  and  commercial  world.     It  would  render  com- 

(semble) ;  Grim  v.  School,  51  Pa.  219  (explaining  Sharp  v.  United  States,  4  Watts,  21); 
Loew  v.  Stocker,  68  Pa.  226;  Whituker  v.  Richards,  134  Pa.  191;  Ward  v.  Churn, 
18  Grat.  801. 

But  see  contra,  Wells  v.  Dill,  1  Mart.  n.  s.  592. 

In  a  few  jurisdictions  the  form  of  the  instrument,  coupled  with  proof  of  the  con- 
ditional delivery's  not  enough  to  exonerate  the  surety  in  such  cases.  The  surety  must 
go  so  far  as  to  show  that  the  obligee  had  actual  knowledge  of  the  conditional  delivery. 
Byers  v.  Gilmore  (Colorado,  1897),  50  Pac.  R.  370  (semble) ;  Smith  v.  Board,  59  111. 
412;  Hart  v.  Mead  Co.  (Nebraska,  1897),  73  N.  W.  R.  458  (compare,  however,  Cutler 
v.  Roberts,  7  Neb.  4;  Mullen  v.  Morris,  43  Neb.  596). 

Absence  of  Signature  of  Principal.  There  is,  on  the  other  hand,  a  presumption  that 
a  surety  who  signs  does  not  mean  to  be  bound  unless  the  principal  also  executes  the  in- 
strument. Accordingly,  in  the  absence  of  the  principal's  signature,  an  obligee,  who 
would  charge  tbe  surety,  must  show  that  the  surety  in  the  particular  case  dispensed 
with  the  signature  of  the  principal.  Weir  v.  Mead,  101  Cal.  125  (because  obligation 
was  joint) ;  Wild  Cat  Branch  v.  Ball,  45  Ind.  213  (semble) ;  Clements  v.  Cassilly,  4  La. 
An.  380  ;  Bean  v.  Parker,  17  Mass.  591 ;  Wood  v.  Washburn,  2  Pick.  24 ;  Goodyear  Co. 
v.  Bacon,  151  Mass.  460;  Dole  Co.  v.  Cosmopolitan  Co.,  167  Mass.  481 ;  Johnston  v. 
Kimball,  39  Mich.  187;  Hall  v.  Parker,  39  Mich.  287,  37  Mich.  590;  Re  Cahill,  63 
Mich.  616  (semble) ;  State  v.  Austin,  35  Minn.  51 ;  Martin  v.  Hornsby,  55  Minn.  187  ; 
Safranski  v.  St.  Paul  Co.  (Minnesota,  1898),  75  N.  W.  R.  17 ;  Bunn  v.  Jetmore,  70  Mo. 
228;  Gay  v.  Murphy,  134  Mo.  98;  Board  v.  Sweeney,  1  S.  Dak.  642. 

In  some  jurisdictions,  however,  there  is  no  such  presumption,  and  the  surety  must 
show  that  his  signing  and  delivery  were,  in  fact,  conditional  upon  the  execution  of  the 
instrument  by  the  principal.  Cooper  v.  Evans,  4  Eq.  45  ;  Kurtz  v.  Forqueer,  94  Cal.  91 
(because  obligation  was  joint  and  several) ;  Hickman  v.  Fargo,  1  Kas.  Ap.  695  ;  Deering 
v.  Moore,  86  Me.  181 ;  Bollman  v.  Pasewalk,  22  Neb.  761 ;  Parker  v.  Bradley,  2  Hill, 
584;  Chouteau  v.  Suydam,  21  N.  Y.  179 ;  Dillon  v.  Anderson,  43  N.  Y.  231  ;  Russell 
v.  Freer,  56  N.  Y.  67 ;  Whitford  v.  Laidler,  94  N.  Y.  145 ;  Williams  v.  Marshall,  42 
Barb.  524  ;  U'Hanlon  v.  Scott,  89  Hun,  44 ;  Eureka  Co.  v.  Long,  11  Wash.  161 ;  Douglas 
Co.  v.  Bardon,  79  Wis.  641. 

In  Illinois  and  Montana,  and  perhaps  in  Ohio,  the  surety,  to  escape  liability,  must 
show  not  only  a  signing  and  delivery  conditional  upon  the  execution  of  the  instru- 
ment by  the  principal,  but  also  that  the  obligee  had  notice  of  the  conditional  delivery. 
Trustees  v.  Sheik,  119  111.  579  ;  Woodman  v.  Calkins,  13  Mont.  363 ;  Cockriil  v.  Davis, 
14  Mont.  131 ;  State  v.  Bowman,  10  Ohio,  445;  Johnson  v.  Johnson,  31  Ohio  St.  131. 

Delivery  by  Principal  in  Violation  of  other  Conditions.  Just  as  the 
principal's  failure  to  procure  the  promised  signature  of  another  party  will  not  exon- 
erate the  surety,  so  an  agreement  between  the  surety  and  the  principal  that  the 
surety's  obligation  shall  not  be  delivered  to  the  obligee  except  for  a  special  purpose, 
or  until  the  happening  of  some  event,  will  not  defeat  an  innocent  obligee.  Gage  v. 
Sharp,  24  Iowa,  15 ;  Carter  v.  Moulton,  51  Kas.  9 ;  Thomas  v.  Bleakie,  136  Mass.  568; 
Small  v.  Smith,  I  Den.  583 ;  Fowler  v.  Allen,  32  S.  Ca.  229  ;  Merritt  v.  Duncan,  7  Heisk. 
156;  Bowman  v.  Van  Kureu,  29  Wis.  209;  Moulton  v.  Posten,  52  Wis.  169  (semble)-, 
Cross  v.  Currie,  5  Ont.  Ap.  31. 

Misdelivery  by  a  Stranger  to  the  Obligation.  If  a  stranger  to  the  obliga- 
tion, to  whom  the  surety  has  intrusted  it  to  be  delivered  only  in  a  certain  contingency, 
delivers  it  in  violation  of  his  trust,  the  surety  is  nevertheless  chargeable  by  a  bona  fide 
obligee  or  holder.  Taylor  Co.  v.  King,  73  Iowa,  153  (questioning  Daniels  v.  Gower, 
54  Iowa,  319,  which  was  treated  as  overruled  in  Benton  Bank  v.  Boddicker  (Iowa, 
1898),  75  N.  W.  R.  632) ;  McCormick  v.  McKee,  51  Mich.  426. 

But  see  contra,  Millett  v.  Parker,  2  Met.  (Ky.)  608  (semble) ;  Nash  v.  Fugate,  24 
Grat.  202  (semble).  —  Ed. 


308  WARD    V.   HACKETT  [CHAI*.  II. 

mercial  paper  a  very  uncertain  and  unsafe  subject  with  which  to  deaL 
But  we  have  carefully  examined  all  of  the  numerous  cases  cited  Irv  ap- 
pellant, and  do  not  find  one  that  goes  far  enough  to  sustain  him.  Many 
of  these  cases  hold  that  a  material  alteration  of  a  note  made  by  one  of 
the  promisors  before  its  delivery,  without  the  knowledge  of  the  other 
promisor,  makes  the  note  void  as  against  such  other  promisor,  although 
the  payee  have  no  notice  of  the  alteration  when  he  takes  the  note.  Such 
is  doubtless  the  law.  But,  upon  examination,  these  will  all  be  found  to 
be  cases  where  the  body  of  the  note  or  the  contract  itself  was  changed, 
as  by  alteration  of  the  date,  rate  of  interest,  or  amount  of  the  note. 
And  the  reason  given  wlnT,  in  such  cases,  the  party  is  discharged,  is  the 
self-evident  one  that  the  contract  is  no  longer  the  one  he  made.  Nu- 
merous cases  are  also  cited  to  the  effect  that  the  addition  of  a  new  party 
to  a  note,  without  the  consent  of  the  other  parties,  is  a  material  altera- 
tion of  the  instrument.  But  these  will  be  found  to  be  cases  where  the 
new  name  was  obtained  after  the  note  was  fully  issued  and  delivered  to 
the  payee,  and  at  his  instance  or  with  his  knowledge.  We  have  been 
referred  to  no  case,  and  have  found  none,  going  so  far  as  to  hold,  where 
a  surety  signs  a  promissory  note  and  intrusts  it  to  his  principal,  and  the 
principal,  while  the  instrument  is  still  inchoate  and  has  not  become 
effectual  as  a  contract  by  delivery,  procures  an  additional  signer,  that 
this  would  be  a  material  alteration  and  release  the  first  surety.  Two  of 
the  cases  cited  might,  at  first  sight,  seem  to  favor  such  a  doctrine,  but, 
upon  examination,  will  be  found  not  to  sustain  it,  even  if  the  payee 
knew,  when  he  took  the  note,  the  circumstances  under  which  the  addi- 
tional signature  was  obtained. 

The  case  of  Haskell  v.  Champion1  was  one  where,  at  the  instance  of 
the  pa}'ee,  the  names  of  new  principal  obligors  were  substituted  in  place 
of  the  original  one,  by  changing  the  individual  signature  of  one  partner 
into  the  firm  signature,  thus  attempting  to  make  a  party  surety  for  per- 
sons for  whom  he  had  never  agreed  to  be  responsible. 

The  case  of  Hall  v.  McHenry2  contains  dicta  by  some  of  the  judges 
which  go  farther  than  an}*  decision  we  have  found.  In  that  case  the 
name  of  the  additional  surety  was  obtained  before  delivery  of  the  note,, 
but  at  the  instance  and  for  the  benefit  of  the  payee.  After  the  note 
was  delivered,  the  payee  cut  off  the  name  of  this  additional  surety  with- 
out the  knowledge  or  consent  of  the  first  surety.  Wright,  J.,  who  de- 
livered the  opinion  of  the  Court,  while  admitting  that  he  had  found  no 
authority  to  that  effect,  argues  that  thus  adding  a  new  surety,  even  be- 
fore delivery  of  the  note,  would  amount  to  a  material  alteration  of  the 
instrument,  which  would  discharge  the  original  surety,  provided  the 
•payee  knew,  when  he  took  the  note,  of  the  circumstances  under  which 
the  additional  name  was  added.  He  then  states  that  the  Court  was  not 
agreed  on  this  proposition,  and  then  proceeds  to  decide  the  case  upon 
another  point,  to  wit,  that  cutting  the  additional  name  off  the  note  was 
a  material  alteration,  which  discharged  the  original  surety. 

1  30  Mo.  136.  2  19  iowa>  521. 


BECT.   XII.]  WARD   V.   IIACKETT.  309 

The  rule  that  a  material  alteration  of  a  contract  avoids  it  had  its 
origin  largely  in  the  necessity  of  preserving  and  protecting  the  integrity 
and  sanctity  of  contracts.  Properly  applied,  the  rule  is  a  salutary  one. 
But  the  general  sentiment  of  courts  now  is  that  the  doctrine  had  been 
extended  quite  far  enough,  and  that  formerly,  especially  in  England,  it 
had  been  carried  too  far,  and  applied  to  cases  not  within  the  mischief 
intended  to  be  prevented.  Therefore,  the  tendency  now  is,  if  not  to 
restrict,  at  least  not  to  extend  it  beyond  what  has  been  already  decided. 
To  hold  that  the  obtaining  of  an  additional  surety  to  a  note,  under  the 
facts  of  the  case  at  bar,  amounted  to  an  alteration  of  the  instrument 
that  would  discharge  Elwis,  would  in  our  judgment  be  harsh,  technical, 
and  work  injustice,  and  establish  a  doctrine  contrary  to  the  general 
understanding  of  business  men,  which  ought  to  be  the  law  of  such  cases, 
and  is  the  only  just  basis  of  the  implied  contract  resulting  from  the  facts. 
In  dealing  with  commercial  paper,  complete  on  its  face,  and  signed  by 
several  parties,  we  apprehend  it  never  occurs  to  a  business  man  that  it 
is  incumbent  upon  him  to  inquire  of  each  maker  whether  he  understood 
when  he  signed  the  paper  just  what  other  parties  were  to  sign  with  him, 
or  whether  any  additional  names  have  been  subsequently  added  without 
his  knowledge  or  consent.  To  require  any  such  thing  would  be  incon- 
venient, without  reason,  and  an  innovation  upon  business  usages.  The 
idea  that  when  a  person  signs  a  note  as  surety,  and  delivers  it  to  his 
principal,  no  other  surety  is  to  be  obtained,  and,  if  the  note  cannot  be 
negotiated  in  that  form  it  cannot  be  used  at  all,  unless  all  parties  con- 
sent to  the  introduction  of  a  new  surety,  is,  we  apprehend,  contrary  to 
the  general  understanding  of  the  commercial  world. 

It  seems  to  us  that,  at  least  as  against  an  innocent  holder,  the  prin- 
cipal obligor,  to  whom  the  paper  has  been  intrusted  by  the  surety,  has 
implied  authority  to  obtain  additional  sureties,  until  the  note  is  launched 
into  the  market  by  delivery  to  the  payee  ;  and,  as  already  remarked, 
this  common  understanding  is  the  only  just  basis  of  an  implied  contract 
resulting  from  the  facts.  Courts  have,  in  some  cases,  gone  so  far  in 
holding  that  the  addition  of  a  new  name  to  a  note,  under  certain  circum- 
stances, amounted  to  a  material  and  unauthorized  alteration  of  the  in- 
strument, that  it  ma^'  be  difficult  to  state  the  principle  which  distinguishes 
some  of  these  cases  from  the  present,  nor  do  we  feel  compelled  to  at- 
tempt to  do  so.  But  whether  or  not  the  reason  we  have  suggested  be 
the  correct  one,  we  are  satisfied  that  neither  upon  principle  nor  author- 
it}-  did  the  obtaining  of  Rice  as  additional  surety  amount,  under  the 
facts  of  this  case,  to  an  alteration  of  the  instrument  such  as  to  release 
Elwis.1  As  Rice's  claim  to  be  discharged  is  entirely  predicated  upon 
the  assumption  that  Elwis  was  released,  it  is  unnecessary  to  consider  it 
further.  Order  affirmed. 

1  Hall  v.  McHenry,  19  Iowa,  521  (semble) ;  Graham  v.  Rush,  73  Iowa,  451 ;  Babcock 
p.  Murray,  58  Minn.  385;  Keith  v.  Goodwin,  31  Vt.  268  {semble),  Accord. 
Stoner  v.  Keith  Co.,  48  Neb.  279,  Contra. 
See  Governor  v.  Lagow,  43  111.  134;  Sampson  v.  Barnard,  98  Mass.  359.  —  Ed. 


310  STONER   V.   MILLIKIN".  [CHAP.  IT. 


THOMAS  J.  STONER  v.  JAMES   MILLIKIN  and  Others. 

In  the  Supreme  Court,  Illinois,  January  Term,  1877. 

[Reported  in  85  Illinois  Reports,  218.] 

Mr.  Chief  Justice  Sheldon  delivered  the  opinion  of  the  Court. 1 

At  the  February  term,  1874,  of  the  County  Court  of  Macon  County, 
a  judgment  'was  entered  by  confession,  in  favor  of  Millikin  &  Co., 
against  Thomas  Lee,  John  Lee,  and  Andrew  J.  Stoner,  for  $453.33, 
upon  a  promissoiy  note  with  a  warrant  of  attorney  attached,  purporting 
to  be  executed  by  the  three  latter,  dated  the  24th  day  of  June,  1873, 
payable  ninety  days  after  date  to  H.  Crea,  and  assigned  by  him  with- 
out recourse. 

An  execution,  issued  upon  the  judgment,  was  levied  upon  personal 
property  of  John  Lee,  sufficient  in  value  to  satisfy  it.  Afterward,  by 
direction  of  Millikin  &  Co.,  the  sheriff  released  the  property  of  John 
Lee  from  the  lev}',  and  levied  the  execution  upon  certain  real  estate  of 
Stoner,  and  the  bill  in  this  case  was  filed  by  Stoner  to  enjoin  the  sale 
of  his  property  under  the  execution. 

The  Court  below,  upon  final  hearing  on  proof,  dismissed  the  bill,  and 
the  complainant  appealed. 

The  chief  ground  relied  upon  in  support  of  the  bill  is,  that  the  signa- 
ture of  the  name  of  John  Lee  to  the  note  is  a  forgery.  The  note  is  a 
joint  and  several  one,  the  signature  of  Stoner  being  last  upon  the  note. 
He  testifies  that  Thomas  Lee  applied  to  him  to  sign  the  note  as  his 
security ;  that  he  refused  to  do  so  unless  Lee  would  first  get  his 
brother,  John  Lee,  to  sign  the  note ;  that  Lee  went  away  saying  he 
would  go  and  get  John  to  sign  it ;  that  the  next  day  he  came  back, 
saying  that  he  had  got  John  to  sign  it,  and  presented  the  note  with  the 
signature  of  John  Lee  appearing  to  it,  and  witness  then  signed  it. 
supposing  the  signature  of  John  Lee  to  be  genuine,  knowing  him  to  be 
responsible,  and  had  he  not  supposed  the  note  to  have  been  signed  by 
John  Lee,  he  would  not  have  executed  it.  Thomas  Lee  had  made  the 
arrangement  beforehand  with  Millikin  &  Co.  to  lend  him  the  money. 
H.  Crea,  the  payee  of  the  note,  was  but  nominally  such,  Millikin  &  Co. 
being  the  real  pa3'ees  ;  and  on  presentment  of  the  note,  with  Crea's  in- 
dorsement on  it,  by  Thomas  Lee  to  Millikin  &  Co. ,  who  were  bankers? 
they  discounted  the  note,  paying  the  proceeds  to  Thomas  Lee. 

Why  should  this  forgery  operate  in  discharge  of  Stoner,  and  entitle 
him  to  have  his  property  exempted  from  sale  on  the  execution? 

It  may  have  been  a  wrong  toward  him,  and  have  caused  him  to 
incur  a  greater  extent  of  liability  than  he  expected  ;  and  the  supposed 
obtaining  of  the  execution  of  the  note  by  John  Lee  may  have  been  the 
sole  condition  upon  which  he  signed  his  name  to  the  note.  Yet,  on 
satisfactory  evidence  to  himself,  in  that  respect,  he  did  place  his  name 
unconditionally  to  the  note  as  a  maker  thereof,  and  left  it  with  Thomas 

1  The  case  is  slightly  abridged.  —  Ed. 


SECT.  XII.]  STONER   V.    MILLIKIN.  311 

Lee  to  deliver  to  Millikin  &  Co.,  knowing  that  on  the  faith  of  his, 
Stoner's,  promise  to  repay  it,  the}'  would  part  with  their  money  to 
Thomas  Lee.  There  is  no  just  reason  why  this  promise  to  Millikin 
&  Co.  should  not  be  kept. 

Whatever  of  wrong  there  was  to  Stoner,  was  perpetrated  by  his 
co-maker,  Thomas  Lee.  Millikin  &  Co.  were  wholly  innocent  in  the 
matter;  they  had  no  notice  of  anything  which  had  been  transpiring 
among  the  makers  of  the  note,  as  between  themselves.  Nor  was  it 
incumbent  upon  Millikin  &  Co.  to  exercise  care  over  the  interest  of 
the  surety  in  the  note,  look  to  the  inducement  which  led  him  to  become 
such,  and  see  that  it  should  not  fail.  The}-  had  but  to  watch  over 
their  own  interest,  and  see  that  the  security  offered  was  a  sufficient 
protection  for  them.  For  the  lack  of  the  vigilance  they  failed  to  exer- 
cise in  this  respect,  they  suffer  the  full  consequence  in  the  loss  of  the 
security  of  the  name  of  John  Lee.  Whatever  of  fraud  and  deception 
the  co-makers  of  the  note  practised  toward  one  another,  was  their  own 
sole  concern,  and  the  consequence,  so  far  as  ma}-  affect  them  in  their 
relation  to  each  other,  should  be  borne  by  themselves  alone.  There  is 
no  justice  in  requiring  Millikin  &  Co.  to  assume  the  risk  of  such  con- 
duct, and  no  sound  principle  upon  which  they  should  be  made  to  suffer 
loss  because  of  it,  not  being  privy  thereto. 

York  County  M.  F.  Ins.  Co.  v.  Brooks1  and  Selser  v.  Brock2  are 
direct  authorities  to  the  point  that  such  a  forgery  of  the  name  of  a  prior 
surety  will  not  discharge  a  subsequent  surety.    See  Young  et  <//.  r.  Ward.3 

We  regard  the  language  of  Lord  Holt,  in  Hern  v.  Nichols,4  as  appli- 
cable, that  "seeing  that,  somebody  must  be  a  loser  by  this  deceit,  it  is 
more  reason  that  he  that  employs  and  puts  trust  and  confidence  in  the 
deceiver  should  be  a  loser,  than  a  stranger.'" 

The  case  of  Seely  v.  The  People,5  is  departed  from  so  far  as  it  con- 
flicts with  the  principle  of  the  present  decision. 

We  are  satisfied  with  the  decree,  and  it  is  affirmed. 

Decree  affirmed.* 

1  51  Me.  506.  2  3  Ohio  St.  302.  3  2\  111.  223. 

4  1  Salk.  289.  5  27  111.  173. 

e  Veach  v.  Rice,  131  U.  S.  318  ;  Stern  v.  People,  102  Til.  540  ;  Carr  v.  Moore,  2  Ink. 
602;  State  v.  Pepper,  31  Ind.  76;  Helmes  v.  Wayne  Co.,  73  Ind.  325;  Wayne  Co.  v. 
Cardwell,  73  Ind.  555  ;  Cook  v.  Boyd,  1 6  B.  Mon.  556  ;  Terry  v.  Hazlewood,  1  Duv.  104 ; 
Hall  v.  Smith,  14  Bush,  611  (semble).  (But  see  Commonwealth  v.  Campbell  (Kentucky, 
1898),  45  S.  W.  R.  89);  York  Co.  v.  Brooks,  51  Me.  506  ;  Chase  v.  Hathorn,  61  Me.  505  ; 
Dole  Co.  v.  Cosmopolitan  Co.,  167  Mass.  481  ;  Graves  v.  Tucker.  18  Miss.  9  {semble); 
State  v.  Baker,  64  Mo.  167;  State  v.  Hewitt,  72  Mo.  603;  Lombard  v.  Mayberrv,  24 
Neb.  674 ;  Kansas  City  v.  Murphy,  49  Neb.  674  ;  Mosher  v.  Carpenter,  13  Hun,  602 ; 
Vass  v.  Riddick,  89  N.  Ca.  6 ;  Saiser  v.  Brock,  3  Ohio  St.  302  ;  Bigelow  v.  Comegys,  5 
Ohio  St.  256  ;  Loew  v.  Stocker,  68  Pa.  226  ;  Mitchell  v.  Burton,  2  Head,  613,  Accord. 

Sharp  v.  Allgood,  100  Ala.  183  (bond) ;  Cornell  v.  People,  37  111.  Ap.  490  ;  Green  v. 
Kindy,  43  Mich.  279,  Contra. 

The  indorser  of  a  note  is  liable  thereon,  although  one  or  more  of  the  names  of  prioi 
parties  may  be  forged.     2  Ames,  Cases  on  Bills  and  Notes,  169,  231,  233,  n.  3. 

Similarly  one  who  guarantees  the  payment  of  an  instrument  is  not  discharged  by 
reason  of  the  forgery  of  a  signature  which  he  believed  to  be  genuine.  Veazie  v 
Willis,  6  Gray,  90.  —  Ed. 


312  BUTLER   V.    UNITED    STATES.  [CHAP.  II. 


BUTLER  v.  UNITED   STATES. 

Ik  the  Supreme  Court,  United  States,  October,  1874. 

[Reported  in  21  Wallace,  272.] 

Error  to  the  Circuit  Court  for  the  Eastern  District  of  Tennessee. 

Debt  on  a  joint  and  several  internal-revenue  bond,  executed  by 
Einory  as  principal,  and  by  Butler,  Sawyer,  and  Choppin  as  sureties, 
the  bond  on  oyer  appearing  to  be  in  the  sum  of  $15, 000. 

Butler  pleaded  that  at  the  time  he  signed  and  affixed  his  seal  to  the 
bond,  it  was  a  mere  printed  form,  with  blank  spaces  for  the  names, 
dates,  and  amounts  to  be  inserted  therein;  that  the  blanks  were  not 
filled,  and  there  was  no  signature  thereto  except  Emory's  ;  that  Emory 
promised,  if  Butler  would  sign  the  bond,  he,  Emory,  would  fill  up  the 
blanks  with  the  sum  of  $4,000,  and  would  procure  two  additional  sure- 
ties in  the  District  of  Columbia,  each  of  whom  was  to  be  worth  $5,000 ; 
and  that  he,  Butler,  signed  the  bond  and  delivered  it  to  Emory  with 
the  understanding  and  agreement  that  the  bond  was  otherwise  not  to 
be  binding  on  him,  Butler,  nor  delivered  to  the  United  States,  or  to 
any  of  its  agents  or  officers,  but  was  to  be  returned  to  him  ;  that 
Emory  did  not  so  fill  up  the  bond,  but,  on  the  contrary,  falsely  and 
fraudulently  filled  it  up  with  the  sum  of  $15,000,  and  with  the  names 
of  Sawyer  and  Choppin,  neither  of  whom  resided  in  the  District  of 
Columbia,  and  neither  of  whom  was  worth  $5,000,  but,  on  the  con- 
trar}',  both  of  whom  were  wholl}*  insolvent  and  worthless ;  that  Emory 
accordingly  obtained  the  signature  of  him,  Butler,  by  false  and  fraudu- 
lent representations  ;  that  the  bond  was  therefore  not  the  bond  of  him, 
Butler,  when  made,  and  that  he  had  never  afterward  ratified  or  acknowl- 
edged its  validity. 

The  Circuit  Court,  relying  on  Dair  v.  United  States,1  ruled  that  this 
was  no  defence  to  the  action.  The  defendant  excepted  and  brought 
this  writ  of  error.2 

The  Chief  Justice  delivered  the  opinion  of  the  Court. 

We  cannot  distinguish  this  case  in  principle  from  Dair  v.  United 
States.  The  printed  form,  with  its  blank  spaces,  was  signed  by  Butler 
and  delivered  to  Emory,  with  authority  to  fill  the  blanks  and  perfect 
the  instrument  as  a  bond  to  secure  his  faithful  service  in  the  office  of 
collector  of  internal  revenue.  He  was  also  authorized  to  present  it 
when  perfected  to  the  proper  officer  of  the  government  for  approval 
and  acceptance.  If  accepted,  it  was  expected  that  he  would  at  once 
be  permitted  to  enter  upon  the  performance  of  the  duties  of  the  office 
to  which  it  referred. 

It  is  true  that,  according  to  the  plea,  this  authorit}-  was  accompanied 
by  certain  private  understandings  between  the  parties  intended  to  limit 

i  16  Wall.  i. 

2  The  report  of  the  case  is  slightly  abridged.  —  Ed. 


SECT.  XII.]  BUTLER   V.    UNITED    STATES.  313 

its  operations,  but  it  was  apparently  unqualified.  Every  blank  space 
in  the  form  was  open.  To  all  appearances  any  sum  that  should  be 
required  bj-  the  government  might  be  designated  as  the  penalty,  and 
the  names  of  any  persons  signing  as  co-sureties  might  be  inserted  in 
the  space  left  for  that  purpose.  It  was  easy  to  have  limited  this  au- 
thority by  filling  the  blanks,  and  the  filling  of  any  one  was  a  limitation 
to  that  extent.  By  inserting  in  the  appropriate  places  the  amount  of 
the  penalty,  or  the  names  of  the  sureties  or  their  residences,  Butler 
could  have  taken  away  from  Emory  the  power  to  bind  him  otherwise 
than  as  thus  specified.  This,  however,  he  did  not  do.  Instead,  he 
relied  upon  the  good  faith  of  Emory,  and  clothed  him  with  apparent 
power  to  fill  all  the  blanks  in  the  paper  signed  in  such  appropriate 
manner  as  might  be  necessary  to  convert  it  into  a  bond  that  would  be 
accepted  by  the  government  as  security  for  the  performance  of  his  con- 
templated official  duties.  It  is  not  pretended  that  the  acts  of  Emory 
are  beyond  the  scope  of  his  apparent  authority.  The  bond  was  ac- 
cepted in  the  belief  that  it  had  been  properly  executed.  There  is  no 
claim  that  the  officer  who  accepted  it  had  any  notice  of  the  private 
agreements.  He  acted  in  good  fa.th,  and  the  question  now  is,  which 
of  two  innocent  parties  shall  suffer.  The  doctrine  of  Dair's  case  is 
that  it  must  be  Butler,  because  he  confided  in  Emory  and  the  govern- 
ment did  not.  He  is  in  law  and  equity  estopped  by  his  acts  from 
claiming,  as  against  the  government,  the  benefit  of  his  private  instruc- 
tions to  his  agent.  .    Judgment  affirmed y 

1  N.  Y.  Co.  v.  Wilcox,  8  Biss.  197;  Dolbeer  v.  Livingston,  100  Cal.  617;  City  jr. 
Gage,  95  111.  593  (overruling  People  v.  Organ,  27  111.  29) ;  Donnell  Co.  v.  Jones,  49 
111.  Ap.  327;  Chalaron  v.  McFarlane,  9  La.  227;  Dover  v.  Robinson,  64  Me.  183,  188 
(semble);  White  v.  Duggan,  140  Mass.  18;  State  v.  McGonigle,  101  Mo.  353,  362 
(semble);  Richards  v.  Day,  137  N.  Y.  183  (semble);  Nesbit  v.  Albert,  85  Hun,  211; 
Gary  v.  State,  11  Tex.  Ap.  527  ;  Nelson  v.  McDonald,  80  Wis.  605  (semble).  Accord. 

Cross  v.  State  Bank,  5  Ark.  525 ;  Smith  v.  Carder,  33  Ark.  709  (semble) ;  Gourdin 
v.  Read,  8  Rich.  230;  Mills  v.  Williams,  16  S.  Ca.  593  (but  see  Fowler  v.  Allen,  32 
S.  Ca.  229,  237) ;  Rhea  v.  Gibson,  10  Grat.  215,  Contra. 

To  these  cases  contra  should  be  added  the  following,  in  which  it  was  decided  that  a 
surety  who  signed  a  sealed  obligation  containing  blauks  would  not  be  chargeable  even 
though  the  blanks  were  filled  up  in  accordance  with  his  parol  authority :  U.  S.  v.  Nel- 
son, 2  Brock.  64 ;  Smith  v.  Carder,  33  Ark.  709 ;  Richmond  Co.  v.  Davis,  7  Blackf. 
412;  Lockhart  v.  Roberts,  3  Bibb,  361  ;  Byers  v.  McClanahan,  6  Gill  &  J.  250;  Wil- 
liams v.  Crutcher,  6  Miss.  71  ;  Barden  v.  Southerland,  70  N.  Ca.  528 ;  Ayres  v.  Hayne, 
1  Ohio,  368;  State  v.  Boring,  15  Ohio,  507  ;  Famelener  v.  Anderson,  15  Ohio  St.  473; 
Gilbert  v.  Anthony,  1  Yerg.  69;  Wynne  v.  Governor,  1  Yerg.  149;  McNutt  v.  Mahan, 
1  Head,  98;  Mosby  v.  Arkansas,  4  Sneed,  324;  Preston  v.  Hull,  23  Grat.  600;  Penn 
v.  Hamlett,  27  Grat.  337. 

But  generally  in  this  country  the  completion  of  an  obligation  under  seal  in  pursu- 
ance of  the  authority  of  a  surety  who  has  executed  it  in  blank  binds  the  surety  as 
effectually  as  his  execution  of  a  completed  specialty.  See,  in  addition,  the  cases  cited 
in  the  first  pai'agraph  of  this  note ;  Gibbs  v.  Frost,  4  Ala.  720 ;  State  v.  Pepper,  31  Ind. 
76,  85-86  (semble) ;  Wright  v.  Harris,  31  Iowa,  272 ;  Lee  Co.  v.  Welsing,  70  Iowa, 
198;  Rose  v.  Douglass  Township,  52  Kas.  451  ;  South  Berwick  v.  Huntress,  53  Me.  89; 
State  v.  Young,  23  Minn.  551 ;  Green  Co.  v.  Wilhite,  29  Mo.  Ap.  459  ;  Ex  parte  Ker- 
win,  8  Cow.  118;  Wiley  v.  Moore,  17  S.  &  R.  438;  Gourdin  v.  Read,  6  Rich.  597, 


($14  LUCAS   V.    OWENS.  [CHAP.  IL 


LUCAS   and   Another   v.  OWENS. 

In  the  Supreme  Court,  Indiana,  November  Term,  1887. 

[Reported  in  113  Indiana  Reports,  521.] 

Mitchell,  C.  J.  Thomas  J.  Owens  brought  this  suit  against  Andrew 
W.  Johnson  and  Sarah  C.  Lucas,  joint  makers  of  a  promissory  note, 
which  fell  due  in  one  year  from  the  date  thereof,  and  called  for  the  pay- 
ment of  $760  and  interest. 

Mrs.  Lucas,  in  the  second  and  fourth  paragraphs  of  her  separate  an- 
swer, set  up  as  a  defence  that  her  co-defendant,  Johnson,  had  induced 
her  to  sign  the  note  sued  on  as  his  surety,  by  means  of  certain  false  and 
fraudulent  representations,  which  are  particularly  set  out,  and  which  she 
alleges  were  relied  on  by  her. 

Without  setting  out  the  facts  pleaded  in  airy  greater  detail,  it  is  suffi- 
cient for  the  purposes  of  this  case  to  say  they  show  that  Mrs.  Lucas, 
without  any  contributor}'  fault  or  neglect  on  her  part,  was  induced  by 
her  co-defendant  to  sign  the  note  in  suit  under  such  circumstances  as 
would  entitle  her  to  be  relieved  therefrom  as  against  the  principal, 
Johnson,  if  he  were  claiming  any  benefit  from  the  contract.  As,  how- 
ever, there  is  nothing  in  the  answer  tending  to  show  that  the  payee  was 
guilty  of  any  fault  or  neglect,  or  that  he  knew,  or  had  any  reason  to 
suspect,  that  Mrs.  Lucas  had  been  induced  to  sign  the  note  by  the  mis- 
conduct of  an}*  one,  it  is  difficult  to  discover  any  principle  upon  which 
he  can  be  compelled  to  exonerate  the  surety,  after  having  accepted  the 
note  and  parted  with  the  consideration  thereof  in  good  faith. 

A  surety  who  has  been  misled  by  the  principal  as  to  the  character  and 
extent  of  an  obligation,  signed  and  assumed  at  the  request  of  the  latter, 
cannot  make  the  fraud  of  the  principal  available  as  a  defence,  unless  he 
can  also  show  that  the  payee  or  obligee  participated  in,  or  had  knowl- 
edge of,  the  fraud  or  deception.  Western,  &c.  Ins.  Co.  v.  Clinton  ; 1 
Casoni  v.  Jerome  ;'2  Ladd  v.  Board  of  Trustees  ;3  Griffith  v.  Reynolds  ;4 
Quinn  v.  Hard  ;5  Brandt,  Sur.  §  353. 

The  payee  who  parts  with  a  consideration,  and  accepts  the  note  in 
good  faith,  is  not  bound  to  ascertain  whether  the  sureties,  whose  genu- 
ine signatures  appear  thereon,  fully  understood  the  nature  and  extent 
of  their  obligation.  He  has  a  right  to  assume  that  they  exercised  care, 
and  understood  the  character  of  the  contract  to  which  the}'  signed  their 

8  Rich.  230;  Mills  v.  Williams,  16  S.  Ca.  593;  Lafferty  v.  Lafferty,  42  W.  Va.  782 
(semble). 

Bills  arid  Notes  signed  by  a  Surety  in  Blank.  A  surety  who  signs  negotiable  paper 
ia  blank,  like  any  other  party  to  such  paper,  is  liable  to  a  bona  fide  holder  even  though 
the  blanks  were  filled  up  in  violation  of  instructions.  Joseph  v.  First  Bank,  17  Kas. 
256 ;  Roberson  v.  Blevins,  57  Kas.  50 ;  Fullertou  v.  Rturges,  4  Ohio  St.  529  ;  Wessell 
i'.  Glenn,  108  Pa.  104 ;  Johnston  Co.  v.  McLean.  57  Wis.  258,  are  a  few  of  many  cases 
on  this  point.  —  Ed. 

i  66  N.  Y.  326.  2  58  N.  Y.  315.  3  80  111.  233. 

4  4  Grat.  46.  5  43  Vt.  375. 


SECT.  XII.]  HARDING    V.   TIFFT.  315 

names  ;  nor  can  he  be  held  responsible  for  the  misconduct  or  deception 
by  which  the  principal  induced  them  to  sign  the  note.  Mrs.  Lucas 
being  under  no  disability,  and  having  signed  the  note  intentionally,  she 
cannot  avoid  liability  to  the  payee,  who  acted  in  good  faith,  by  showing 
that  she  was  overreached  by  her  co-defendant,  the  principal.1 

Assuming  that  both  the  surety  and  the  payee  were  equally  without 
fault,  since  one  of  two  innocent  persons  must  suffer  by  the  wrong  of  a 
third  person,  the  loss  must  fall  upon  the  one  who  put  it  in  the  power  of 
the  wrong-doer  to  cause  the  loss.  Hunter  v.  Fitzmaurice  ;  -  Helms  v. 
Wayne  Agricultural  Co.  ; 3  Preston  v.  Witherspoon  ; 4  Quick  v.  Milligun  ;fi 
Houck  v.  Graham  ;6  Schmidt  v.  Archer.7 

Judgment  affirmed,  with  costs. 


G.   H.    HARDING,  Respondent,   v.  W.    I.   TIFFT,  Appellant. 

In  the  Court  of  Appeals,  New  York,  December,  1878. 

[Reported  in  75  New  York  Reports,  461.] 

Appeal  from  judgment  of  the  General  Term  of  the  Supreme  Court, 
in  the  fourth  judicial  department,  affirming  a  judgment  in  favor  of 
plaintiff,  entered  upon  a  verdict. 

1  Stone  v.  Compton,  5  Bing.  N.  C.  142  (semble);  Spencer  v.  Handley,  4  M.  &  Gr. 
414  (semble);  Maitland  v.  Irving,  15  Sim.  437  (semble)  ;  Wallace  v.  Wilder,  13  Fed- 
Rep.  707 ;  Marks  v.  First  Bank,  79  Ala.  550;  Anderson  v.  Warne,  71  111.  20;  Booth  v. 
Storrs,  75  111.  438  ;  Ladd  v.  Board,  80  111.  233  ;  Davis  Co.  v.  Buckles,  89  111.  237  ;  Jen- 
ners  v.  Howard,  6  Blackf.  238 ;  Lepper  v.  Nuttman,  35  Ind.  384 ;  Craig  v.  Hobbs,  44  Ind. 
363;  Jones  v.  Swift,  94  Ind.  516;  Glenn  v.  Statler,  42  Iowa,  107;  Monroe  Bank  v. 
Anderson  Co.,  65  Iowa,  692;  Martin  v.  Campbell,  120  Mass.  126;  Beath  v.  Chapoton 
(Mich.  1898),  73  N.  W.  R.  806;  Graves  v.  Tucker,  18  Miss.  9  (semble);  Linn  Co.  v. 
Farris,  52  Mo.  75,  77;  Coleman  v.  Bean,  1  Abb.  Ap.  394;  Mc Williams  v.  Mason,  31 
N.  Y.  294 ;  Casoni  v.  Jerome,  58  N.  Y.  315  ;  Western  Co.  v.  Clinton,  66  N.  Y.  326, 331  ; 
Howe  Co.  v.  Farriugton,  82  N.  Y.  121,  127 ;  Powers  v.  Clark,  127  N.  Y.  417,  422,  423; 
Page  i'.  Krekey,  137  N.  Y.  307,  312,  313;  Brown  v.  James,  2  N.  Y.  Ap.  Div.  105; 
Rothschild  v.  Frank,  14  N.  Y.  Ap.  Div.  399;  Riley  v.  Johnson,  8  Ohio,  526  (semble)  ; 
Johnstons.  Patterson,  114  Pa.  398;  Rothermal  v.  Hughes,  134  Pa.  510;  Kulp  n.  Brant, 
162  Pa.  222;  Riley  v.  Reifert  (Texas  Civil  Appeals,  1897),  32  S.  W.  R.  185;  Quinn  v. 
Hard,  43  Vt.  375 ;  Griffith  v.  Reynolds,  4  Grat   46,  Accord. 

Duress.  A  surety  cannot  defend  on  the  ground  of  duress  practised  upon  him  by 
the  principal,  unless  the  obligee  took  the  obligation  mala  fide.  Fairbanks  v.  Snow,  1 45 
Mass.  153.  Holmes,  J.,  said  in  this  case,  p.  154  :  "  The  ground  upon  which  a  contract 
is  voidable  for  duress  is  the  same  as  in  the  case  of  fraud :  and  is,  that,  whether  it 
springs  from  a  fear  or  from  a  belief,  the  party  has  been  subjected  to  an  improper  mo- 
tive for  action.  See  Rodliff  v.  Dallinger,  141  Mass.  1,  6 ;  Stiff  v.  Keith,  143  Mass. 
224.  But  if  duress  and  fraud  are  so  far  alike,  there  seems  to  he  no  sufficient  reason 
why  the  limits  of  their  operation  should  be  different.  A  party  to  a  contract  has  no 
concern  with  the  motives  of  the  other  party  for  making  it,  if  he  neither  knows  them 
nor  is  responsible  for  their  existence."  —  Ed. 

2   102  Ind.  449.  3  73  Jnd.  395.  4   109  ImL  457. 

5  108  Ind.  419.  6  106  Ind.  195.  7  113  Tnd.  365. 


316  HARDING   V.    TIFFT.  [CHAP.  II 

This  action  was  upon  a  promissory  note  for  $500,  made  by  defend- 
ants Skinkle  &  Howlet,  and  indorsed  by  defendant  Tifft,  for  their 
accommodation.     The  answer  set  up  a  payment  of  $275. 

The  facts  appear  sufficiently  in  the  opinion. 

D.  A.  King,  for  appellant. 

II.  L.  Hovie,  for  respondent.1 

Rapallo,  J.  The  point  upon  which  the  appellant  relies  for  the 
reversal  of  the  judgment  in  this  action  is,  that  on  the  trial  the  Court 
excluded  evidence  of  the  fact  that  the  sum  of  $275  which  was  paid  in 
June,  1873,  by  Skinkle  to  the  plaintiff,  had  been  raised  by  Skinkle  by 
use  of  the  name  of  the  defendant  as  an  accommodation  indorser,  for 
the  purpose  of  being  applied  towards  the  payment  of  the  note  in  suit. 
It  was  not  proved  or  offered  to  be  proved  that  knowledge  of  this  fact 
was  communicated  to  the  plaintiff.  Skinkle  testified  that  in  the  spring 
before  the  payment  he  told  the  plaintiff  that  he  would  make  a  payment 
on  a  $400  note  which  the  plaintiff  held  against  the  firm  of  Skinkle  & 
Howlet  without  any  indorser,  if  he  could  get  it  out  of  their  business, 
and  that  he  would  pay  on  the  note  in  suit,  indorsed  by  the  defendant, 
if  he  got  it  on  a  note  indorsed  by  him,  and  that  four  or  five  days  before 
the  pajment  he  told  the  plaintiff  that  he  had  found  where  he  could  get 
the  money  to  pay  on  the  note  in  suit.  But  he  testified  that  he  could 
not  say  that  he  told  the  plaintiff  how  or  on  whose  indorsement  he  was 
going  to  get  the  money,  and  he  does  not  say  that  he  ever  told  plaintiff 
how  he  got  it. 

Skinkle  further  testified  that  when  he  made  the  payment  he  told 
plaintiff  that  he  had  come  to  pay  $275  on  the  note  indorsed  by  the 
defendant.  That  plaintiff  took  the  money,  counted  it  and  took  out 
a  paper  which  the  witness  supposed  was  the  note,  and  wrote  on  the 
back  of  it.  The  plaintiff  contradicted  Skinkle's  statements  to  the  effect 
that  the  payment  was  made  on  the  note  in  suit,  and  gave  evidence  tend- 
ing to  show  that  it  was  made  on  the  $400  note  ;  he  also  testified  that 
at  the  time  of  the  payment  he  indorsed  it  on  the  $400  note  in  presence 
of  the  defendant,  but  that  he  did  not  know  whether  the  defendant 
noticed  the  note.  That  he  did  not  know  that  the  money  had  been 
raised  on  the  defendant's  indorsement.  The  $400  note  was  produced 
at  the  trial,  bearing  the  indorsement  of  the  payment. 

It  is  conceded  that  if  the  money  paid  to  the  plaintiff  had  been  raised 
on  the  credit  of  the  defendant  for  the  purpose  of  being  applied  on  the 
note  indorsed  by  him,  and  this  fact  was  communicated  to  the  plaintiff, 
he  would  have  bound  himself  by  accepting  the  money  to  apply  it  on 
that  note.  But  in  the  absence  of  any  such  knowledge,  it  is  claimed  on 
the  part  of  the  plaintiff  that  he  had  the  right  to  apply  the  money  paid 
him  by  Skinkle,  to  the  unindorsed  note,  unless  Skinkle  directed  that  it 
be  applied  on  the  note  in  suit,  and  that  the  fact  that  it  had  been  raised 
by  Skinkle  on  the  defendant's  indorsement,  if  unknown  to  the  plaintiff, 
would  not  affect  that  right. 

1  The  arguments  of  counsel  are  omitted.  —  Ed. 


SECT.  XII.]  HARDING   V.   TIFFT.  317 

The  question  whether  Skinkle  directed  the  payment  to  be  applied  on 
the  note  in  suit,  as  stated  by  him  in  his  testimony,  was  submitted  to 
the  jury,  and  their  verdict  establishes  that  no  such  direction  was  given. 
The  evidence  as  to  the  means  by  which  Skinkle  raised  the  money  was 
not  material  on  that  issue.  But  it  is  claimed  by  the  defendant  that, 
assuming  that  no  direction  was  given  by  Skinkle  to  apply  the  payment 
on  any  particular  note,  the  fact  that  the  mone}'  had  been  raised  on 
a  note  indorsed  by  the  defendant  for  the  express  purpose  of  being  paid 
on  the  note  in  suit,  entitles  him  now  to  have  it  thus  applied  notwith- 
standing the  application  actualby  made  by  the  plaintiff  at  the  time.  It 
is  not  disputed  that  a  creditor  having  two  demands  against  a  debtor 
may  apply  a  payment  received  from  the  debtor  to  either  of  the  demands, 
at  his  election,  provided  no  direction  is  given  by  the  debtor,  and 
the  verdict  establishes  that  no  such  direction  was  given  in  the  pres- 
ent case  to  apply  the  payment  on  the  note  in  suit.  But  it  is  con- 
tended that  the  right  of  the  creditor  to  make  the  application  is  subject 
to  the  condition  that  such  application  be  not  inequitable,  and  such 
is  the  language  used  in  some  of  the  authorities  cited.  The  equities 
referred  to,  however,  are  usually  equities  existing  between  the  debtor 
and  creditor,  and  I  have  found  no  case  recognizing  those  arising  out 
of  transactions  between  the  debtor  and  third  persons,  of  which  the 
creditor  has  no  notice.  The  mere  fact  that  there  is  a  surety  for  one  of 
the  debts  does  not  preclude  the  creditor  from  applying  a  payment  thus 
received  to  the  debt  for  which  he  has  no  securit}-.  Allen  v.  Culver ; * 
Stone  v.  Seymour.2  If  the  money  had  been  raised  by  the  debtor  by 
the  aid  of  the  indorsement  of  the  surety,  given  for  the  express  pur- 
pose of  enabling  the  debtor  to  raise  funds  to  pay  the  secured  debt,  and 
these  facts  had  been  communicated  to  the  creditor,  he  would  not  be 
permitted  even  with  the  consent  of  the  debtor  to  misapply  it.  But  it 
can  hardly  be  disputed  that  if  the  debtor  brought  money  thus  raised  to 
the  creditor,  and  paid  it  to  him  expressly  upon  the  unsecured  debt, 
without  disclosing  the  means  by  which  the  money  had  been  raised  or 
any  agreement  as  to  its  use,  the  payment  would  be  valid.  I  think  the 
same  result  follows  when  the  debtor,  by  omitting  to  specify  on  which 
debt  the  payment  is  to  be  credited,  authorizes  the  creditor  to  apply  it 
to  either,  and  the  creditor  exercises  this  option.  The  money  belongs 
to  the  debtor,  and  where  the  creditor  is  ignorant  of  any  duty  on  the  part 
of  the  debtor  in  respect  to  it,  he  may  receive  and  apply  it  as  if  no  such 
duty  existed.  If  no  application  had  been  made  by  either  party,  and 
the  duty  were  cast  upon  the  Court  of  making  the  proper  application,  the 
equities  of  the  surety  would  doubtless  be  considered.  But  where 
the  application  has  been  made  by  the  creditor,  in  accordance  with  his 
apparent  legal  right,  and  in  ignorance  of  any  fact  which  should  prevent 
him  from  making  such  application,  I  do  not  think  he  is  bound  to  change 
it  on  the  subsequent  disclosure  that  a  third  party  had  an  interest  in 

1  3  Den.  285.  2  15  Wend.  20. 


318  HARDING   V.    TIFFT.  (_CHAP.  IL 

having  it  otherwise  applied,  and  that  the  debtor  had  violated  a  duty  to 
such  third  party  in  not  directing  such  application.     The  application 
made  by  the  creditor  cannot  be  said  to  have  been  inequitable  if  no  facts 
were  brought  to  his  knowledge  at  the  time,  showing  that  he  ought  not 
to  make  it ;  it  would  create  great  confusion  in  commercial  dealings  to 
hold  that  after  the  lapse  of  time,  and  when  the  position  of  the  parties 
may  have  been  changed  by  such  a  payment,  the  transaction  could  be 
reopened  and  the  creditor  obliged  to  revive  an  unsecured  debt  which 
he  had  treated  as  paid,  and  apply  the  payment  on  a  debt  for  which  he 
had  ample  security.     The  loss,  if  any,  sustained  by  the  surety  in  such 
a  case  results  from  the  act  of  his  principal  in  whom  he  placed  con- 
fidence, and  not  from  any  improper  act  of  the  debtor.     It  does  not 
appear  that  the  plaintiff  was  ever  apprised,  until  the  trial  of  this  action, 
of  the  allegation  as  to  the  means  by  which  the  money  had  been  raised. 
He  had  the  right  in  the  meantime  to  repose  upon  the  payment  of  the 
unindorsed  note,  and  if  he  had  attempted  to  collect  that,  the  fact  of  the 
payment,  and  the  indorsement  of  it  on  that  note,  would  have  been 
a  good  defence.      The  defence  set  up  in  the  answer  in  this   action 
and  testified  to  at  the  trial  was  the  express  payment  on  the  note  in 
suit.     If  that  was  true,  the  evidence  as  to  the  means  whereby  Skinkle 
raised  the  money  was  immaterial,  and  it  was  excluded  on  that  ground. 
But  in  any  aspect  of  the  case  it  was  properly  excluded. 

The  judgment  should  be  affirmed. 

All  concur,  except  Miller  and  Earl,  JJ.,  absent. 

Judgment  affirmed.1 

»  Compare  Merchants'  Co.  v.  Herber  (Minnesota,  1897),  71  N.  W.  E.  624.  —  Ed. 


SECT.  XIII.]  EX   PAliTE   GIFFORD.  319 


SECTION  XIII. 

Surety* s  Defences  growing  out  of  Dealings  or  Relations  between 

the   Creditor  and   Co-Surety. 

Ex  parte  GIFFORD. 
In  Chancery,  Before  Lord  Eldon,  C,  April  27,  1802. 

[Reported  in  6  Vesey,  805.] 

Marshall  and  Haigh,  creditors  of  Bedford  upon  a  promissory  note, 
requiring  farther  security,  Bedford,  Niblock  and  Burgess,  and  Baylis, 
joined  in  a  promissory  note,  as  a  collateral  security.  Niblock  and 
Burgess  and  Bedford  became  bankrupts.  Marshall  and  Haigh  proved 
the  whole  debt  under  each  Commission  ;  and  afterwards  brought  an 
action  against  Baylis ;  who  entered  into  a  composition  with  his  credi- 
tors ;  under  which  Marshall  and  Haigh  received  a  dividend  of  4s.  in 
the  pound  ;  the  receipt  for  which  was  expressed  to  be  for  £191  and  two 
notes,  which,  when  duly  paid,  will  be  in  full  of  the  said  debt  and  all 
other  demands  from  him.  The  dividend  paid  by  the  estate  of  Bedford 
was  4s.  in  the  pound  ;  and  that  by  the  estate  of  Niblock  and  Burgess  5s. 

The  prayer  of  this  petition  was,  that  the  proof  against  the  estate  of 
Niblock  and  Burgess  may  be  expunged. 

Mr.  Romilly  and  Mr.  Whishaw,  in  support  of  the  petition. 

Mr.  Richards,  Mr.  Alexander,  and  Mr.  Cooke,  contra.1 

Lord  Chancellor  [Eldon].  —  Clearly  it  is  impossible  upon  any 
principle,  regulating  cases  of  this  nature,  that  relief  can  be  given  to 
the  extent  prayed  by  this  petition  :  and  it  also  strikes  me  that  the 
decision  of  an}-  question,  that  may  arise  in  these  bankruptcies,  is  some- 
what premature  :  the  question  depending  upon  the  quantum  of  dividend, 
that  the  respective  estates  will  pay.  These  parties  as  between  them 
respectively  and  Bedford,  are  to  be  considered  in  the  situation  of  prin- 
cipal and  surety ;  and,  as  between  themselves,  upon  the  principle  of 
co-sureties.  As  to  Bedford,  he  is  to  pay  the  debt  in  equitable  con- 
sideration in  relief  of  both  ;  and  proof  being  made  against  his  estate,  if 
the  holder  thought  proper  to  receive  a  sura  of  money  in  discharge  of  his 
estate,  the  case  Ex  parte  Smith  2  and  many  others  would  have  entitled 
the  surety  to  say,  that  if  his  estate  was  discharged,  without  an}-  reserve 
of  the  remedy  against  the  sureties,  they  would  be  discharged  ;  first, 
upon  this  principle  unquestionably :  that  the  sureties,  if  they  paid  the 

1  The  arguments  of  counsel  are  omitted.  —  Ed. 

2  3  Bio.  C.  C.  1,  1  Cooke,  Bankr.  Law  (8th  ed.),  190. 


320  EX    PAETE    GIFFOKD.  [CHAP.  IL 

debt,  would  have  been  entitled  to  stand  in  the  place  of  the  creditor  in 
respect  of  the  proof  against  the  estate  of  the  principal ;  and  therefore, 
when  it  is  stated  in  some  cases,  that  it  is  for  the  interest  of  the  surety, 
that  the  compromise  shall  be  made,  the  answer  is,  those,  for  whose 
benefit  it  is  alleged  to  be  made,  are  the  proper  judges,  whether  it  is  for 
their  benefit ;  and  it  is  not  to  be  forced  upon  them  :  they  having  a  clear 
equitable  reined}*  to  stand  in  the  place  of  the  creditor  proving. 

Another  ground,  upon  which  it  has  been  reasoned  in  some  cases,  is, 
that  upon  the  faith  of  such  a  transaction  with  the  principal,  if  there  was 
no  reserve  of  the  remedy  against  other  persons  liable,  in  order  to  secure 
the  intended  effect  of  such  a  contract  to  discharge  him  upon  such  a  pay- 
ment, you  must  almost  of  necessity  infer,  that  the  party  is  not  to  take 
a  remedy  over  against  others,  which  would  forthwith  bring  upon  the 
party  discharged  all  the  evil,  from  which  the  prior  moment  the  other 
had  agreed  to  discharge  him.  Suppose  4s.  in  the  pound  paid  by  the 
principal,  nothing  being  said  about  remainder  of  the  debt :  it  would 
be  a  very  bad  bargain,  if  the  creditor  could  send  another  person,  either 
upon  the  same  instrument  or  a  contract  implied  by  the  law,  to  take  the 
debtor  in  execution  for  the  remainder  of  the  debt,  for  which  that  com- 
position was  made.  The  Court  would  therefore  be  inclined  to  infer, 
that  it  was  not  intended  that  the  person  discharged  should  still  remain 
liable.  But  certainly  he  might  so  frame  his  contract ;  and  there  are 
man}'  cases,  in  which  it  is  not  imprudent  for  the  debtor  to  make  the 
composition  with  a  reserve  of  the  remedies,  either  understood,  or  an 
express  declaration  to  that  effect.  There  would  be  nothing  imprudent 
in  the  debtor  so  doing  in  this  very  case ;  unless  it  turns  out,  that  the 
surety  shall  pay  to  an  extent,  in  which  he  would  be  prejudiced,  if  barred 
of  the  remedy  against  the  co-sureties. 

With  respect  to  co-sureties  the  case  is  different,  but  governed  by 
principles  in  some  degree  the  same.  The  principal  is  to  discharge  all 
the  obligations  of  all  the  sureties :  but  they  stand  with  regard  to  each 
other  in  a  relation,  which  gives  rise  to  this  right  among  others  ;  that, 
if  one  pays  more  than  his  proportion,  there  shall  be  a  contribution  for 
a  proportion  of  the  excess  beyond  the  proportion,  which  in  all  events 
he  is  to  pay.  The  party  has  a  right  to  say  for  himself,  he  will  not  con- 
sider the  relation  ;  but  will  take  6s. ;  though  the  surety  is  liable  to  pay 
10s.  He  may  say,  he  will  be  passive  as  to  the  other  4s.  ;  or  he  will 
discharge  the  whole  debt,  and  at  his  own  risk  as  to  the  remedy  against 
the  other  surety  ;  or  he  may  reserve  the  remedy  against  the  co-surety 
expressly.  It  depends  upon  the  effect  and  terms  of  the  bargain  actually 
entered  into.  It  might  be  prudent  in  this  very  case  for  Baylis,  Bed- 
ford's son-in-law,  to  say  he  would  pay  4s.  in  the  pound  ;  recollecting, 
that  Niblock  and  Burgess  must  pay  more  than  10s.  in  the  pound,  before 
any  demand  could  be  made  by  them  against  Baylis ;  and  recollecting 
the  remedies  against  Bedford.  The  question  therefore  is,  under  the 
circumstances  what  did  they  mean?  As  to  the  receipt  the  creditor 
contends,  there  is  no  difference  whether  there  is  an  express  reservation 


SECT.  XIII.]  EX   PARTE    GIFFORD.  321 

of  the  remedies  against  the  co-sureties,  but  that  distinction  has  been 
taken.  At  the  time  of  Mr.  Richard  Burke's  Case  Lord  Thurlow  ad- 
mitted, that,  if  there  is  a  reserve  of  the  remedies  against  the  others, 
there  is  consent  of  the  party,  with  whom  the  composition  is  made  ;  and 
if  out  of  that  a  demand  arises  against  him,  it  is  a  demand,  which  began 
to  exist  with  his  consent  expressed  in  the  terms  of  the  contract,  and 
under  some  circumstances  wisely  and  prudently  given  ;  for  the  party 
would  not  have  entered  into  the  contract,  unless  he  was  allowed  to 
contract  for  that  reined}*  over  against  the  co-sureties.  If  Niblock  and 
Burgess  should  not  pay  more  than  their  moiety,  the  contract  would  be 
a  beneficial  contract  for  Baylis  ;  for  though  paying  more  than  Baylis 
they  would  not  pa}'  enough  to  bring  an  assumpsit  against  him.  That 
would  not  therefore  be  an  imprudent  bargain  for  Baylis  to  make.  It 
ma}r  however  never  be  necessary  to  decide  this ;  as  it  depends  upon 
what  dividends  the  estate  of  Bedford  and  of  Niblock  and  Burgess  pay. 
But  I  have  a  strong  opinion,  that  under  the  circumstances  the  other 
persons  liable  upon  this  note  are  discharged,  because  Baylis  was  con- 
tented to  make  a  bargain,  the  effect  of  which  leaves  him  to  his  chance 
as  to  his  ultimate  liability  between  him  and  his  co-surety ;  and  there- 
fore that  relief  cannot  be  given  even  to  the  extent,  to  which  it  is  now 
modified. 

The  order  was,  that  under  the  present  circumstances  the  petition 
should  be  dismissed  without  costs,  and  without  prejudice  to  presenting 
any  other  petition.1 

1  It  is  generally  agreed  that  an  agreement  by  the  creditor  never  to  sue  a  surety,  or 
the  equivalent  of  such  an  agreement  in  the  form  of  a  parol  release,  will  discharge 
a  co-surety  only  so  far  as  it  would  deprive  the  co-surety  of  his  right  of  reimbursement 
for  payment  of  more  than  his  share  of  the  common  obligation.  Jemison  v.  Governor, 
47  Ala.  390;  Saint  v.  Wheeler,  95  Ala.  362,  374  (semble)  ;  Lewis  v.  Armstrong,  80  Ga. 
402,  87  Ga.  466 ;  Thomason  v.  Clark,  31  111.  App.  404 ;  Thompson  v.  Adams,  Freem. 
Ch.  (Miss.)  225;  Fletcher  v.  Grover,  11  N.  H.  368  (semble);  Currier  v.  Baker,  51 
N.  H.  613  (semble);  Morgan  v.  Smith,  70  N.  Y.  537  ;  Benedict  v.  Lea,  35  Hun,  34; 
Schock  v.  Miller,  10  Barr,  401  ;   Waggener  v.  Dyer,  11  Leigh,  384,  Accord. 

But  see  Stockton  v.  Stockton,  40  Ind.  225. 

If  the  creditor  at  the  time  of  his  agreement  never  to  sue  the  surety  expressly  re- 
serves all  his  rights  against  the  co-surety,  the  latter  will  continue  liable  for  the  full 
amount  of  the  obligation.  Deering  v.  Moore,  86  Me.  181 ;  Morgan  v.  Smith,  70  N.  Y, 
537.  —  Ed. 


322  THOMPSON    V.   LACK  [CHAP.  II. 


THOMPSON  and  Others  v.  E.  J.  LACK. 
In  the  Common  Pleas,  November  18,  1846. 

[Reported  in  3  Common  Bench  Reports,  540.] 

Covenant.  The  plaintiffs  counted  upon  a  covenant  whereby  the 
defendant  and  C.  P.  Lack  jointly-  and  severally  guaranteed  the  pa}r- 
ment  of  an  annuity  by  John  Lack.  The  defendant  pleaded,  with  a 
profert,  a  release  by  the  plaintiffs  of  his  co-guarantee,  C.  P.  Lack.  The 
release  being  enrolled,  contained  a  proviso  that  nothing  therein  con- 
tained should  prejudice  the  rights  of  the  plaintiff  against  the  defendant. 
The  plaintiff  demurred. 

Dowling,  Serjt.,  for  the  plaintiffs. 

Channell,  Serjt.,  for  the  defendants.1 

Wilde,  C.  J.  With  respect  to  the  third  plea,  the  question  is,  what 
is  the  effect  of  the  deed  which  is  therein  described  as  a  release  ?  Are 
you  at  liberty  to  separate  that  which  professes  to  be  a  release,  from 
the  proviso?  or  must  30U  take  them  both  together,  and  say  what  is 
their  entire  effect?  It  seems  to  me,  that  you  must  look  at  the  whole 
of  the  deed  ;  and  that  raises  the  point,  whether  a  party  may  give  a 
qualified  release.  Solly  v.  Forbes'2  is  a  decision  that  you  may  give 
such  a  release  ;  and,  although  in  Nicholson  v.  Rcvill 3  there  are  to  be 
found  expressions  used  b}-  Lord  Denman,  in  delivering  the  judgment 
of  the  court,  inconsistent  with  that  view,  it  seems  to  me  that  those  ex- 
pressions are  more  of  the  nature  of  obiter  dicta  than  those  attributed  to 
Lord  Eldon  in  Ex  parte  Gifford.  In  the  latter  case,  Lord  Eldon 
decided,  in  conformity  with  the  principle  established  b}T  Solly  v. 
Forbes, — which  I  consider  is  a  decisive  authority,  —  that  a  release 
may  be  qualified,  and  prevented  operating  as  a  discharge  of  a  co- 
surety.4 The  question  here  is,  whether  the  release  in  this  deed  is 
qualified,  and  reserves  the  remedy  against  the  defendant.  It  is  ad- 
mitted that  the  intention  of  the  parties  is  clear ;  and  strong  grounds 
should  be  laid  before  the  court  to  induce  it  not  to  give  effect  to  the 
deed  according  to  such  intention.  I  see  nothing  in  the  present  case  to 
prevent  us  from  deciding  in  conformity  with  Solly  v.  Forbes.  Generally 
speaking,  a  release  of  one  will  operate  as  a  discharge  to  all.  There- 
fore, in  Nicholson  v.  Revill,  the  plaintiff  having  received  a  sum  of 

1  The  statement  of  the  case  is  abridged,  and  the  arguments  and  concurring  opinions 
of  Coltman  and  Maule,  JJ.,  are  omitted,  —  Ed. 

2  2  Bro.  &  B.  38.  3  4  A.  &  E.  675. 

4  A  similar  distinction  prevails  in  the  Roman  law:  —  "In  his  qui  ejusdem  pecuniae 
exactionem  habent  in  solidum,  vel  qui  ejusdem  pecuniae  debitores  sunt,  quatenus  alii 
quoque  prosit  ant  noceat  pacti  exceptio,  quoeritur :  et  in  rem  pacta  omnibus  prosunt 
quorum  obligationem  dissolutam  esse  ejus  qui  paciscebatur  interfuit :  itaque  debitoris 
conventio,  fidejussoribus  proficiet."  "  Nisi  hoc  actum  est  Ut  dumtaxat  a  reo  non 
petatur,  a  Jdej'itssoribus  petatur:  tunc  enim  fidejussor  exceptione  non  utetur.''  Dig. 
lib.  2,  tit.  14,1.  21,  §  5,1.  22. 


SECT    XIII.]  GOSSERAND   V.   LACOUR.  323 

money  from  one  of  the  parties  to  a  promissory  note,  and  having  erased 
his  name  from  the  instrument,  it  was  held,  that  such  erasure  operated 
as  a  release  to  the  other  parties  thereto ;  and  what  was  neeessary  for 
the  decision  of  that  case,  was  in  accordance  with  the  general  principle. 
I  am  of  opinion  that  this  was  a  qualified  release,  and  did  not  discharge 
'the  co-surety.  I  think,  therefore,  the  general  demurrer  sustainable  by 
the  deed  as  set  out  on  oyer.  Judgment  for  the  plaintiff s} 


JACQUES   GOSSERAND  v.  JEAN   B.  LACOUR  and  Others. 
In  the  Supreme  Court,  Louisiana,  March,  1853. 

[Reported  in  8  Louisiana  Annual  Reports,  75.] 

Appeal  from  the  District  Court,  Ninth  District.     Farrar,  J. 
Suit  on  the  following  promissory  note. 

$3,543.  Pointe  Coupke,  ce  20  Juin,  1849. 

Dans  tout  Mars,  mille  huit  cent  cinquante,  nous  Jean  B'te  Lacour 
comme  principal,   et  Madame  V.   Pierre  Gondran,   et  Monsieur  Jean 

l  Kearsley  v.  Cole,  16  M.  &  W.  128,  136,  Per  Parke,  B.  ;  Price  v.  Barker,  4  E.  &  B. 
760,  supra,  147,  150,  n.  2,  s.  c.  ;  Pegram  v.  Riley,  88  Ala.  399  (semble)\  Glasscock  v. 
Hamilton,  62  Tex.  143,  168-169;  Richardson  v.  Overleese  (Texas  Civil  Appeals, 
1897),  44  S.  W.  R.  308;  Hewitt  v.  Adams,  1  Pat.  &  H.  34;  Macdonald  v.  Whitfield, 
27  Can.  S.  C.  94,  Accord. 

Similarly,  a  creditor  may  release  a  surety  as  to  his  proportion,  reserving  his  rights 
against  a  co-surety  for  the  latter's  proportion.  Hood  v.  Hay  ward,  124  N.  Y.  1;  and 
there  is  a  disposition,  in  some  jurisdictions,  to  treat  an  ordinary  release  of  a  surety 
as  if  it  contained  such  a  reservation  of  rights  against  the  co-surety.  Gordon  v. 
Moore,  44  Ark.  349;  Smith  v.  State,  46  Md.  617;  State  v.  Matson,  44  Mo.  305.  In 
Massey  v.  Brown,  4  S.  Ca.  85,  the  court  allowed  the  release  to  be  interpreted  in  this 
sense  by  the  aid  of  parol  evidence  of  such  an  intention.  — Ed. 

Unqualified  release  of  a  surety  in  a  joint  or  joint  and  several  obligation 
discharges  his  co-surety  in  the  same  obligation.  Nicholson  v.  Revill,  4  A.  &  E.  675; 
Evans  v.  Bremridge,  2  K.  &  J.  174,  183;  Kearsley  ;;.  Cole,  16  M.  &  W.  128  136; 
Price  v.  Barker,  4  E.  &  B.  160,  777,  supra,  147,  148,  s.  c.  ;  Ward  v.  Nat.  Bank,  8 
App.  Cas.  755,  764  (affirming  s.  c.  L.  R.  1  New  Zealand,  51);  Mercantile  Bank  v. 
Taylor,  93  A.  C.  317  (affirming  s.  c.  L.  R.  12  N.  S.  Wales,  252);  People  v.  Buster, 
11  Cal.  215;  Spencer  v.  Houghton,  68  Cal.  82  ;  Deering  v.  Moore,  86  Me.  181  (semble). 

But  in  Gordon  v.  Moore,  44  Ark.  349  ;  Smith  v.  State,  46  Md.  617  ;  State  v.  Matson, 
44  Mo.  305  ;  Massey  v.  Brown,  4  S.  Ca.  85.  snch  a  release,  though  effectual  at  law, 
was  considered  to  exonerate  the  co-surety  only  pro  tanto  in  equity. 

By  statute,  in  some  jurisdictions,  a  release  of  one  surety  on  payment  of  a  part  of 
the  joint  indebtedness  does  not  discharge  the  co-surety  from  the  rest  of  the  debt. 
State  v.  Atherton,  40  Mo.  209  ;  Alford  v.  Baxter,  36  Vt.  158. 

Merger.  In  Chick  v.  Farr,  31  S.  Ca.  463,  it  was  adjudged  that  the  fact  that  a 
surety  became  the  administrator  of  the  principal  obligor  did  not  discharge  a 
co-surety. 

Discharge  in  Bankruptcy.  The  discharge  in  bankruptcy  of  one  surety  does  not 
affect  the  creditor's  rights  against  a  co-surety.  Sacramento  Co.  v.  Bird,  35  Cal 
66. —Ed. 


324  GOSSERAND   V.    LACOUR.  [CHAP.  IL 

B'te  Decuir  comrne  la  caution,  promettons  de  pa}Ter  solidairement  et 
l'un  pour  l'autre,  a  l'ordre  de  Monsieur  Jacques  Gosserand,  la  somme 
de  trois  mille  cinq  cent  quarante-trois  piastres  pour  valeur  recue,  avec 
interet  a  huit  pour  cent  l'an  depuis  l'echeanee  jusqu'a  parfait  paiement. 

[Signed]         Jean  B.  Lacour, 
Jean  B.  Decuir, 
Chas.  Hag  an,  temoin.  V.  P.  Gondran. 

Slidell,  J.1  On  the  face  of  the  note  we  consider  Madame  Gondran 
and  J.  B.  Decuir  bound  as  sureties  in  solido. 

It  is  undisputed  that  Gosserand,  the  holder  of  the  note,  gave  time 
to  Madame  Gondran  ;  and  the  question  arises  whether  this  agreement 
affected,  and  if  so,  to  what  extent,  the  liability  of  her  co-surety  Decuir, 
and  his  heir  Mrs.  Lejeune. 

By  the  Article  3032  of  the  Code  of  1825,  it  is  said,  the  prolongation 
of  the  term  granted  to  the  principal  debtor,  without  the  consent  of  the 
surety,  operates  a  discharge  of  the  latter. 

It  is  argued  for  the  plaintiff  that  this  article  does  not  in  terms  cover 
the  case  of  time  given  to  a  co-surety.  This  is  true.  But  we  consider 
its  spirit  applicable  to  the  present  question,  especially  when  we  revert 
to  the  pre-existing  law,  and  the  reasons  suggested  by  the  jurisconsults 
who  prepared  the  amended  Code,  which  is  the  law  of  this  contract. 

In  the  Code  of  1808,  under  the  head  "Extinctions  of  Suretyship," 
is  the  following  Article.  "  The  simple  prorogation  of  the  term  granted 
by  the  creditor  to  the  principal  debtor,  does  not  exonerate  the  surety, 
who  may  in  this  case  sue  the  said  debtor,  to  compel  him  to  make  pay- 
ment." 

In  presenting  the  amendment  which  was  adopted  by  Article  3032, 
above  cited,  the  jurisconsults  submitted  to  the  Legislature  the  following 
remarks :  — 

"  This  is  an  innovation  on  the  principles  acknowledged  by  authors, 
and  an  entire  change  of  the  provision  as  it  existed  before,  in  which  it 
is  declared  that  a  mere  prorogation  of  the  term  granted  to  the  debtor 
should  not  discharge  the  surety.  It  is  proper,  therefore,  that  we 
should  state  the  reasons  which  have  induced  us  to  propose  this  amend- 
ment. 

"  Pothier,  from  whom  principally  the  French  Code  has  adopted  a 
provision  similar  to  that  which  we  propose  to  abolish,  gives  as  a  reason 
for  his  opinion,  that  where  the  creditor  accords  the  debtor  a  proroga- 
tion of  the  time,  this  does  not  prevent  the  surety  from  acting  against 
the  debtor,  and  providing  for  his  indemnity,  if  he  perceives  that  the 
fortune  of  the  debtor  is  beginning  to  diminish. 

"  Notwithstanding  the  respect  due  to  an  authority  of  such  weight, 
we  do  not  think  that  tin's  doctrine  is  in  accordance  with  general  prin- 
ciples, as  applicable  to  matters  of  suretyship,  nor  that  it  is  just  to 
drive  the  surety  to  this  recourse.     The  obligation  which  the  surety 

i  A  portion  of  the  case  is  omitted.  —  Eo. 


SECT.  XIII.]       KLINGENSMITH   V.    KLINGENSMTTIl'S   EXECUTOR.  325 

contracts  is  to  pay  at  the  time  fixed  by  the  contract,  if  the  debtor 
himself  does  not.  This  security  is  given  for  a  limited  time.  When 
the  time  of  performing  the  obligation  arrives,  the  surety  should  have 
the  right  of  insisting  on  the  execution  of  the  contract,  that  he  may  be 
discharged,  or  at  least  that  he  may  be  informed  of  the  amount  which 
he  has  to  pay.  To  prolong  his  obligation  beyond  the  term  fixed,  is  to 
force  him  beyond  his  undertaking  ;  to  subject  him  to  conditions  to 
which  he  did  not  mean  to  submit.  In  fine,  it  is  changing  his  contract." 
See  Amendments,  p.  119. 

If  we  apply  the  spirit  of  these  remarks  and  of  the  amendment  to 
the  case  before  us,  how  does  the  matter  stand? 

Mrs.  Decuir  had  a  right,  as  surety,  to  be  subrogated  to  the  rights  of 
the  plaintiff,  under  the  original  contract,  against  her  co-surety  to  the 
extent  of  their  share  of  liability,  which  inter  se  her  co-surety  was 
bound  to  have.  For  being  bound  as  sureties  in  solido,  either,  on  pay- 
ing the  whole  debt,  had  a  right  to  resort  to  the  co-surety  to  reimburse 
one  half.  But  if  the  appellant  had  paid  the  plaintiff  the  whole  claim, 
and  demanded  a  subrogation  of  the  rights  of  the  plaintiff  against 
Madame  Gondran,  the  plaintiff  could  not  have  given  it.  By  his  agree- 
ment he  was  estopped  from  present  suit.  Thus  the  co-surety's  right 
under  the  contract  had  been  changed,  to  the  co-surety's  detriment,  by 
the  act  of  the  creditors ;  and  therefore,  in  our  opinion,  the  co-surety's 
liability  was  pro  tanto  discharged. 

We  are  of  opinion,  therefore,  that  the  judgment  against  the  appel- 
lant for  the  whole  amount  of  the  note  and  interest  was  erroneous,  and 
that  the  judgment  should  be  reduced  by  one  half,  being  the  amount  of 
the  share  of  the  co-surety,  Mrs.  Gondran. 

It  is,  therefore,  decreed  that  the  judgment  of  the  court  below  against 
Mrs.  Margaret  Decuir,  wife  of  Ovid  Lejeune,  be  reversed,  and  that  the 
said  plaintiff  recover  of  the  said  Margaret  Decuir  the  sum  of  $1771.50, 
with  interest  thereon  from  the  3d  April,  1850,  until  paid,  at  the  rate  of 
eight  per  cent,  per  annum  and  costs  of  the  suit  against  her  in  the  court 
below,  the  costs  of  the  appeal  to  be  paid  by  the  plaintiff.1 


KLINGENSMITH  v.   KLINGENSMITH'S  EXECUTOR. 

In  the  Supreme  Court,  Pennsylvania,  1858. 

[Reported  in  31  Pennsylvania  Reports,  460.] 

Error  to  the  Common  Pleas  of  Westmoreland  county. 
This  was  an  action  of  debt,  b}'  Sarah  Klingensmith  and  John  Kling- 
ensmith,  her  husband,  for  the  wife's  use,  against  P.  Klingensmith,  exe- 

1  Stirling  v.  Forrester,  3  Bligh,  575 ;  Dunn  v.  Slee,  1  Moore,  2  Holt,  N.  P.  399; 
Draper  v.  Weld,  13  Gray,  580  ;  Ide  v.  Churchill,  14  Oh.  St.  372,  Accord.  —  Ed. 


326  KLINGENSMITH   V.    KLINGENSMITH'S   EXECUTOR.       [CHAP.  II. 

cutor  of  John  Klingensmith,  Jr.,  deceased,  on  a  note  under  seal,  for  the 
payment  of  $169. 

Sarah  Klingensmith,  prior  to  her  marriage,  loaned  $169  to  A.  Kling- 
ensmith ;  and  for  this  sum  he  gave  the  note  in  question,  dated  the  5th 
April,  1854,  with  John  Klingensmith,  Jr.,  and  Henry  Knappenberger, 
as  sureties.     The  note  was  joint  and  several,  and  under  seal. 

A.  Klingensmith,  the  principal,  became  insolvent ;  both  the  sureties 
died  ;  and  separate  suits  were  instituted  by  the  plaintiffs  against  their 
representatives. 

This  action  was  defended,  on  the  ground  that  the  defendant's  tes- 
tator had  been  discharged,  by  a  neglect  to  sue  the  principal  debtor, 
after  a  notice  given  to  the  plaintiffs  by  Henry  Knappenberger,  the 
co-surety. 

The  evidence  for  the  defence  consisted  in  proof  that  a  son  of  Knap- 
penberger, the  co-surety,  who  was  aged  and  infirm,  called  on  the  plain- 
tiffs, and  said  he  was  sent  by  his  father,  to  sa}r  that  he  wanted  them  to 
push  that  note,  or  his  father  would  not  stand  good  for  it  any  longer. 

The  court  below,  in  answer  to  points  presented  by  the  plaintiffs' 
counsel,  declined  to  charge  the  jurj7  that  there  was  no  evidence  of  any 
authority  in  Knappenberger's  son,  to  give  the  notice  proved  ;  but  left 
it  as  a  question  of  fact  for  the  jury,  and  instructed  them,  that  if  Knap- 
penberger was  discharged,  by  the  omission  of  the  plaintiffs  to  sue  after 
notice,  then  this  would  operate  also  to  discharge  John  Klingensmith,  Jr., 
his  co-surety. 

To  this  charge  the  plaintiffs  excepted  ;  and  a  verdict  and  judgment 
having  been  rendered  for  the  defendant,  the  plaintiffs  removed  the 
cause  to  this  court,  and  here  assigned  such  charge  for  error. 

W.  A.  Cook,  for  the  plaintiffs  in  error,  cited  Hays  v.  Lynn,  7  Watts, 
525  ;  Moore's  Executors  v .  Patterson,  4  Casey,  512  ;  Storj-'s  Eq.  §  498  ; 
Schock  v.  Miller,  10  Barr,  402-4. 

The  opinion  of  the  court  was  delivered  by 

Lowrie,  C.  J.  It  seems  to  us  that  there  was  no  error  in  the  admis- 
sion of  evidence,  nor  in  the  application  of  it.  But  there  is  error  in  the 
answer  to  the  plaintiff's  third  proposition.  The  action  is  against  one 
of  two  sureties.  The  other  had  been  discharged,  by  the  neglect  of  the 
plaintiff  to  sue  the  principal  after  due  notice.  This  does  not  discharge 
both,  where  by  law  a  several  action  ma}'  be  brought.  The  surety  not 
discharged  may  be  sued  for  his  proportion  of  the  amount.  This  prin- 
ciple is  so  well  stated  and  justified  bv  Mr.  Justice  Rogers,  in  the  case 
of  Schock  v.  Miller,  10  State  Rep.  401,  that  we  may  content  ourselves 
with  referring  to  that  decision.1 

Judgment  reversed,  and  a  new  trial  awarded. 

1  Wilson  v.  Tebbetts,  29  Ark.  579  ;  Gordon  v.  Moore,  44  Ark.  349,  358 ;  Trustees 
v.  Southard.  31  111.  Ap.  359  ;  Ronton  v.  Lacy,  17  Mo.  399,  Accord. 

In  Alabama  and  Virginia,  the  co-surety  is  released  altogether  by  the  creditor's  fail- 
ure to  proceed  against  the  principal  at  the  request  of  the  surety.  Towns  v.  Riddle,  2 
Ala.  194 ;  Wright  v.  Stockton,  5  Leigh,  153.     In  Kentucky,  on  the  other  hand,  by  stat- 


SECT.  XIII. I  DODD   V.   WINN.  327 


DODD   v.   WINN. 
In  the  Supreme  Court,  Missouri,  October  Term,  1858. 

[Reported  in  27  Missouri  Reports,  501.] 

Error  to  Rails  Circuit  Court. 

This  was  an  action  in  favor  of  Levi  Dodd  against  Isham  O.Winn,  on 
a  promissory  note  executed  by  David  C.  Glascock,  M.  McDonald,  R.  F. 
Richmond,  Minor  J.  Winn,  James  G.  Caldwell,  and  said  Isham  0.  Winn. 
The  jury  found  the  following  special  verdict:  "  We,  the  jury,  find  a 
special  verdict  as  follows  :  On  the  6th  day  of  April,  1849,  the  plaintiff 
Dodd  sued  Minor  J.  Winn,  on  the  same  note  now  sued  on,  before  the 
recorder  of  the  cit}'  of  Hannibal,  the  said  Minor  being  one  of  the  obli- 
gors in  the  note.  Said  Dodd  recovered  a  judgment  before  said  recorder 
against  said  Minor  on  the  6th  day  of  April,  1850  ;  and  an  execution 
was  issued  b}T  said  recorder  on  said  judgment  on  the  11th  day  of  April, 
1850,  and  placed  in  the  hands  of  the  marshal  of  said  city,  and  by  him 
levied  on  a  house  in  said  city  as  the  property  of  Minor  J.  Winn ;  that 
said  marshal  advertised  said  house  for  sale  under  said  execution,  but 
did  not  sell  the  house,  being  ordered  by  the  plaintiff's  counsel  to  tear 
down  the  advertisements  and  return  the  execution  'no  property  found;' 
which  he  did  ;  and  no  execution  has  since  issued  on  said  judgment  by  the 
recorder.  The  jury  further  find  as  follows,  that  when  the  marshal  levied 
on  the  house  as  aforesaid,  a  part  of  said  house  was  owned  by  said  Minor 
J.  Winn,  which  part  so  owned  by  him  was  worth  the  sum  of  $137.50. 
Said  house  was  standing  on  a  piece  of  ground  owned  by  Jeremiah 
Strode,  who  had  leased  it  to  said  Minor  J.  Winn,  with  the  privilege  of 
taking  off  when  he  pleased  any  house  he  might  erect  thereon.  Minor 
J.  Winn  had  built  the  house  in  question  on  said  lot,  but  had  sold  a  part 
of  it  before  the  execution  was  levied  as  before  stated.  The  jury  further 
find  that  David  C.  Glascock  was  the  principal  in  the  note  sued  on,  and 
that  Minor  J.  Winn  and  Isham  O.  Winn  were  each  securities  for  said 
Glascock." 

The  court  rendered  judgment  on  this  verdict  in  favor  of  plaintiff  for 
eighty  dollars  debt  (four-fifths  of  the  amount  of  the  original  note  sued 
on),  and  assessed  the  damages  for  the  detention  thereof  at  seventy-six 
dollars.1 

ute,  the  co-surety  is,  under  such  circumstances,  not  released  at  all.  Letcher  v.  Yantis,  3 
Dana,  160. 

An  assignee  of  a  hankrupt  surety  hy  buying  up  the  obligation  on  which  the  surety 
is  liable,  and  declining  to  disclose  the  price  paid  for  it,  forfeits  all  right  against  the 
surety,  and  this  discharge  of  the  surety  releases  the  co-sureties  so  far  as  their  right  to 
contribution  against  the  discharged  surety  is  affected.  Garey  v.  Hignutt,  32  Md.  552 
-Ed. 

1  The  arguments  of  counsel  are  omitted.  —  Ed. 


S28  DODD   V.    WINN.  [CHAP.  II 

Lamb  &  Lakenan,  for  plaintiff  in  error. 

Porter  &  Harrison,  for  defendant  in  error. 

Richardson,  Judge,  delivered  the  opinion  of  the  court. 

The  law  is  well  settled  that  a  valid  agreement  between  the  creditor 
and  the  principal  debtor  to  extend  the  time  of  payment,  or  any  improper 
interference  by  the  creditor  with  the  process  of  law  after  the  commence- 
ment of  a  suit,  by  which  the  surety  may  be  injured  or  subjected  to 
greater  risk,  or  be  delayed  in  the  right  on  payment  of  the  debt  to  pro- 
ceed against  the  principal,  if  made  or  done  without  the  assent  of  the 
surety,  will  discharge  him  from  his  liability,  24  Mo.  333  ;  26  Mo.  243; 
and  the  relation  of  principal  and  suret}7  or  of  co-sureties  is  not  extin- 
guished by  judgment.  Rice  v.  Morton.1  A  release  of  the  principal 
will  discharge  the  surety,  but  one  surety  may  be  discharged,  without 
prejudice  to  an  action  against  the  others,  to  the  extent  that  they  would 
be  liable  in  a  suit  for  contribution  between  themselves.  Routon  v.  Lacy.2 
The  creditor  cannot,  by  discharging  one,  increase  the  liability  of  the 
other;  and  he  will  not  be  allowed,  b}-  discharging  one,  to  impose  on 
the  other  a  greater  proportion  of  a  common  burden  than  in  equit}'  he 
ought  to  bear.  At  law,  if  there  are  several  sureties  and  one  is  insol- 
vent and  another  pays  the  whole  debt,  he  can  onby  recover  against  the 
solvent  sureties  their  pro  rata  part  as  if  all  of  them  were  solvent ;  but 
the  rule  in  equity  is  more  just  and  reasonable,  and  the  insolvent's  share 
is  apportioned  among  those  who  are  solvent,  1  Story  Eq.  §  498.  The 
eighth  section  of  our  statute  concerning  securities  provides  that  one 
surety  at  the  suit  of  another  shall  not  be  liable  to  pay  more  than  his 
due  proportion  of  the  original  demand,  but  what  is  his  due  proportion 
will  vary  according  to  the  circumstances.  Thus,  if  there  are  three 
sureties,  and  all  of  them  are  solvent,  and  one  pays  the  debt,  each  of 
the  others  will  be  liable  to  him  for  one-third  of  the  amount  only ;  but 
if  one  of  them  is  insolvent,  the  other  will  be  liable  for  one-half. 

In  this  case  it  seems  that  Glascock  was  the  principal  debtor,  and  that 
the  other  five  parties  to  the  note  were  sureties.  Now  if  all  the  sureties 
were  solvent,  and  the  defendant  paid  the  debt,  he  could  only  require 
M.  J.  Winn  to  contribute  one-fifth  part  of  it,  and  therefore  could  only 
ask  to  have  one-fifth  abated,  and  could  only  complain  of  the  conduct  of 
the  plaintiff  in  releasing  the  lev}'  of  the  execution  to  that  extent.  But 
if  the  other  sureties  are  insolvent,  M.  J.  Winn  would  be  bound  to  con- 
tribute to  the  defendant  one-half  instead  of  one-fifth  of  the  debt;  in 
which  case,  if  the  plaintiff  had  released  to  M.  J.  Winn,  he  could  only 
demand  of  the  defendant  the  other  moiety;  and,  on  principle,  the  same 
result  must  follow  if  he  could  have  made  half  the  debt  but  for  his 
improper  interference  with  the  execution.  These  questions  cannot  be 
determined  from  the  meagre  statement  of  facts  in  the  special  verdict. 
It  does  not  appear  whether  the  other  sureties  were  solvent  or  not. 

The  statute  authorizes  this  court  to  remand  a  cause  when  the  facts  in 

1  19  Mo.  263.  2  17  Mo.  399. 


SECT.  XIII.]  D0D1)   V.   WINN.  329 

a  special  verdict  are  insufficiently  found,  2  R.  C.  1855,  p.  1301,  §  35; 
and  the  judgment  then  will  be  reversed  and  the  cause  remanded  ;  Judge 
Napton  concurring.     Judge  Scott  not  sitting.1 

1  Rice  v.  Morton,  19  Mo.  263;  Lower  v.  Buchanan  Bank,  78  Mo.  67;  English  v. 
Seibert,  49  Mo.  Ap.  563,  567 ;  Dobson  v.  Prather,  6  Ired.  Eq.  31 ;  Robison  Bros.,  14 
Aust.  L.  T.  145 ;  Monk  v.  Smith,  14  N.  S.  Wales  R.  (Eq.)  311,  Accord. 

In  Story  v.  Johnson,  32  Ind.  438  ;  Chipmau  v.  Todd,  60  Me.  282 ;  Alexander  v.  Byrcl, 
85  Va.  690,  the  release  of  an  attachment  or  execution  in  a  proceeding  against  a  surety 
was  held  to  have  no  effect  whatever  upon  the  creditor's  right  to  proceed  against  a  co- 
surety. 

On  the  other  hand,  in  People  v.  Chisholm,  8  Cal.  29,  the  release  of  an  execution 
upon  property  of  a  surety  adequate  to  pay  the  debt  was  held  to  be  a  complete  discharge 
of  the  co-surety. 

Wasting  a  security.  If  the  creditor  waste  a  security  received  from  surety,  he  will 
release  a  co-surety  in  so  far  as  the  latter's  right  of  contribution  is  prejudiced.  Mar- 
gretts  v.  Gregory,  10  W.  R.  630.  —  Ed. 

Set  off  by  a  surety,  with  the  co-surety's  consent,  of  a  debt  due  to  the  latter  from 
the  creditor  was  permitted  in  Hibert  v.  Lang,  165  Pa.  439.  But  this  doctrine  is  pecu- 
liar  to  Pennsylvania.  —  Ed. 


330  UNDERWOOD    V.    STANEY.  [CHAP.  II. 


SECTION  XIV. 

Effect  of  Accident,  Notice  of  Revocation,  Death  of  the  Surety,  or 
Default  of  the  Principal,  upon  the  Continuance  of  the  Obli- 
gation of  Suretyship. 

UNDERWOOD  v.   STANEY. 

In  Chancery,  Before  Sir  Harbottle  Grimstone,  M.  R.,  November 

24,  16G6. 

Before  Lord  Finch,  C. 

[Reported  in  1  Cases  in  Chancery,  77.] 

The  obligee  in  a  bond  of  twenty  years  old  exhibits  his  bill  against 
the  administrator  of  the  principal  and  the  surety  (upon  loss  of  his  bond). 
The  administrator  saith  by  his  answer,  that  he  hath  no  assets.  Upon 
hearing  the  cause,  it  was  directed  to  a  trial,  whether  the  surety  had 
sealed  and  delivered  the  bond  ;  and  a  verdict  had  passed  against  the 
surety,  viz.,  that  he  had  sealed  and  entered  into  the  bond.  And  the 
cause  coming  back  to  this  Court,  and  the  plaintiff's  counsel  praying  a 
decree  for  the  plaintiffs  debt  against  the  surety,  Sergeant  Fountain  (not 
of  counsel  on  either  side)  said  it  was  doubtful  whether  equity  should  in 
this  case  bind  the  surety,  who  was  not  obliged  in  law,  but  in  respect  of 
the  lien  of  the  bond  ;  and  that  being  lost,  and  the  surety  having  no 
benefit  by  (nor  consideration  for)  being  bound,  he  thought  equity  after 
so  long  a  time  should  not  charge  the  surety.  The  Master  of  the  Rolls 
said  he  would  see  to  moderate  and  mediate  this  matter  between  the 
parties,  in  order  to  which  he  was  several  times  attended  by  the  plain- 
tiff; and  the  defendant  making  default,  he  decreed  for  the  plaintiff. 
And  afterwards  the  caus%  was  upon  a  case  made,  brought  before  my 
Lord  Chancellor,  who  was  of  opinion  with  the  Master  of  the  Roils,  and 
decreed  it  for  the  plaintiff.1 

1  Skip  v.  Huey,  3  Atk.  91 ;  E.  I.  Co.  v.  Boddam,  9  Ves.  464  ;  Hughes  v.  Nelson,  29 
N.  J.  Eq.  547;  Berg  v.  Radcliff,  6  Johns.  Ch.  302,  307;  Harrison  v.  Field,  2  Wash. 
(Va.)  140;  Kerney  v.  Kerney,  6  Leigh,  484,  Accord.  In  Skip  v.  Huey,  supra,  Lord 
Hardwicke,  C,  said,  p.  93  :  "There  are  many  cases  where  equity  will  set  up  debts, 
extinguished  at  law,  against  a  surety,  as  well  as  against  a  principal;  as  where  a  bond 
is  burnt  or  cancelled  by  accident  or  mistake,  and  much  stronger,  if  a  principal  procure 
the  bond  to  be  delivered  up  by  fraud,  in  such  a  case  the  court  would  certainly  set  it 
up,  because  he  shall  not  avail  himself  of  the  fraud  of  any  of  the  debtors." 

Relief  against  Surety  on  the  Ground  of  Mistake.  If,  by  mistake,  the 
obligation  signed  by  a  surety  fails  to  express  the  agreement  intended  by  the  parties, 
so  that  the  surety  is,  at  common  law,  either  not  liable  at  all,  or  only  in  a  mode  not 
contemplated,  equity  will  decree  a  reformation  of  the  instrument,  although  against  a 
surety,  and  notwithstanding  the  Statute  of  Frauds.  Crosby  v.  Middleton,  Prec.  Ch. 
309  ;  U.  S.  v.  Cushman,  2  Sumn.  434 ;  Percival  v.  McCoy,  13  Fed.  R.  379  ;  Montville  v. 
Haughton,  7  Conn.  543  ;  Olmsted  v.  Olmsted,  38  Conn.  309 ;  Edwards  v.  Schoeneman. 


SECT.  XIV. 1  RISLEY    V.   BROWN.  331 

It  was  in  the  debate  of  this  case  said,  that  if  a  grantee  in  a  voluntary 
deed,  or  an  obligee  in  a  voluntary  bond,  lose  the  deed  or  bond,  they 
should  have  remedy  against  the  grantee  or  obligor  in  equity.  Tamen 
qucere.  But  if  so,  no  mistake  in  the  principal  case,  where  the  bond  was 
for  money  lent;  and  though  the  surety  had  no  advantage,  yet  the 
obligee  had  parted  with  his  money,  and  loss  is  as  good  a  consideration 
for  a  promise  as  benefit  or  profit. 


ALVAH   RISLEY   v.   ABNER  BROWN,   Impleaded,  etc. 

In  the  Court  of  Appeals,  New  York,  October,  1876. 

[Reported  in  67  New  York  Reports,  160.] 

Earl,  J.  This  is  a  motion  for  an  order  substituting  the  admin- 
istrator of  Abner  Brown  as  defendant,  he  having  died  during  the 
pendency  of  the  appeal  to  this  court. 

The  action  was  upon  a  joint  promissory  note  made  by  the  defendants, 
Abner  Brown  signing  simply  as  surety.  The  principal  interposed  no 
defence.  The  action  was  tried  before  a  referee,  and  the  plaintiff  re- 
covered judgment,  and  judgment  was  entered  against  both  defendants. 
Abner  Brown  alone  appealed  to  the  General  Term  of  the  Supreme 
Court,  and  there  the  judgment  was  affirmed.  He  then  appealed  to 
this  court,  and  filed  the  usual  undertaking  providing  for  the  payment 
of  the  ludgment,  if  it  was  affirmed  or  the  appeal  dismissed.  Pending 
the  appeal  he  died,  and  an  administrator  has  been  appointed  upon  his 

€S  Ltl  jCi 

The  substitution  ought  not  to  be  made.  It  is  the  settled  law  of  this 
State  that  upon  the  death  of  one  of  the  makers  of  a  joint  promissory 
note,  who  was  not  liable  for  the  debt  irrespective  of  the  joint  obligation, 
but  who  signed  the  note  simply  as  suret}*,  his  estate  is  absolutely  dis- 

104  111.  278;  Henkleman  a  Peterson,  154  111.  419  (overruling  Trustees  v.  Otis,  85  111. 
179);  Keith  v.  Henkleman,  68  111.  Ap.  623;  State  v.  Frank,  51  Mo.  98;  Smith  v. 
Allen,  Saxt.  43 ,  Wiser  v.  Blackly,  1  Johns.  Ch.  607 ;  Berg  v.  Radcliff,  6  Johns.  Ch. 
302,  308  ;  Prior  u.  Williams,  3  Abb.  Ap.  624;  Clute  v.  Knies,  102  N.  Y.  377  ;  Huson 
v.  Pittman,  2  Hayw.  331 ;  Armistead  v.  Bozman,  1  Ired.  Eq.  117  ;  Butler  v.  Durham, 
3  Ired.  Eq.  589;  Sikes  v.  Truitt.  4  Jones  Eq.  361  ;  Neininger  v.  State,  50  Oh.  St.  394; 
Moser  v.  Libenguth,  2  Rawle,  428  {semble) ;  Weaver  v.  Shryock,  6  S.  &  R.  262,  264 
(semble)  ;  Rutland  v.  Paige,  24  Vt.  181 

In  Prior  v.  Williams,  supra,  Peckham,  J.,  said,  p.  627  :  "Many  cases  may  be  con- 
ceived where  the  grossest  injustice  would  result  if  courts  had  no  power  to  correct 
mistakes  as  against  sureties.  Mistakes  are  as  likely  to  occur  with  them  as  with 
others,  and  there  is  no  sound  principle  that  prevents  their  being  compelled  to  act  justly 
and  honestly."  On  page  626  the  same  Judge  said  "  With  deference,  I  do  not  think  it 
an  answer  to  a  bill  for  the  reformation  of  an  instrument,  that  it  would  have  been  invalid 
if  not  in  writing,  and  that  therefore  it  cannot  be  reformed.  Upon  such  a  doctrine,  a 
deed  of  land  or  a  mortgage  could  not  be  reformed  even  against  a  principal,  because 
either  is  invalid  if  not  in  writing.'"'  —  Ed 


332  RISLEY    V.    BROWN.  [CHAP.  IL 

charged,  both  in  law  and  equity ; *  and  it  makes  no  difference  that  the 
surety  died  after  a  joint  judgment  against  him  and  the  principal.2  In 
the  latter  case,  the  action  was  upon  a  joint  and  several  bond  against 
principal  and  suret}',  and  a  joint  judgment  was  recovered.  The  suret}r 
then  died,  and  it  was  held,  the  obligee  having  treated  the  bond  as  joint 
by  bringing  an  action  thereon  against  principal  and  surety  jointly,  and 
the  bond  being  merged  in  the  judgment  which  was  a  joint  obligation 
that  his  estate  was  discharged,  both  in  law  and  equit}-.3  It  is,  there- 
fore, unquestioned  that  the  judgment  appealed  from  cannot  be  enforced 
against  the  estate  of  Abner  Brown. 

But  the  claim  is  made  that  the  giving  of  the  undertaking  upon  the 
appeal  altered  the  position  of  the  surety,  and  imposed  upon  him  an 
independent  liability  to  pay  the  judgment  in  case  of  its  affirmance  ;  but 

1  Eawstone  v.  Parr,  3  Russ.  539 ;  Jones  v.  Beach,  2  D.  M.  &  G.  886 ;  Other  v.  Iveson, 
3  Drew.  177;  U.  S.  v.  Price,  9  How.  92;  Piekersgill  v.  Lahens,  15  Wall.  140  (affirm- 
ing Fielden  v.  Lahens,  6  Blatchf.  524) ;  Olmsted  v.  Olmsted,  38  Conn.  309  (semble) ; 
Dorsey  v.  Dorsey,  2  Har.  &  J.  480,  n.  (a)  ;  Waters  v.  Riley,  2  Har.  &  G.  305 ;  Dixon 
v.  Vandenburg,  35  N.  J.  Eq.  47,  49  (semble ;  changed  now  by  statute)  ;  Getty  v.  Binsse, 
49  N.  Y.  384  ;  Wood  i\  Fisk,  63  N.  Y.  245  ;  Hauck  v.  Craighead,  67  N.  Y.  432 ;  Randall 
v.  Sackett,  77  N.  Y.  480;  Johnson  v.  Harvey,  84  N.  Y.  363  (semble);  Richardson  v. 
Draper,  87  N.  Y.  337,  344  (semble) ;  Chard  v.  Hamilton,  125  N.  Y.  777  (affirming  s.  c. 
56  Hun,  259);  Douglass  v.  Ferris,  138  N.  Y.  192,  207  (semble);  Raynor  v.  Laux,  28 
Hun,  35;  Carpenter  v.  Provoost,  2  Sandf.  537;  Davis  v.  Van  Buren,  6  Daly,  391, 
Weaver  r.  Shryock,  6  S.  &  R.  262 ;  Kennedy  v.  Carpenter,  2  Whart.  344 ;  Pecker  v. 
Julius,  2  P.  A.  Browne,  31  ;  Glasscock  v.  Hitchcock,  62  Tex.  143,  150  (seinble) ;  Boyd  v. 
Bell,  69  Tex.  735,  76  Tex.  133  (semble) ;  Harrison  v.  Field,  2  Wash.  (Va.)  136.  (Chan- 
cellor Wythe,  whose  decree  was  reversed  in  this  case,  assailed  the  opinion  of  the  higher 
court  with  some  severity  in  Wythe's  Decisions,  280),  Accord. 

Shubrick  v.  Livingston,  1  DeS.  315;  Lainhardt  v.  Reilly,  3  DeS.  590;  Smithy. 
Martin,  4  DeS.  148;  Susong  v.  Vaiden,  10  S.  Ca.  247,  Contra. 

If  the  obligation  was  intended  to  be  joint  and  several,  and  by  mistake  or  fraud  was 
made  joint  only,  equity  will  reform  the  obligation,  and  thus  prevent  the  exoneration  of 
the  surety's  estate  by  his  death.  Olmsted  v.  Olmsted,  38  Conn.  309.  (Evidence  of 
such  intention  very  slender.) 

It  was  adjudged  in  First  Bank  v.  Morgan,  73  N.  Y.  593,  that  a  creditor  might  come 
upon  the  estate  of  a  surety  on  a  joint  obligation  after  the  latter's  death,  if  the  creditor 
was  not  aware  of  the  suretyship  relation  when  he  took  the  obligation.  But  see  contra, 
Dixon  v.  Vandenburg,  35  N.  J.  Eq.  47,  49. 

There  are  now  statutes  in  most  of  the  States  which  either  make  joint  obligations 
joint  and  several,  or  else  provide  expressly  that  the  estate  of  a  surety  on  a  joint  obli- 
gation shall  not  be  exonerated  by  his  death.  The  following  are  a  few  of  the  cases 
decided  under  such  statutes.  Powell  v.  Kettelle,  6  111.  491  ;  Anderson  v.  Armstrong, 
70  Ind.  99 ;  Mays  v.  Cochrane,  57  Tex.  352  ;  Bergstroem  v.  State,  58  Tex.  92 ;  Donner- 
berg  v.  Oppenheimer,  15  Wash.  290.  — Ed. 

2  But  the  lien  of  a  joint  judgment  fastening  upon  the  land  of  all  the  judgment 
debtors,  is  not  affected  by  the  subsequent  death  of  one  of  them,  although  merely  a 
surety.     Baskin  v.  Huntington,  130  N.  Y.  313.  —Ed. 

3  U.  S.  v.  Archer,  1  Wall.  Jr.  173  (per  Grier,  J.,  who  declined  to  follow  the  contrary 
decision  of  Story,  J.,  in  U.  S.  v.  Cushman,  2  Sumn.  426) ;  McNulty  v.  Hurd,  18  Hun, 
1  (semble),  Accord. 

But  see  Baskin  v  Andrews,  53  Hun,  95,  98. 

On  the  other  hand  if  a  creditor  obtained  a  separate  judgment  against  a  surety  upon 
a  joint  (not  joint  and  several)  obligation,  the  subsequent  death  of  the  surety  did  not 
discharge  his  estate.     Smith  v.  Osborne,  31  Hun,  390. — Ed. 


SECT.  XIV.]  CLARK    V.   THAYER.  333 

the  difficulty  with  this  claim  is  that  the  judgment  can  never  be  properly 
affirmed.  As  the  judgment  can  never  be  enforced  against  the  estate  of 
the  surety,  there  can  be  no  propriety  in  substituting  his  administrator. 
As  the  estate  is  absolutely  discharged  from  all  liability  upon  the  judg- 
ment, we  should  not  continue  the  appeal  simply  for  the  purpose  of 
enabling  the  plaintiff,  in  case  of  affirmance,  to  bring  an  action  upon  the 
undertaking.  But  it  must  be  true  that  whatever  discharges  the  estate 
of  a  surety  in  such  a  case  from  the  judgment,  also  discharges  it  from 
the  undertaking.  There  can  be  no  liability  upon  the  undertaking  given, 
after  the  judgment  has  been  destroyed  or  discharged,  either  by  the  act 
of  the  parties  or  the  operation  of  law.  It  is  quite  inadmissible  to  con- 
strue the  undertaking  to  mean  that  the  surety  would  pay  the  judgment, 
even  if  he  or  his  estate  would,  after  the  giving  of  the  undertaking,  be 
discharged  from  all  liability  upon  the  judgment. 

The  motion  must  be  denied,  without  costs. 

All  concur.  Motion  denied. 


J.  W.  CLARK  v.  E.  C.  THAYER  and  Another,  Administrators. 

In  the  Supreme  Judicial  Court,  Massachusetts,  October 

Term,  1870. 

[Reported  in  105  Massachusetts  Reports,  216.] 

Appeal  from  the  decision  of  commissioners  appointed  by  the  probate 
court  to  receive  and  examine  all  claims  of  creditors  against  the  insol- 
vent estate  of  Warren  Hunt,  deceased,  allowing  the  claim  of  James  W. 
Clark  as  holder  of  a  promissory  note  made  by  the  deceased  and  dated 
May  15,  1867,  for  $2,000  payable  five  months  after  date  to  the  order 
of  Francis  W.  Hunt,  and  by  him  indorsed  in  blank. 

Wells,  J.  The  plaintiff  became  the  bona  fide  holder  of  this  note, 
for  value,  before  its  maturity.  He  was  informed  of  the  previous  de- 
cease of  the  maker,  Warren  Hunt.  But  it  does  not  appear  that  he  had 
notice  of  the  fact  that  it  was  an  accommodation  note.  We  do  not  think 
there  is  any  ground  for  the  argument  that  he  is  chargeable  with  implied 
notice  ;  or  that  notice  may  be  inferred  from  the  circumstances  of  the 
transaction.  The  defendants  did  not  seek  to  go  to  the  jury  upon  that 
question  ;  and  it  does  not  appear  that  the  point  was  raised  at  the  trial. 
The  defendants  claimed  that  the  death  of  Warren  Hunt,  known  to 
Clark  when  he  took  the  note,  defeated  his  right  to  recover  upon  the 
note,  or  to  prove  it  against  Warren  Hunt's  estate.  This  single  point 
being  ruled  against  them,  the  case  was  reported,  at  the  request  of  the 
defendants,  for  revision  by  this  court. 

Upon  this  presentation  of  the  case,  no  other  question  is  open  to  the 
defendants  here,  except  that  which  was  ruled  upon  at  the  trial.     We 


334  CLARK   V.    THAYER.  [CHAP.  TL 

must  assume  that  Clark  was  not  chargeable  with  notice  that  the  note 
was  made  for  the  accommodation  of  the  indorsee. 

Clark  was  entitled,  then,  to  take  the  note  for  what  it  purported  to 
be,  namely,  as  given  for  value,  and  valid  between  the  original  parties. 
In  that  case,  the  death  of  Warren  Hunt  would  not  affect  its  negotiabil- 
ity, or  its  validity  in  the  hands  of  any  holder.  Knowledge  of  the  death 
of  Warren  Hunt,  therefore,  would  not  affect  Clark  with  notice  of  any 
invalidity  of  the  note.  The  principle  is  the  same  as  that  established  in 
Monument  National  Bank  v.  Globe  Works.1 

The  question  has  been  argued  at  the  bar,  whether  the  right  of  Francis 
W.  Hunt,  during  the  life  of  Warren  Hunt,  to  negotiate  the  note  for  his 
own  use,  was  a  power  coupled  with  an  interest,  or  a  mere  naked  power 
revocable  by  Warren  Hunt  at  an}r  time  before  it  was  executed,  and 
therefore  revoked  by  his  death.  But  we  do  not  consider  that  question 
to  be  material  to  the  decision  of  the  case.  Even  if  the  right  of  Francis 
W.  Hunt  to  transfer  the  note  had  been  terminated  by  revocation  of  his 
power  in  an}^  mode,  and  he  put  it  into  circulation  fraudulentby  as 
against  the  maker  of  the  note,  that  would  onl}T  throw  upon  the  holder  the 
burden  of  proof,  to  show  that  he  acquired  the  note  before  maturity, 
for  value  and  in  good  faith.  Munroe  v.  Cooper  ;  2  Sistermans  v.  Field  ;  3 
Worcester  County  Bank  v.  Dorchester  &  Milton  Bank  ; 4  Wyer  v.  Same.5 

For  some  purposes,  the  first  negotiation  for  value  is  treated  as  the 
inception  of  the  contract.  This  is  so  especially  in  relation  to  questions 
of  usury  ;  and  it  makes  no  difference  that  the  purchaser  of  the  note 
supposed  he  was  obtaining  a  security  already  in  circulation,  and  valid 
between  the  original  parties,  be  having  no  notice  to  the  contrary.  But 
that  rule  obtains  under  statutes,  and  does  not  apply  to  ordinaiy  trans- 
actions depending  on  the  commercial  law.  B}-  that  law,  the  indorsee 
of  negotiable  paper  before  maturity,  for  value,  in  good  faith,  and  with- 
out notice  of  defences,  is  protected  against  defences  on  grounds  of 
want  of  consideration,  misappropriation,  and  even  fraud  between  the 
original  parties  thereto.  Story  on  Notes,  §  191  ;  Thurston  v.  McKown  ;  * 
Lancaster  Bank  v.  Taylor.7  This  rule  of  law  meets  the  point  of  the 
present  case.  The  defendants  fail  to  establish  the  condition  on  which 
alone  the  proposed  defence  can  be  open.8 

Judgment  for  the  plaintiff  accordingly. 

1  101  Mass.  57.  2  5  Pick.  412.  3  9  Gray,  331.  4  10  Cush.  488. 

5  11  Cush.  51.  6  6  Mass.  428.  7  100  Mass.  18. 

8  Edwards  v.  McClave,  55  N.  J.  Eq.,  151,  154-155  (semble) ;  Clough  v.  Gray,  1  W.  & 
W.  (Victoria,  1862),  225,  Accord.  The  rule  should  be  the  same  where,  although  the 
holder  knows  of  the  accommodation  nature  of  the  bill  or  note,  he  is  not  aware  of  the 
death  of  the  accommodating  party.  But  see  contra,  Michigan  Co.  v.  Leavenworth,  30  Vt. 
11.  If  the  accommodation  and  the  death  of  the  accommodating  party  are  known  to 
the  holder  when  he  takes  the  bill  or  note  from  the  party  accommodated,  he  cannot,  ac- 
cording to  Smith  v.  Wyckoff,  3  Sandf.  Ch.  77,  charge  the  estate  of  the  deceased. 

Similarly,  it  has  been  adjudged  that  one  who  takes  a  note  from  the  party  accommo- 
dated with  knowledge  that  the  party  accommodating  has  forbidden  the  negotiation  of 
the  note,  cannot  enforce  it  against  the  latter.  Agawam  Bank  v.  Strever,  18  N.  Y.  502. 
513-14  (semble) ;  Dogan  v.  Dubois,  2  Rich.  Eq.  85.  —  Ed. 


SECT.  XIV.]  LLOYD'S   V.   HARPER.  335 


LLOYD'S  v.  HARPER. 

In  the  Coukt  of  Appeal,  November  15,  1880. 

[Reported  in  16  Chancer;/  Division,  290] 

James,  L.  J.1  The  facts  of  the  case  are  these.  A  gentleman  of  the 
name  of  Harper  was  minded  to  be  introduced  as  what  was  called  an 
underwriting  member  of  Lloyd's  Association,  and  in  accordance  with 
the  custom  which  had  been  introduced  some  years  before,  and  was  in 
existence  at  that  time,  the  committee  before  they  admitted  him  to  that 
position  required  a  guarantee.  His  father,  who  was  at  that  time  I 
believe  himself  an  underwriting  member  of  Lloyd's,  gave  the  guarantee 
to  the  committee  in  the  following  words:  "My  son  Robert  Henry 
Harper,  being  a  candidate  for  admission  to  Lloyd's  as  an  underwriting 
member,  I  beg  to  tender  my  guarantee  on  his  behalf,  and  to  hereby 
hold  myself  responsible  for  all  his  engagements  in  that  capacity." 

The  first  question  which  was  raised  on  this  appeal  was,  that  upon  the 
construction  of  that  guarantee  it  did  not  extend  to  any  liability  under 
which  the  son  might  come  to  the  outside  world,  but  was  confined  to 
engagements  which  he  might  be  under  to  indemnify  the  society  itself, 
i.  e.,  to  what  might  be  called  internal  engagements.  It  appears  to  us 
to  be  impossible  to  put  that  construction  on  the  guarantee.  The  words 
are  "engagements  in  that  capacity."  In  what  capacity?  In  the  ca- 
pacity of  an  underwriting  member.  As  it  seems  to  me,  neither  the 
committee  nor  Mr.  Harper,  the  father,  who  gave  the  guarantee,  nor  the 
son  could  at  the  time  doubt  that  what  were  meant  to  be  guaranteed 
were  the  engagements  the  son  might  enter  into  as  underwriter  with  the 
outside  world,  so  as  to  prevent  any  default  which  would  have  redounded 
to  the  injury  and  discredit  of  the  association,  and  it  is  clear  to  my  mind 
that  such  is  the  true  construction  of  the  guarantee. 

That  being  so,  is  there  any  limit  to  the  guarantee?  It  was  contended 
that  it  was  limited  to  the  lifetime  of  the  guarantor.  It  appears  to  me  im- 
possible to  say  that  it  was  so  limited.  It  applies  in  terms  to  "all  engage- 
ments in  that  capacity."  Whether  the  engagements  were  entered  into 
before  or  after  the  death  of  the  father,  it  appears  to  me  utterly  impossi- 
ble to  say  they  were  not  engagements  entered  into  by  the  son  in  the 
capacity  of  an  underwriting  member.  The  representatives  of  Mr. 
Harper  are  bound  by  Mr.  Harper's  guarantee,  just  as  if  he  had  entered 
into  a  covenant  to  indemnify  a  lessor  against  the  breach  by  the  lessee 
of  the  covenants  of  a  lease.2  In  order  to  support  the  contention  that 
the  guarantee  was  ipso  facto  determined  at  the  death  of  the  guarantor, 
it  was  contended  that  the  guarantor  could  himself  in  his  lifetime  have 

1  Everything  is  omitted  except  the  opinion  of  James,  L.  J.,  upon  the  limit  to  the 
guarantee.     Cotton  and  Lush,  JJ.,  delivered  concurriug  opinions.  —  Ed. 

2  As  in  Holthausen  v.  Kells,  18  N.  Y.  Ap.  Div.  80;  Coe  v.  Vogdes,  71  Pa  383; 
Pleasanton's  App.,  75  Pa.  344,  9  Phila.  302  (semble).  —  Ed. 


336  Lloyd's  v.  harper.  [chap,  il 

revoked  the  guarantee,  and  that  therefore  it  must  be  assumed  that  his 
death  would  operate  in  the  same  manner,  that  is  to  say,  it  is  said  we 
must  assume  that  the  executors,  as  it  was  their  duty  to  do,  have  re- 
voked the  guarantee,  and  that  matters  are  to  be  on  the  same  footing  as 
if  the  testator  had  exercised  the  option  to  determine  it.  Now  the  foun- 
dation of  that  contention  appears  to  me  utterly  to  fail.  The  testator, 
in  my  opinion,  could  not  have  determined  the  guarantee,  and  in  that 
respect  the  case  differs  essentially  from  the  case  of  Coulthart  v.  Clem- 
entson,  in  which  Mr.  Justice  Bowen  followed  the  decision  in  Harris  v. 
Fawcett,1  with  regard  to  the  effect  of  death  in  determining  a  guarantee. 
In  those  cases  there  is  this  distinction  (whether  it  is  sufficient  to  sustain 
them  or  not),  that  each  advance  of  goods  was  a  separate  consideration. 
It  may  be  considered  equitable  and  right  that  where  a  man  is  not  under 
any  obligation  to  make  further  advances  or  to  sell  further  goods,  a  per- 
son who  has  guaranteed  repayment  of  such  advances,  or  payment  of  the 
price  of  the  goods,  ma}'  say,  "  Do  not  sell  any  further  goods  or  make  any 
further  advances  ;  I  give  you  warning  that  you  are  not  to  rely  upon  my 
guarantee  for  any  further  advances  which  you  make,  or  for  an}-  further 
goods  you  sell."  That  might  be  in  many  cases  a  very  equitable  view. 
It  perhaps  might  be  hardly  equitable  for  a  banker  or  merchant  to  go  on 
making  advances  after  receiving  a  distinct  notice  from  the  guarantor 
that  he  would  not  be  further  liable.  But  here  the  consideration  is  given 
once  for  all,  just  as  in  the  case  of  the  granting  a  lease  in  which  a  third 
part}'  guarantees  the  payment  of  the  rent  and  the  performance  of  the 
covenants.  The  father  undertakes  that  if  the  son  is  admitted  to  the 
status  of  an  underwriting  member,  he,  the  father,  will  guarantee  all 
the  son's  engagements  as  such  member.  The  moment  the  son  was 
admitted  to  that  status  he  became  entitled  to  retain  it  until  he  had  done 
some  act  which  under  the  rules  deprived  him  of  his  right  to  retain  it. 
If  the  testator  could  at  any  time  have  determined  the  guarantee,  he 
could  have  determined  it  the  next  da}'.  The  moment  the  son  was  ad- 
mitted to  the  status  of  an  underwriting  member  with  all  its  privileges, 
if  the  father  was  at  liberty  to  say,  "I  withdraw  the  guarantee,"  then 
the  guarantee  would  have  been  utterly  futile  and  idle.  If  it  could  not 
be  determined  by  him  the  next  day,  there  would  be  no  time  at  which  he 
could  have  a  power  of  determining  it.  That  being  so,  it  appears  to 
me  that  his  estate  is  still  liable  for  all  the  engagements  which  the  son 
entered  into  with  the  persons  who  effected  policies  of  insurance  with 
him.  Judgment  for  the  plaintiff  affirmed.7, 

1  Law  Rep.  15  Eq.  311 ;  Ibid.  8  Ch.  866. 

2  McCloskey  v.  Barr,  79  Fed.  R. 408,415  (semble) ;  Kernochan  v.  Murray,  111  N.  Y. 
306,  309  (semble),  Accord. 

Similarly,  the  death  of  a  surety  in  a  fidelity  bond  does  not  exonerate  his  estate  as  to 
subsequent  defaults  of  the  principal,  where  the  latter  was  to  hold  his  position  for  a 
definite  time,  or  until  the  accomplishment  of  the  object  of  his  appointment.  Broome  v. 
U.  S.,  15  How.  143  (Collector)  ;  Moore  v.  Wallis,  18  Ala.  458  (Guardian) ;  Hightower 
v.  Moore,  46  Ala.  387  (Administrator) ;  Voris  v.  State,  47  Ind.  345  (Guardian);  Mow 


SECT.  XIV.]  CAKK   V.   LADD.  337 


JAMES   CARR  v.   ABIGAIL  LADD,  Administratrix. 

In  the  Superior  Court  of  Judicature,   New  Hampshire,  Septem- 
ber, 1803. 

[Reported  in  Smith,  45.] 

This  was  debt  on  a  bond  made  by  Nathaniel  Ladd,  A.  B.,  and 
Samuel  Ladd.  The  bond  was  joint  and  several.  The  condition  recited 
that  the  plaintiff  had  appointed  Nathaniel  Ladd,  one  of  the  obligors, 
to  be  a  deputy  sheriff  under  him  (without  any  limitation  of  time). 
There  were  the  usual  stipulations :  that  he  should  faithfully  execute 
the  office,  indemnify  the  sheriff,  and  pay  over  a  certain  proportion  of 
the  fees. 

The  defendant  was  defaulted,  and  prayed  to  be  heard  in  chancery. 

On  the  hearing  the  plaintiff  claimed  damages  for  a  default  of  Na- 
thaniel Ladd,  which  happened  after  the  death  of  Samuel  Ladd,  the 
defendant's  intestate. 

This  claim  was  resisted,  on  the  ground  that  the  estate  of  the  intestate 
was  only  liable  for  defaults  which  happened  before  his  death.1 

To  this  it  was  answered,  and  resolved  by  the  court,  that  this  was 
not  such  an  engagement  as  must  necessarily  be  performed  by  the  de- 
ceased in  his  lifetime,  and  could  not  be  performed  by  executors  or 
administrators. 

The  case  of  Heaver  v.  Thompson,  King's  Bench,  June  25,  1803,  be» 
fore  Lord  Ellenborough,  is  in  point. 

"This  was  an  action  against  an  executor  on  a  bond  for  £100,  given 
as  security  for  the  honesty  of  one  Cooper,  who  was  employed  as  book- 
keeper at  the  Angle  Inn,  on  the  recommendation  of  the  defendant's 
testator  [James  Marsh,  who  executed  this  bond]. 

' '  [Mr.  Ershine  stated  that  he  could  prove  defalcations  in  Cooper's 
account  to  an  amount  considerably  greater.] 

"  Mr.  Park  [on  the  other  side]  stated  that  the  defalcations  of 
Cooper  were  after  the  death  of  Marsh,  the  defendant's  testator.  He 
admitted  that  the  executors  were  bound  to  answer  any  defalcations  in 
the  lifetime  of  Marsh,  but  he  thought  it  would  be  extremely  hard  that 
a  man's  family  should  be  bound  for  an  indefinite  time  by  a  bond  given 
mereh'  as  a  security  for  the  honesty  of  the  person  recommended.  The 
learned  counsel  cited  some  authorities,  which  he  conceived  were  against 
this  supposition. 

"Lord  Ellenborough  said  that,  whether  it  was  a  hardship  or  not, 
it  was  certainty  the  law,  that,  if  a  man  gave  a  bond  as  a  security  for 
the  good  behavior  or  good  conduct  of  any  individual  in  any  office,  this 
bond  was  binding  on  his  executors  as  long  as  he  continued  in  that 

bray  v.  State,  8S  Ind.  324  (City  Treasurer)  ;  Wood  v.  Leland,  1  Met.  387  (Guardian)  ; 
White  v.  Commonwealth,  39  Pa.  167  (Trustee) ;  Shackamaxon  Bank  v.  Yard,  143  Pa 
129,  150  Pa.  351  (Cashier) ;  Snyder  t>.  State,  5  Wyo.  318  (Clerk  of  Court).  — Ed. 
1  The  report  of  the  case  is  somewhat  abridged.  —  Ed. 

22 


338  CARR   V.    LADD.  [CHAP.  IL 

office.  He  had  himself  known  a  similar  bond  of  £10,000  paid  by 
executors,  though  the  bond  was  executed  twentj'  years  ago. 

"  Mr.  Park  said  he  wished  this  might  be  generally  known,  as  it 
would  make  men  a  little  more  cautious  in  entering  into  such  securities. 

"The  verdict  was  [then]  given  for  the  plaintiff  [subject  to  a  refer- 
ence on  the  accounts]."  ' 

Securities  given  by  executors,  administrators,  and  guardians,  in  this 
State,  must  all  stand  upon  the  same  footing  with  the  present ;  and  it 
never  was  doubted  that  the  estates  of  the  bondsmen  were  liable,  though 
the  waste  was  committed  after  their  death. 

The  proper  remedy  against  the  mischiefs  that  have  been  suggested 
by  the  counsel  for  the  defendant  would  be  for  the  sureties  to  stipulate 
only  for  a  certain  time  ;  or  to  introduce  a  stipulation  that,  on  notice  by 
the  surety  that  he  would  no  longer  be  holden,  the  responsibility  should 
terminate.  If  no  such  covenants  are  inserted,  and  the  covenantors 
oblige  themselves  as  long  as  the  deputy  remains  in  office,  it  must  de- 
pend on  the  pleasure  of  the  sheriff  how  long  they  shall  be  bound. 
Arguments  from  inconvenience  have  no  place  where  the  law  is  clear. 
The  administrator  must  answer  for  defaults  till  the  deputation  given  to 
Nathaniel  Ladd  was  revoked.2 

Judgment  for  amount  of  penalty  of  the  bond.  Execution  for  dam- 
ages, $957.20,  and  costs.s 

1  See  Boston  Gazette,  Sept.  1,  1803  * 

2  Sureties  in  a  recognizance  to  keep  the  peace,  it  is  said,  are  not  discharged  hy 
their  death;  their  executors  or  administrators  continue  bound.  4  Burn,  268,269; 
1  Hawk.  P.  C.  129  ;  Dalt.  c.  120;   1  Hawk.  P.  C.  b.  1,  c.  60,  §  17,  p.  258. 

3  Gordon  v.  Calvert,  2  Sim.  253,  4  Buss.  581,  3  M.  &  By.  124  (collecting  clerk)  ; 
McCloskey  v.  Barr,  79  Fed.  B.  408,  415-16  (semble);  Bappr.  Phoenix  Co.,  113  HI.  390 
(insurance  agent) ;  Boyal  Co.  v.  Davies,  40  Iowa,  469  (insurance  agent) ;  Green  v. 
Young,  8  Me.  14  (deputy-sheriff) ;  Shackamaxou  Bank  v.  Yard,  143  Pa.  129,  150  Pa. 
351  (cashier) ;  in  which  cases  the  principal  obligor  held  his  position  at  the  will  of  his 
employer,  the  obligee,  Accord.  To  the  same  effect  are  Andrus  v.  Beals,  9  Cow.  693 
(deputy -sheriff) ;  Barnard  v.  Darling,  11  Wend.  28  (deputy-sheriff);  in  which  cases 
the  surety  sought  to  terminate  his  liability  for  the  future  by  a  notice  to  that  effect. 

But  a  different  doctrine  is  suggested  in  Beilly  v.  Dodge,  131  N.  Y.  153,  157  :  "  There 
are  certain  contracts  of  indemuity  which  may  be  terminated  by  a  surety  without  the 
consent  of  the  creditor  or  the  principal.  It  was  said  by  Pinch,  J.,  in  Emery  v.  Baltz 
(94  N.  Y.  408),  that  '  a  surety  bound  for  the  fidelity  and  honesty  of  his  principal,  and 
so  for  an  indefinite  and  contingent  liability,  and  not  for  a  sum  fixed  and  certain  to 
become  due,  may  revoke  and  end  his  future  liability  in  either  of  two  cases,  viz. :  First, 
where  the  guaranteed  contract  has  no  definite  time  to  run  ;  and  second,  where  the 
principal  has  so  violated  the  contract,  and  is  so  in  default,  that  the  creditor  may  safely 
and  lawfully  terminate  it  for  that  reason.'  The  learned  judge  did  not  say,  nor  does 
the  case  hold,  that  the  liability  may  be  terminated  by  mere  notice  given  by  the  surety 
at  any  time,  and  is  not  authority  to  sustain  the  proposition  upon  which  the  sureties  in 
this  case  rely ;  namely,  that  their  liability  was  terminated  on  the  twenty-eighth  of 
November,  the  day  the  notice  was  received. 

"  Whether  a  surety  upon  a  penal  bond,  conditioned  upon  the  faithful  performance  of 

*  Annexed  to  the  manuscript  is  a  printed  slip,  which  seems  to  have  been  cut  from 
the  "  Boston  Gazette,"  containing  a  report  of  Heaver  v.  Thompson,  substantially  the 
same  as  recited  in  the  opinion. 


SECT.  XIV  ]  FEWLASS   V.    KEESHAN.  339 


FEWLASS   and   Others   v.   KEESHAN   and   Others. 
In  the  Circuit  Court  of  Appeals,  Sixth  Circuit,  July  5,  1898. 

[Reported  in  88  Federal  Reporter,  573.] 

Before  Taft  and  Lurton,  Circuit  Judges,  and  Clark,  District 
Judge. 

Taft,  Circuit  Judge.  This  is  an  appeal  from  the  decree  of  the 
Circuit  Court  against  Howard  Ferris,  the  administrator  of  Samuel 
Cooper,  deceased,  and  Hannah  Cooper  Fewlass,  his  sole  heir  and 
next  of  kin,  on  a  cost  bond  entered  into  by  Cooper  shortly  before 
he  died  for  the  amount  of  the  costs  adjudged  to  be  due  from  the  com- 
plainants in  the  case,  most  of  which  accrued  after  Cooper's  decease. 
The  bond  was  in  the  form  following  :  — 


"  In  the  Circuit  Court  of  the  Uuited  States  for  the  Southern  District  of  Ohio. 

"  Sarah  E.  McCloskey  et  al.  v.  Samuel  IJarr  et  al.     Cost  bond. 
"  I  hereby  acknowledge  myself  security'  for  costs  in  this  case. 

"  Samuel  Cooper. 
"Taken  and  acknowledged  before  me  this  15th  day  of  September,  1887. 

"Robert  C.  Georgi, 
"  Deputy  Clerk  United  States  Circuit  Court,  Southern  District  of  Ohio." 

After  a  decree  for  costs  was  rendered  against  complainants  in  the 
action,  the  administrator  and  the  heir  and  next  of  kin  of  Cooper  were 
duly  notified  of  the  filing  of  a  petition  b}r  the  successful  parties  for  a 
decree  against  them,  and,  after  pleadings  were  filed  raising  various 
issues,  evidence  was  taken,  and  the  decree  for  the  full  amount  of  costs, 
now  appealed  from,  was  entered. 

his  duty,  by  a  public  officer  like  a  deputy  sheriff,  can  terminate  his  liability  without  the 
consent  of  the  sheriff  or  the  principal  in  the  bond,  or  can  become  discharged  without 
any  new  consideration,  is  a  point  that  is  not  necessary  to  decide  in  this  case.  It  is  en- 
tirely safe  to  hold,  however,  that  a  notice  by  the  surety,  such  as  was  served  in  this 
case,  does  not  operate  to  discharge  the  sureties  until  a  reasonable  time  has  elapsed  suf- 
ficient to  enable  the  sheriff  to  give  notice  to  the  deputy  and  the  other  sureties,  and  to 
permit  a  new  bond  to  be  given*  The  official  duties  of  the  sheriff  are  performed  to  a 
very  great  extent  through  deputies  appointed  by  him,  and,  for  his  own  protection, 
they  are  required  upon  their  appointment  to  give  bonds  to  him  for  the  faithful  per- 
formance of  their  duties.  It  would  greatly  embarrass  the  sheriff  in  the  performance 
of  the  important  and  responsible  duties  of  his  office  if  the  sureties  upon  the  bonds  of 
his  deputies  could  withdraw  from  them  and  terminate  their  liability  at  will.  The 
business  in  the  hands  of  the  deputies  might  be  in  such  a  condition  when  the  notice  of 
the  sureties  is  served  upon  him  that  be  might  be  unable  to  arrest  their  action  or  ter- 
minate their  power  to  subject  him  to  liability  by  their  acts  done  in  his  name.  Unless 
the  sureties  can  be  held  by  him  to  the  liability  which  they  assumed  for  at  least  a  rea- 
sonable time  after  the  notice,  he  may  be  subjected  to  liability  of  the  gravest  kind  for 
the  acts  of  others  without  any  means  of  protection.  That  this  responsibility  cannot 
be  thrown  upon  the  sheriff  by  the  sureties  at  will  and  upon  notice  merely,  would  seem 
to  be  clear  upon  principle,  and  is  sustained  by  abundant  authority.  —  Ed. 

*  La  Rose  v.  Logansport  Bank,  102  Ind.  332,  344  (semble),  Accord. 


340  BRADBURY   V.    MORGAN.  [CHAP.  II. 

The  first 1  point  made  in  this  court  by  the  appellants  is  that  the  cost 
bond  does  not  bind  the  estate  of  the  surety  for  any  costs  accruing 
after  his  death.  The  rule  as  to  the  obligation  of  a  grantor  in  respect 
to  transactions  occurring  after  his  death  is  that  the  obligation  is  not 
affected  by  his  death  if  the  contract  of  guarantee  was  one  from  which 
he  might  not  withdraw  upon  notice,  but  that,  if  he  could  have  done  so, 
then  his  death  will  be  given  the  effect  of  a  notice  of  withdrawal,  at 
least  from  the  time  when  the  knowledge  of  the  same  has  been  brought 
home  to  the  obligee.  The  former  proposition  is  sustained  by  the  cases 
of  Lloyd  v.  Harper  ;  Calvert  v.  Gordon  ; 2  Green  v.  Young  ; 3  Moore  v. 
Wallis  ; 4  and  Voris  v.  State.5  The  alternative  proposition  is  illustrated 
in  the  cases  of  Jordan  v.  Dobbins  ;  Hyland  v.  Habich  ; 6  Coulthart  v. 
Clementson  ;  and  Gay  v.  Ward.7  A  court  cannot  release  a  suretj-  upon 
a  cost  bond  without  the  consent  of  the  party  for  whose  benefit  the  secu- 
rity has  been  given.  Holder  v.  Jones  ; 8  Standard  Publishing  Co.  v. 
Bartlett.9  This  feature  of  the  obligation  of  a  cost  bond  places  it  in 
the  category  of  irrevocable  guarantees,  the  obligations  of  which  con- 
tinue according  to  their  terms,  without  regard  to  the  death  of  the 
guarantor.10 


BRADBURY  and  Others  v.  MORGAN  and  Another,  Executors. 
In  the  Exchequer,  June  4,  1862. 

[Reported  in  1  Hurlstone  §•  Coltman,  249.] 

Declaration.  That  heretofore,  and  in  the  lifetime  of  the  said  J.  M. 
Leigh,  the  said  J.  M.  Leigh  contracted,  guaranteed,  and  agreed  with 
the  plaintiffs,  in  the  guarantee  hereinafter  mentioned  called  Messrs. 
Bradbur}',  Greatorex  and  Co.,  in  the  words  and  figures  following,  that 

is  to  say  :  — 

"3  George  Yard,  Lombard  St., 
"London,  May  3,  1858. 
"  Messrs.  Bradburj-,  Greatorex  and  Co. 
"  Gentlemen, 

"I  request  that  you  will  give  credit  in  the  usual  way  of  your 
business  to  Henry  Jones  Leigh,  of  Leather  Lane,  Holborn  ;  and  in  con- 
sideration of  your  doing  so,  I  hereby  engage  to  guarantee  the  regular 
payment  of  the  running  balance  of  his  account  with  you,  until  I  give 
you  notice  to  the  contrary,  to  the  extent  of  one  hundred  pounds  sterling. 

"  I  remain,  &c, 
"  Limit  £100.  "  J.  M.  Leigh." 

1  Onlv  so  much  of  the  case  is  given  as  relates  to  this  point.  —  Ed. 

2  3  Man.  &  R.  124.  3  8  Me.  14.  4  18  Ala.  458. 

6  47  Ind.  345.  6  150  Mass.  112.  7  67  Conn.  147. 

*  29  N.  C.  191.  9  5  Wkly.  Law  Bui.  501. 

W  McCloskey  v.  Barr,  79  Fed.  R.  408,  Accord.  —Ed. 


SECT.  XIV.]  BRADBURY    V.    MORGAN.  341 

And  the  plaintiffs  accordingly  from  time  to  time  credited  the  said 
II.  J.  Leigh  in  the  usual  way  of  their  business  ;  and  the  running  balance 
of  the  said  II.  J.  Leigh's  account  with  the  plaintiffs  afterwards,  and  after 
the  death  of  the  said  J.  M.  Leigh,  and  before  the  plaintiffs  had  any  notice 
or  knowledge  of  such  death,  and  before  any  such  notice  as  in  the  said 
guarantee  was  and  is  made  and  provided  had  been  given  to  the  plain- 
tiffs amounted  to  a  large  sum,  to  wit,  £100,  and  was  and  is  due  and  un- 
paid to  the  plaintiffs  ;  and  all  things  have  been  done  and  happened,  and 
all  times  have  elapsed,  necessary  to  entitle  the  plaintiffs  to  maintain 
this  action. 

Plea.  —  That  the  said  running  balance  of  the  said  H.  J.  Leigh's  ac- 
count was  and  is  due  to  the  plaintiffs  for  goods  sold  and  delivered  by 
them,  and  credits  for  the  same  given  by  them  in  the  usual  way  of  their 
business,  to  the  said  H.  J.  Leigh,  and  not  otherwise  ;  and  that  the  said 
goods  were  sold  and  delivered,  and  the  credits  in  respect  thereof  given, 
and  the  debts  constituting  the  said  balance  of  the  said  account  were, 
and  each  of  them  was,  contracted  and  incurred  after  the  death  of  the 
said  J.  M.  Leigh,  and  not  in  his  lifetime. 

Demurrer  and  joinder  therein. 

Bei'esford  (with  whom  was  Hume  Williams)  in  support  of  the  de- 
murrer. 

J.  Brown,  in  support  of  the  plea.1 

Pollock,  C.  B.  We  are  all  of  opinion  that  the  plaintiff  is  entitled  tc 
judgment.  No  doubt,  if  this  were  merely  an  implied  contract  which 
arose  from  a  request,  it  would  be  revoked  by  the  death  of  either  party. 
Blades  v.  Free  2  is  an  authority  that  a  request  is  revoked,  but  a  con- 
tract is  not  put  an  end  to,  by  death.  The  language  here  used,  "  I  re- 
quest you  will  give  credit,"  is  a  mere  mode  of  civil  expression,  and  the 
part}'  using  it  never  meant  to  request  in  that  sense  which  Mr.  Brown 
has  suggested.  Instead  of  saying,  "I  will  thank  you  to  give  credit;  " 
or  "  You  will  oblige  me  by  giving  credit,"  he  says,  "  I  request  you  will 
give  credit."  Whether  his  death  was  contemplated,  I  do  not  know. 
The  probability  is,  that  if  it  had  been  suggested  the  plaintiffs  would 
have  required  some  notice  before  the  guarantee  was  determined ;  but 
this  is  a  contract,  and  the  question  is  whether  it  is  put  an  end  to  by  the 
death  of  the  guarantor.  There  is  no  direct  authorit}'  to  that  effect ;  and 
I  think  that  all  reason  and  authority,  such  as  there  is,  are  against  that 
proposition,  and  that  the  plaintiffs  are  therefore  entitled  to  judgment. 

Bramwell,  B.  I  am  of  the  same  opinion.  The  general  rule  is  thus 
stated  in  Williams  on  Executors,  page  1559,  5th  ed. :  "  The  executors 
or  administrators  so  completely  represent  their  testator  or  intestate, 
with  respect  to  the  liabilities  above  mentioned,  that  every  bond,  or 
covenant,  or  contract  of  the  deceased  includes  them,  although  the}'  are 
not  named  in  the  terms  of  it ;  for  the  executors  or  administrators  of 
every  person  are  implied  in  himself."  The  only  exception  is  where 
the  contract  is  in  respect  of  the  personal  qualification  of  the  testator  or 

1  The  arguments  of  counsel  are  omitted.  —  Ed.  a  9  B.  &  C.  167. 


342  BRADBURY   V.   MORGAN.  LCHAP.  IL 

intestate,  and  that  does  not  apply  to  the  present  case.  If  the  guarantee 
had  been  in  these  terms :  "I  request  you  to  deliver  to  A.  to-morrow 
morning  goods  of  the  value  of  £50,  and  in  consideration  of  j'our  so 
doing  I  will  pay  you,"  and  before  the  morning  the  guarantor  died,  but 
the  goods  were  duly  delivered  ;  I  can  see  no  reason  why  the  personal 
representative  of  the  guarantor  should  not  be  liable  ;  and  whether  a 
guarantor  says,  "  deliver  some  goods  on  a  given  day,"  or  "deliver  a 
quantity  of  goods  upon  any  day  or  days,"  can  make  no  difference.  Very 
likely  a  tradesman,  who  would  not  trust  in  the  first  instance  without  a 
guarantee,  would  not  deliver  any  goods  after  the  death  of  the  guarantor, 
but,  however  that  may  be,  tbe  executor  must  give  some  timely  notice 
in  order  to  put  an  end  to  the  contract.  Mr.  Brown  relied  on  the  words 
"I  request  you  will  give  credit,"  but  the}'  are  of  no  importance;  for 
this  is  not  a  case  of  authority  given  by  the  deceased. 

With  respect  to  the  passage  in  Williams  on  Executors,  p.  1604,  it  is 
certainly  not  supported  by  any  authority.  It  is  there  said,  if  a  man 
enters  into  a  continuing  guarantee  and  dies,  his  executor,  it  seems,  is 
not  liable  for  advances  made  after  the  testator's  death,  which  operates 
as  a  revocation.  Reference  is  made  to  Smith's  Mercantile  Law,  p.  451, 
5th  ed.,  but  not  to  the  authorities  there  cited  ;  and  if  those  authorities 
be  looked  at,  there  is  no  pretence  for  sa}-ing  that  they  justify  the  propo- 
sition laid  down  in  that  book.  Therefore  it  seems  to  me  that  there  is 
no  authority  to  prevent  us  from  deciding  in  favor  of  the  plaintiff. 

Channell,  B.  I  am  also  of  opinion  that  the  plaintiff  is  entitled  to 
judgment.  Whether  the  parties  contemplated  that  the  contract  should 
extend  beyond  the  life  of  the  guarantor,  is  not  the  question.  I  agree 
with  the  Lord  Chief  Baron  that  the  question  is  whether  this  is  a  case  of 
mere  authorit}r  or  a  contract.  I  am  of  opinion  that  it  is  a  contract,  and 
if  so,  it  is  not  revoked  by  the  death  of  the  guarantor.  A  mere  author- 
ity is  determined  by  death,  but  in  the  case  of  a  contract  death  does  not 
in  general  operate  as  revocation,  but  only  in  exceptional  cases,  and  this 
is  not  within  them. 

Judgment  for  the  plaintiffs.1 

1  Illinois  Co.  n.  Gorton,  19  Pa.  Co.  E.  124,  6  Pa.  D.  C.  447  s.  c. ;  Michigan  Bank  v. 
Leavenworth,  28  Vt.  210,  Contra. 

In  Offord  v.  Davies,  12  C.  B.  n.  s.  748,  and  Conduitt  v.  Ryan,  3  Indiana  Ap.  1,  a 
promise  similar  to  that  in  the  principal  case  was  held  to  be  without  legal  effect  from  the 
time  notice  of  revocation  of  the  offer  was  given  to  the  offeree.  But  if  the  plaintiff, 
acting  in  reliance  upon  the  defendant's  letter  of  credit,  has  promised  to  honor  bills  to 
be  drawn  upon  him  by  A,  he  may  exact  reimbursement  from  the  defendant  for  accept- 
ances of  A's  bills  although  made  after  notice  from  the  defendant  of  the  revocation  of 
his  letter  of  credit,  if  the  bills  accepted  were  drawn  before  the  plaintiff  had  time  to 
notify  A  to  draw  no  more  bills  upon  him.    Gelpcke  v.  Quentell,  74  N.  Y.  599.  — Ed. 


SECT.  XIV.]  COULTIIAKT   V.   CLEMENTSON.  343 


COULTIIART  v.   CLEMENTSON  and  Another. 

In  the  Queen's  Bench  Division,  December  9,  1879. 

[Reported  in  5  Queen's  Bench  Division,  42.] 

The  following  judgment  was  delivered  :  — 

Bowen,  J.  This  is  an  action  brought  by  a  bank  upon  a  continuing 
guarantee  against  the  executor  of  a  deceased  guarantor. 

Messrs.  E.  &  J.  Clementson,  cotton-brokers  and  spinners  in  the 
county  of  Chester,  had  a  banking  account  with  the  bank  of  which  the 
plaintiff  is  the  registered  public  officer.  In  the  year  1867  the  bank  re- 
quired security  for  the  advances  which  were  likely  to  be  made  to  Messrs. 
E.  &  J.  Clementson,  and  on  the  24th  of  August,  1867,  a  written  guar- 
antee was  executed  by  Nathaniel  Lawton,  the  deceased,  and  the 
defendant  Joseph  M.  Clementson,  who  is  now  Nathaniel  Lawton's 
executor  (and  sued  as  such). 

The  material  part  of  the  guarantee  is  as  follows :  — 

"  We  the  undersigned,  Joseph  Moxom  Clementson,  of  Dukinfield, 
in  the  county  of  Chester,  cotton-spinner,  and  Nathaniel  Lawton,  of 
Micklehurst,  flannel  manufacturer,  do  hereby  jointly  and  severally  un- 
dertake and  agree  to  guarantee  to  the  proprietors  of  or  partners  in  the 
said  banking  co-partnership  for  the  time  being  the  due  and  punctual 
pa}'ment  when  required  of  all  such  sums  of  mone}"  as  may  have  been, 
or  may  be  from  time  to  time,  advanced  or  paid  b}r  or  from  the  said 
banking  co-partnership,  or  which  the  same  co-partnership  may  have 
already  paid,  or  become  liable  to  pay,  or  may  hereafter  pay  or  become 
liable  to  pa}'  for  or  on  account  of  the  said  Edward  and  John  Clement- 
son, or  their  order,  on  any  account  whatsoever,  with  interest,  commis- 
sion, and  other  banking  charges  upon  such  sums.  .  .  .  And  we  jointly 
and  severalty  further  agree  as  follows,  namely,  that  this  guarantee  or 
engagement  shall  be  considered  a  continuing  guarantee,  and  shall  not 
be  withdrawn,  but  shall  continue  in  full  force  until  three  months  after 
notice  to  the  manager  of  the  said  banking  co-partnership  in  Ashton- 
under-Lyne  in  writing  under  our  hands  of  our  intention  to  discontinue 
or  determine  the  same." 

Advances  were  duly  made  by  the  bank  under  this  guarantee  down  to 
the  death  of  the  testator,  Nathaniel  Lawton,  on  the  19th  of  December, 
1875,  at  which  date  the  firm  of  Messrs.  E.  &  J.  Clementson  were  con- 
siderably indebted  to  the  bank.  It  was  admitted,  however,  that  suffi- 
cient sums  of  money  after  notice  of  the  death  had  been  paid  into  the 
account,  and  generally  appropriated  to  the  current  account,  to  cover 
any  balance  which  was  in  fact  owing  at  the  date  either  of  the  death  or 
of  such  notice.  Upon  the  other  hand,  if  the  guarantee  was  not  deter- 
mined in  law  by  death  or  notice  of  the  death  of  the  testator,  it  was  ad- 
mitted that  the  bank,  who  continued  their  advances  up  to  May,  1878, 
to  the  firm  of  E.  &  J.  Clementson,  were  entitled  to  recover  under  this 


344  COULTHART  V.    CLEMENTSON.  [CHAP.  H. 

guarantee  a  large  sum  of  £3,000  or  thereabouts,  which,  in  case  of 
difference,  is  to  be  settled  hereafter  by  a  referee. 

The  cause  was  tried  before  myself  and  a  special  jury  at  Liverpool, 
when  it  was  agreed  that  the  jury  should  he  discharged,  and  that  the 
court  should  have  power  to  draw  all  reasonable  inferences  of  fact. 

The  evidence  as  to  what  had  passed  between  the  bank  and  the  defend- 
ant as  Nathaniel  Lawton's  executor  after  Nathaniel  Lawton's  death  is 
not  very  clear.  From  a  feeling  of  mutual  courtesy  the  parties  refrained 
from  cross-examination  of  one  another  at  the  trial. 

It  appeared  that  the  bank  knew  of  the  death  of  Mr.  Lawton,  but  had 
received  no  written  notice  of  it  addressed  specially  to  themselves.  On 
the  12th  of  February,  1876,  however,  the  defendant  as  executor  had 
published  in  the  proper  newspapers  advertisements  under  22  &  23  Vict. 
c.  35,  requiring  the  creditors  of  the  deceased  Nathaniel  Lawton  to  send 
in  particulars  of  claims  to  the  solicitors  of  the  executors  on  or  before 
the  14th  of  May,  1876.  The  bank  and  their  officers  were  cognizant  of 
this  advertisement,  as  well  as  of  Nathaniel  Lawton's  death. 

Under  the  testator's  will  one-third  of  his  estate  was  to  be  in  trust  for 
the  children  of  the  testator's  sister  Sarah  who  should  attain  twenty-one 
years  in  equal  shares,  one-third  for  the  children  of  his  deceased  brother 
John  Lawton  who  should  attain  twenty-one,  and  the  remaining  one-third 
to  the  brother  of  the  testator,  M.  H.  Lawton.  Some  of  the  children 
were  minors.  M.  H.  Lawton,  before  any  claim  made  by  the  bank,  got 
his  share  and  spent  it. 

It  was  admitted  that  the  bank  knew  who  were  the  executors,  and 
that,  without  knowing  the  terms  of  the  will,  the  bank  knew  that  the 
estate  was  going,  one-third  of  it  to  the  testator's  brother,  and  two- 
thirds  to  the  children  of  the  testator's  brother  and  sister,  some  of  whom 
were  infants. 

The  defendant,  who  was  a  brother  of  the  partners  in  the  guaranteed 
firm,  Messrs.  E.  &  J.  Clementson,  had  become  liable  to  the  bank  as  a 
guarantor  jointby  and  severally  with  Nathaniel  Lawton  under  the  guar- 
antee in  question.  He  called  at  the  bank  shortly  after  the  appearance 
of  the  advertisements,  and  saw  the  manager,  Mr.  Coulthart.  The  fol- 
lowing is  the  account  given  by  the  defendant  of  the  interview  :  "I  went 
to  the  bank  to  see  if  they  could  advance  some  money  on  a  large  public 
building,  the  Conservative  Hall,  and  Mr.  Coulthart  agreed  to  do  so. 
Then  he  said,  'I  see  b}T  the  notice  in  the  paper  that  your  brother-in-law 
is  dead.  Do  }"ou  know  that  3'ou  are  responsible  for  £3,000  ?  '  and  I  was 
not  aware  of  it,  but  was  quite  agreeable  to  be  so,  knowing  my  brother 
to  be  in  good  circumstances.  He  asked  me  how  they  were  doing.  I 
told  him  I  knew  all  their  affairs,  and  told  him  they  were  doing  as  well 
as  they  could  be  doing  at  the  time.  That  is  all  that  passed  to  the  best 
of  my  recollection.  We  should  never  have  paid  the  share  out  if  we  had 
thought  it  was  subject  to  liability." 

The  defendant  was  not  cross-examined,  but  it  was  stated  on  behalf 
of  the  bank  that  Mr.  Coulthart's  recollection  of  the  conversation  differed 


SECT.  XIV.J  COULTHART   V.   CLEMENTSON.  345 

from  the  defendant's,  and  by  consent  a  written  memorandum  of  the  in- 
terview made  b}1  Mr.  Coulthart  at  the  time  was  put  in  as  containing  the 
substance  of  the  evidence  which  Mr.  Coulthart  was  prepared  to  give, 
and  was  to  be  taken  as  if  he  had  actually  deposed  to  it. 

The  memorandum  was  as  follows  :  — 

"Mr.  Clementson  called,  and  said  he  would  sign  a  new  letter  of 
guarantee  for  £4,000  or  allow  the  existing  ones  to  continue,  as  might 
be  most  agreeable  to  the  directors." 

In  May,  1878,  the  guarantee  firm,  Messrs.  E.  &  J.  Clementson,  fell, 
as  I  have  stated,  into  difficulties.  The  bank  to  whom  they  were  in- 
debted heavily  for  advances,  exceeding  the  amount  of  the  guarantee, 
claimed  under  the  guarantee  to  be  repaid  the  same  by  the  defendant  as 
executor  of  the  testator,  and  brought  this  action. 

For  the  defendant  it  was  contended  that  the  testator's  estate  was  not 
liable  for  any  advances  made  after  the  testator's  death,  or,  at  all  events, 
after  the  bank  received  notice  of  his  death.  For  the  bank  it  was  argued 
that  no  notice  was  given  which  was  equivalent  to  a  notice  of  the  with- 
drawal of  the  guarantee,  and  that  the  proper  inference  to  be  drawn  from 
these  facts  was  that  the  bank  had  a  right  to  and  did  still  suppose  that 
the  guarantee  was  to  continue. 

If  it  were  established  that,  after  the  death  of  the  testator  the  parties 
had  dealt  together  on  the  footing  that  the  guarantee  was  at  an  end,  the 
case  of  Harris  v.  Fawcett1  would  apply,  and  the  bank  would  not  be 
liable.  But  I  do  not  decide  this  case  on  that  ground,  though  I  am 
not  convinced,  on  the  present  materials  alone,  that  the  bank  [defend- 
ants?] may  not,  after  the  testator's  death,  have  been  looking  to  the 
defendant's  liability  as  joint  and  several  guarantor  on  the  guarantee, 
and  have  considered  the  guarantee  determined  as  regards  the  testator 
and  his  estate. 

It  is  possible,  on  the  other  hand,  that  the  executor  himself  supposed 
the  guarantee  to  be  at  an  end,  while  the  bank  entertained  no  definite 
opinion  on  the  subject.  It  would  be  difficult  for  me  to  express  any  clear 
view  about  the  matter,  as  the  evidence  leaves  me  still  in  some  doubt 
about  it.  It  is  not  necessary,  if  my  judgment  be  well  founded,  to  decide 
the  point. 

I  am  of  opinion  that  the  notice  with  which  the  bank  in  the  present 
case  was  affected  amounted  to  a  discontinuance,  so  far  as  future  ad- 
vances were  concerned,  of  the  guarantee.  -A  guarantee  like  the  present 
is  not  a  mere  mandate  or  authority  revoked  ipso  facto  by  the  death  of 
the  guarantor.  It  is  a  contract,  and  the  question  from  what  time  and  on 
what  notice  it  ceases  to  cover  advances  is  a  question  of  construction  of 
the  contract  itself.  In  the  case  of  such  continuing  guarantees  as  the 
present,  it  has  long  been  understood  that  they  are  liable,  in  the  absence 
of  anything  in  the  guarantee  to  the  contrary,  to  be  withdrawn  on  notice. 
Various  explanations  have  been  offered  of  this  reasonable,  though  im 

*  Law  Rep.  15  Eq.  311  ;  8  Ch.  866. 


346  COULTHART   V.   CLEMENTSON.  [CHAP.  II. 

plied,  limitation.  The  guarantee,  it  has  been  said,  is  divisible  as  to 
each  advance,  and  ripens  as  to  each  advance  into  an  irrevocable  prom- 
ise or  guarantee  only  when  the  advance  is  made.  This  explanation  has 
received  the  sanction  of  the  Court  of  Common  Pleas  in  the  case  of  Of- 
ford  v.  Davies.1  Whether  the  explanation  be  the  true  one  or  not,  it  is 
now  established  by  authority  that  such  continuing  guarantees  can  be 
withdrawn  on  notice  during  the  lifetime  of  the  guarantor,  and  a  limita- 
tion to  that  effect  must  be  read,  so  to  speak,  into  the  contract.  But 
what  is  to  happen  on  his  death?  Is  the  guarantee  irrevocable  and  to 
go  on  forever?  It  would  be  absurd  to  refuse  to  read  into  the  lines  of 
the  contract  in  order  to  protect  the  dead  man's  estate  a  limitation  which 
is  read  into  it  to  protect  him  while  he  is  alive.  On  the  argument  of  the 
present  case  it  was  virtually  conceded  that  the  provision  as  to  three 
months'  notice  relating  only  to  the  guarantor's  life,  and  there  being  no 
corresponding  provision  as  to  the  notice  to  be  given  on  his  death,  the 
guarantee  could  be  legally  determined  at  any  time  after  the  guarantor's 
death  by  a  proper  notice  to  that  effect.  But  there  remains  the  ques- 
tion what  is  the  proper  notice  to  be  given.  To  answer  this  question 
we  must  consider  the  change  which  the  guarantor's  death  has  effected 
in  the  situation.  The  notice  cannot  any  longer  be  given  by  the  guaran- 
tor. He  is  dead.  The  executor  of  his  will  is  guardian  of  his  estate,  and 
if  notice  is  to  be  given  by  any  one,  the  executor  would  seem  the  person 
to  give  it.  But  must  the  executor  give  special  notice  that  the  guarantee 
is  withdrawn  ;  or  is  it  not  enough  that  the  bank  should  be  warned  of 
the  death  of  the  testator  and  the  devolution  of  his  estate  to  others?  In 
many  cases  the  executor  has  no  option  to  elect  to  continue  the  guaran- 
tee. Surely  it  would  in  such  cases  be  idle  to  insist  on  special  forms  of 
withdrawal  of  a  guarantee  which  nobody  has  a  right  to  continue. 
Notice  of  the  death  and  of  the  existence  of  a  will  is  notice  of  the  exist- 
ence of  trusts  which  may  be  incompatible  with  the  continuance  of  the 
guarantee.  If,  indeed,  under  the  testator's  will,  the  executor  has  the 
option  of  continuing  the  guarantee,  then  from  the  absence  of  any  spe- 
cific notice  of  withdrawal,  the  bank  may,  perhaps,  in  spite  of  notice  of 
the  death,  properly  assume,  as  against  the  estate,  that  the  guarantee  is 
not  to  be  determined.  But  if  the  executor  has  no  option  of  the  sort, 
then,  in  my  opinion,  the  notice  of  the  death  of  the  testator  and  of  the 
existence  of  a  will  is  constructive  notice  of  the  determination  as  to 
future  advances  of  the  guarantee.  The  bank  from  that  moment  are 
aware  that  the  person  who  could  during  his  lifetime  have  discontinued 
the  guarantee  by  notice  cannot  any  longer  be  a  giver  of  notices  ;  that 
his  estate  has  passed  to  others  who  have  trusts  to  fulfil,  and  it  is  easy 
for  them  to  ascertain  what  those  trusts  are.  If  these  trusts  do  not 
enable  the  executor  to  continue  the  guarantee,  then  the  bank  has  con- 
structive notice  that  the  guarantee  is  withdrawn.  If,  indeed,  the  con- 
tracting parties  desire  that  on  the  death  of  the  guarantor  a  special  notice 

-  12  C.  B.  (n.  s.)  748  ;  31  L.  J.  (n.  s.)  (C.  P.),  319. 


SECT.  XIV.]  JORDAN    V.    DOBBINS.  347 

shall  be  necessary  to  determine  the  guarantee,  they  can  so  provide  in 
the  guarantee  itself;  and  such  a  provision  will,  of  course,  bind  the 
estate.1     Here  there  is  no  such  provision. 

Judgment  will,  therefore,  be  entered  for  the  defendants,  with  costs. 

Judgment  for  the  defendants.* 


E.  D.  JORDAN  and  Others  v.  E.  DOBBINS,  Administratrix. 
In  the  Supreme  Judicial   Court,  Massachusetts,  March  1,  1877. 

[Reported  in  122  Massachusetts  Reports,  168.] 

Contract  upon  the  following  guarantee:  "  For  value  received,  the 
receipt  whereof  is  hereby  acknowledged,  the  undersigned  does  hereby 
guarantee  to  Jordan,  Marsh  &  Co.  the  prompt  payment  by  George  E. 
Moore  to  Jordan,  Marsh  &  Co.,  at  maturity,  of  all  sums  of  money  and 
debts  which  he  may  hereafter  owe  Jordan,  Marsh  &  Co.  for  merchan- 
dise, which  they  ma}r  from  time  to  time  sell  to  him,  whether  such  debts 
be  on  book  account,  by  note,  draft,  or  otherwise,  and  also  any  and  all 
renewals  of  any  such  debt.  The  undersigned  shall  not  be  compelled  to 
pay  on  this  guarantee  a  sum  exceeding  $1,000,  but  this  guarantee  shall 
be  a  continuing  guarantee,  and  apply  to  and  be  available  to  said  Jordan, 
Marsh  &  Co.,  for  all  sales  of  merchandise  they  ma}7  make  to  said  George 
E.  Moore  until  written  notice  shall  have  been  given  by  the  undersigned 
to  said  Jordan,  Marsh  &  Co.  and  received  by  them,  that  it  shall  not 
apply  to  future  purchases.  Notice  of  the  acceptance  of  this  guarantee 
and  of  sales  under  the  same,  and  demand  upon  said  George  E.  Moore 
for  payment,  and  notice  to  me  of  non-payment,  is  hereby  waived.  In 
witness  whereof  I,  the  undersigned,  have  hereunto  set  my  hand  and 

1  In  In  re  Silvester,  '95,  1  Ch.  573,  the  parties  did  so  provide,  and  it  was  accordingly 
adjudged  that  the  estate  of  a  deceased  surety  continued  liable  on  a  bond  to  secure  the 
repayment  of  successive  advances,  although  the  advances  were  made  after  knowledge 
of  the  surety's  death.  Romer,  J.,  said,  p.  576  :  "  I  think  that  on  such  a  contract  as  this 
the  plaintiffs  were  entitled  to  rely  on  the  express  provisions  of  the  contract  with  them, 
and  were  not  bound  to  take  the  notice  of  the  obligor's  death  as  a  notice  from  his  exe- 
cutors to  determine  the  liability.  The  proviso  freed  the  plaintiffs  from  being  bound 
by  any  implied  notice  of  or  being  bound  to  make  inquiry  as  to  whether  there  would  be 
any  breach  of  trust  on  the  part  of  the  executors  in  not  giving  notice  to  determine  the 
liability."     See  also  Hecht  v.  Weaver,  34  Fed.  R.  Ill  .^ —  Ed. 

2  Harris  v.  Fawcett,  15  Eq.  311,  8  Ch.  866  (semble)  ;  In  re  Whelau,  '97,  Ir.  1  Ch. 
575 ;  Menard  v.  Scudder,  7  La.  An.  385,  Accord. 

In  Lloyds  v.  Harper,  16  Ch.  Div.  290,  Lush,  L.  J.,  said,  p.  320 :  "  I  cannot  entertain 
a  doubt  that  the  judgment  of  Mr.  Justice  Bowen  in  Conlthart  v.  Clementson  is  per- 
fectly right,  that  notice  of  the  death  of  the  guarantor  is  a  notice  to  terminate  the 
guarantee,  and  has  the  same  effect  as  a  notice  given  in  the  lifetime  of  the  guarantor 
that  he  would  put  an  end  to  it."  But  in  the  same  case  Cotton,  L.  J.,  said,  p.  318  :  "  It 
may  in  such  a  case  be,  although  I  give  no  opinion  upon  it,  that  death  and  notice  of 
death  are  sufficient  to  determine  a  guarantee  as  regards  subsequent  advances."  —  Ed. 


348  JORDAN    v.    DOBBINS.  [CHAP.  II. 

seal  this  twenty- eighth  day  of  Februaiy,  a.  d.  1873.  William  Dobbins. 
(Seal.)"  Annexed  to  the  declaration  was  an  account  of  goods  sold 
to  Moore. 

The  case  was  submitted  to  the  Superior  Court,  and,  after  judgment 
for  the  plaintiffs,  to  this  court,  on  appeal,  on  an  agreed  statement  of 
facts  in  substance  as  follows :  — 

The  plaintiffs  are  partners  under  the  firm  name  of  Jordan,  Marsh  & 
Co.,  and  the  defendant  is  the  duly  appointed  administratrix  of  the  estate 
of  William  Dobbins. 

William  Dobbins,  on  February  28,  1873,  executed  and  delivered  to 
the  plaintiffs  the  above  written  contract  of  guarantee.  The  plaintiffs 
thereafter,  relying  on  this  contract,  sold  to  said  Moore  the  goods 
mentioned  in  the  account  annexed  to  the  declaration,  at  the  times  and 
for  the  prices  given  in  said  account,  all  of  the  goods  having  been  sold 
and  delivered  to  Moore  between  January  16  and  May  28,  1874.  All 
the  amounts  claimed  were  due  from  Moore,  and  payment  was  duly  de- 
manded of  him  and  of  the  defendant  before  the  date  of  the  writ.  Other 
goods  had  been  sold  bjT  the  plaintiffs  to  Moore  between  the  date  of  the 
guarantee  and  the  first  date  mentioned  in  the  account,  but  these  had 
been  paid  for. 

William  Dobbins  died  on  August  6th,  1873,  and  the  defendant  was 
appointed  administratrix  of  his  estate  on  September  2,  1873.  The 
plaintiffs  had  no  notice  of  his  death  until  after  the  last  of  the  goods 
mentioned  in  the  account  had  been  sold  to  Moore. 

If  upon  these  facts  the  defendant  was  liable,  judgment  was  to  be 
entered  for  the  plaintiffs  for  the  amount  claimed  ;  otherwise,  judgment 
for  the  defendant. 

M.  Storey,  for  the  plaintiffs. 

D.  S.  Richardson  &  G.  F.  Richardson,  for  the  defendant. 

Morton,  J.  An  agreement  to  guarantee  the  payment  b}r  another  of 
goods  to  be  sold  in  the  future,  not  founded  upon  any  present  considera- 
tion passing  to  the  guarantor,  is  a  contract  of  a  peculiar  character. 
Until  it  is  acted  upon,  it  imposes  no  obligation  and  creates  no  liability 
of  the  guarantor.  After  it  is  acted  upon,  the  sale  of  the  goods  upon 
the  credit  of  the  guarantee  is  the  only  consideration  for  the  conditional 
promise  of  the  guarantor  to  pay  for  them. 

The  agreement  which  the  guarantor  makes  with  the  person  receiving 
the  guarantee  is  not  that  I  now  become  liable  to  3'ou  for  anything,  but 
that  if  you  sell  goods  to  a  third  person,  I  will  then  become  liable  to  pay 
for  them  if  such  third  person  does  not.  It  is  of  the  nature  of  an  authorit}' 
to  sell  goods  upon  the  credit  of  the  guarantor,  rather  than  of  a  contract 
which  cannot  be  rescinded  except  by  mutual  consent.  Thus  such  a 
guarantee  is  revocable  b}r  the  guarantor  at  any  time  before  it  is  acted 
upon. 

In  Offord  v.  Davies,1  the  guarantee  was  of  the  due  payment  for  the 
space  of  twelve  months  of  bills  to  be  discounted,  and  the  court  held 

i  12  C.  B.  (n.  s.)  748. 


SECT.  XI V.J  JORDAN   V.   DOBBINS.  349 

that  the  guarantor  might  revoke  it  at  any  time  within  the  twelve  months, 
and  that  the  plaintiff  could  not  recover  for  bills  discounted  after  such 
revocation.  The  ground  of  the  decision  was  that  the  defendant's 
promise  b}*  itself  created  no  obligation,  but  was  in  the  nature  of  a 
proposal  which  might  be  revoked  at  any  time  before  it  was  acted  on. 

Such  being  the  nature  of  a  guarantee,  we  are  of  opinion  that  the  death 
of  the  guarantor  operates  us  a  revocation  of  it,  and  that  the  person  hold- 
ing it  cannot  recover  against  his  executor  or  administrator  for  goods 
sold  after  the  death.  Death  terminates  the  power  of  the  deceased  to 
act,  and  revokes  any  authority  or  license  he  may  have  given,  if  it  ha3 
not  been  executed  or  acted  upon.  His  estate  is  held  upon  any  contract 
upon  which  a  liability  exists  at  the  time  of  his  death,  although  it  may 
depend  upon  future  contingencies.  But  it  is  not  held  for  a  liability 
which  is  created  after  his  death,  by  the  exercise  of  a  power  or  authority 
which  he  might  at  any  time  revoke. 

Applying  these  principles  to  the  case  at  bar,  it  follows  that  the  de- 
fendant is  entitled  to  judgment.  The  guarantee  is  carefully  drawn,  but 
it  is  in  its  nature  nothing  more  than  a  simple  guarantee  for  a  proposed 
sale  of  goods.  The  provision,  that  it  shall  continue  until  written  notice 
is  given  by  the  guarantor  that  it  shall  not  apply  to  future  purchases, 
affects  the  mode  in  which  the  guarantor  might  exercise  his  right  to  re- 
voke it,  but  it  cannot  prevent  its  revocation  by  his  death.  The  fact  that 
the  instrument  is  under  seal  cannot  change  its  nature  or  construction. 
No  liability  existed  under  it  against  the  guarantor  at  the  time  of  his 
death,  but  the  goods  for  which  the  plaintiffs  seek  to  recover  were  all 
sold  afterwards. 

We  are  not  impressed  b\'  the  plaintiffs'  argument  that  it  is  inequitable 
to  throw  the  loss  upon  them.  It  is  no  hardship  to  require  traders, 
whose  business  it  is  to  deal  in  goods,  to  exercise  diligence  so  far  as  to 
ascertain  whether  a  person  upon  whose  credit  they  are  selling  is  living. 

The  decision  in  Bradbury  v.  Morgan,  upon  which  the  plaintiffs  reby, 
was  rested  upon  reasoning  which  appears  to  us  to  be  unsatisfactory 
and  inconsistent  with  the  opinion  of  the  same  court  a  year  before,  in 
Westhead  v.  Sproson,1  and  with  the  decision  in  Offord  v.  Davies,  ubi 
supra,  at  the  argument  of  which  Bradbury  v.  Morgan  was  cited  ;  and 
it  has  not  since  been  treated  as  settling  the  law  in  England.  Harris 
v.  Fawcett.2  The  reasons  of  the  similar  decision  in  Bank  of  South 
Carolina  v.  Knotts,8  are  open  to  the  same  objections. 

Judgment  for  the  defendant. l 

>6H.  &N.  728.  2  l.  R.  15  Eq.  311,8  Ch.  866.  3  10  Rich.  543. 

*  Hyland  v.  Habich,  150  Mass.  112  (semble),  Accord. 

Gay  v.   Ward,  67   Conn.   147,  156;   Rapp  v.  Phoenix  Co.,  113  HI.  390,  400-401, 

Contra. 

See  also  Shackamaxon  Bank  v.  Yard,  143  Pa.  129,  137.  —Ed. 


350  NATIONAL   EAGLE   BANK   V.   HUNT.  [CHAP.  II. 


NATIONAL  EAGLE   BANK  v.   H.   A.   HUNT,  Administrator. 
In  the  Supreme  Court,  Rhode  Island,  February  11,  1886. 

[Reported  in  16  Rhode  Island  Reports,  148.] 

Covenant.     On  demurrers  to  the  pleas. 

February  11,  1888.  Matteson,  J.  This  is  an  action  of  covenant 
upon  two  sealed  instruments,  made,  executed,  and  delivered  to  the 
plaintiff  by  Sturgis  P.  Carpenter,  the  defendant's  intestate. 

The  first1  count  in  the  declaration  sets  forth  that  on  the  25th  day 
of  November,  1882,  the  said  Sturgis  P.  Carpenter,  by  his  certain  deed- 
poll,  or  agreement  in  writing  of  that  date,  made  and  signed  by  him  and 
sealed  with  his  seal,  after  reciting  therein  that  said  plaintiff  had  there- 
tofore at  his  request  discounted  trade  or  business  paper  for  his  son, 
Clarence  H.  Carpenter,  and  might  from  time  to  time  thereafter  dis- 
count trade  or  business  paper  for  said  Clarence,  or  for  his  son,  Frank 
F.  Carpenter,  guaranteed  to  said  plaintiff  the  payment  as  and  when  it 
matured  of  all  such  trade  or  business  paper  of  said  Clarence  or  of  said 
Frank  that  had  been  or  might  be  discounted  by  the  plaintiff,  until  such 
time  as  he,  said  Sturgis,  should  notify  the  plaintiff  of  his  intention  to 
terminate  said  guaranty,  and  therebj-  waived  demand  and  notice  of  non- 
payment thereof;  that  said  Sturgis  never  notified  the  plaintiff  of  his 
intention  to  terminate  said  guarantee,  and  that  afterwards,  on  the  31st 
day  of  March,  1884,  the  plaintiff,  upon  the  faith  of  and  relying  upon 
said  guarantee,  discounted  for  said  Clarence  his,  said  Clarence's,  note  of 
that  date  for  $2,500,  payable  four  months  after  date  at  bank,  to  the 
order  of  said  Sturgis,  which  note  had  theretofore  been  indorsed  by  said 
Sturgis,  and  paid  over  to  said  Clarence  the  net  proceeds  of  the  discount 
of  said  note ;  that  afterwards,  when  said  note  became  due  and  payable, 
to  wit,  on  the  2d  day  of  August,  1884,  payment  of  it  was  demanded  at 
bank,  but  the  said  Clarence  did  not  pay  and  never  has  paid  it  or  any  part 
of  it ;  of  all  which  the  defendant  had  due  notice,  and  thereby  became 
liable  to  pay  the  plaintiff  the  amount  of  said  note  on  demand. 

The  defendant's  third,  fourth,  and  fifth  pleas  set  forth  in  varying 
terms,  in  substance,  that  prior  to  the  maturit}'  of  said  note  the  said 
Sturgis  P.  Carpenter  died  ;  that  the  plaintiff  had  full  notice  of  his  death 
at  the  time  of  his  decease,  and  that  said  guarantee  was  thereby  termi- 
nated and  revoked  as  to  all  subsequent  transactions. 

To  these  pleas  the  plaintiff  has  demurred. 

Guarantees  have  been  divided  into  two  classes  :  one  where  the  con- 
sideration is  entire,  that  is,  where  it  passes  wholly  at  one  time ;  the 
other,  where  it  passes  at  different  times,  and  is,  therefore,  separable  or 
divisible.  The  former  are  not  revocable  by  the  guarantor,  and  are  not 
terminated  by  his  death  and  notice  of  that  fact.     Calvert  v.  Gordon,* 

1  Only  so  much  of  the  opinion  is  given  as  relates  to  this  count.  —  Ed. 
a  3  Man.  &  Ry.  124,  128. 


SECT.  XIV.]  NATIONAL   EAGLE    BANK   V.   HUNT.  351 

Green  v.  Young  51  Moore  v.  Wallis  ; 2  Royal  Insurance  Co.  v.  Davies  ;8 
Lloyds  v.  Harper ;  Rapp  v.  Phoenix  Insurance  Co.4  The  latter,  on  the 
contrary,  may  be  revoked  as  to  subsequent  transactions  by  the  guaran- 
tor, upon  notice  to  that  effect,  and  are  determined  by  his  death  and 
notice  of  that  event.  Offord  v.  Davies  ; 5  Jordan  v.  Dobbins  ;  Coulthart 
v.  Clementson  ;  Rapp  v.  Phoenix  Insurance  Co.  ;  Menard  v.  Scudder.6 

The  distinction  between  these  two  classes  of  guarantees  is  well  illus- 
trated by  Lush,  Lord  Justice,  in  Lloyds  v.  Harper.  "  An  instance  of 
the  first,"  he  remarks,  "  is  where  a  person  enters  into  a  guarantee 
that,  in  consideration  of  the  lessor  granting  a  lease  to  a  third  person, 
he  will  be  answerable  for  the  performance  of  the  covenants.  The 
moment  the  lease  is  granted  there  is  nothing  more  for  the  lessor  to  do, 
and  such  a  guarantee  as  that  of  necessity  runs  on  throughout  the  dura- 
tion of  the  lease.  The  lease  was  intended  to  be  a  guaranteed  lease, 
and  it  is  impossible  to  say  that  the  guarantor  could  put  an  end  to 
the  guarantee  at  his  pleasure,  or  that  it  could  be  put  an  end  to  by  his 
death,  contrary  to  the  manifest  intention  of  the  parties.  Another 
illustration  of  it  is  found  in  .  .  .  Calvert  v.  Gordon,7  which  is  one 
of  a  precisely  similar  kind.  There  the  defendant,  in  consideration  that 
the  plaintiff  would  take  into  his  service  a  given  individual  as  collector 
and  clerk  in  a  responsible  position,  guaranteed  that  he  would  be  an- 
swerable for  his  fidelity  as  long  as  he  continued  in  that  service.  It 
was  held,  and,  as  I  think,  rightly,  b}*  the  Court  of  Queen's  Bench,  that 
that  guarantee  could  not  be  put  an  end  to  as  long  as  the  service  con- 
tinued. The  consideration  there  was,  admitting  the  young  man  into 
the  service  of  the  plaintiff  in  that  capacity,  and,  that  being  done,  it 
was  to  be  a  guaranteed  service  as  long  as  he  remained  there.  The 
guarantee,  therefore,  necessarily  continued  until  the  service  ended. 

"  Instances  of  the  second  class  are  more  familiar.  They  are  where 
a  guarantee  is  given  to  secure  the  balance  of  a  running  account  at  a 
banker's,  or  the  balance  of  a  money  account  for  goods  supplied.  There 
the  consideration  is  supplied  from  time  to  time,  and  it  is  reasonable  to 
hold,  unless  the  guarantee  stipulates  to  the  contrary,  that  the  guarantor 
may  at  any  time  terminate  the  guarantee.  He  remains  answerable  for 
all  the  advances  made  or  all  the  goods  supplied  upon  his  guarantee  be- 
fore the  notice  to  determine  it  is  given  ;  but  at  any  time  he  may  saj', 
'  I  put  a  stop  to  this  ;  I  do  not  intend  to  be  answerable  an}*  longer ; 
therefore  do  not  make  any  more  advances  or  supply  any  more  goods 
upon  my  guarantee.'  As  at  present  advised,  I  think  it  quite  competent 
for  a  person  to  do  that  when,  as  I  have  said,  the  guarantee  is  for  ad- 
vances to  be  made  or  goods  to  be  supplied,  and  where  nothing  is  said 
in  the  guarantee  about  how  long  it  is  to  endure.8     In  that  case,  as 

1  8  Me.  H,  15,  16.  2  8  Ala.  458,  463. 

3  40  Iowa,  469,  471.  *  113  111.  390,  394,395. 

5  12  C.  B.  N.  S.  748,  756,  757.  6  7  La.  Ann.  385,  391,  392. 

1  3  Man.  &  Ry.  124. 

8  Jeudevine  v.  Rose,  36  Mich.  54,  Accord.  — Ed. 


352  NATIONAL   EAGLE   BANK   V.   HUNT.  [CHAP.  IL 

at  present  advised,  I  cannot  entertain  a  doubt  that  the  judgment  of 
Mr.  Justice  Bowen,  in  Coulthart  v.  Clementson,  is  perfectly  right,  that 
notice  of  the  death  of  the  guarantor  is  a  notice  to  terminate  the  guar- 
antee, and  has  the  same  effect  as  a  notice  given  in  the  lifetime  of  the 
guarantor  that  he  would  put  an  end  to  it." 

The  only  case  in  which  a  different  doctrine  from  that  above  expressed 
with  reference  to  the  second  class  of  guarantees  has  been  held  is  Brad- 
bury v.  Morgan.  In  that  case,  however,  as  remarked  by  Lord  Komilly 
in  Harris  v.  Fawcett,1  the  plea  did  not  aver  that  the  plaintiffs  had 
notice  of  the  death  of  the  guarantor  before  they  supplied  the  goods, 
although  the  court  did  not  base  its  decision  upon  the  want  of  such 
notice.  The  authority  of  Bradbury  v.  Morgan  has,  however,  been  ques- 
tioned ;  Harris  v.  Fawcett ;  and  was  not  regarded  in  Coulthart  v.  Clem- 
entson, a  later  case,  in  which  a  contrary  decision  was  made. 

The  guarantees  in  the  case  at  bar  come  within  the  second  class  above 
considered.  They  were,  therefore,  upon  the  authorities  cited,  termi- 
nated b}r  the  death  of  the  guarantor  and  notice  of  it  to  the  plaintiff,  as 
to  all  subsequent  transactions.2  As,  however,  the  note  described  in  the 
declaration  had  been  discounted,  and  the  net  proceeds  had  been  paid  to 
the  maker  prior  to  the  death  of  the  guarantor,  the  plaintiff  would  have 
been  entitled  to  recover  but  for  the  fact,  set  up  in  the  pleas,  that  after 
notice  of  the  death  of  the  guarantor  it  extended  the  time  of  pa}-ment 
for  a  further  period  by  taking  a  new  note  from  the  principal  debtor  and 
receiving  the  interest  thereon  in  advance,  without  the  consent  of  the 
defendant,  and  without  any  reservation  of  his  right  assented  to  by  the 
principal,  to  insist  upon  immediate  paj'ment  by  the  principal,  and,  in 
default  of  such  payment,  to  pay  the  debt  himself,  and  proceed  at  once 
against  the  principal.  That  such  action  on  the  part  of  the  plaintiff  was 
sufficient  to  release  the  estate  of  the  guarantor,  and  the  defendant  as 
his  representative,  from  liabibty,  is  too  well  established  to  need  the 
citation  of  authority.  Demurrers  overruled. 

*■  L.  R.  15  Eq.  311,313. 

2  Gay  r.  Ward,  67  Conn.  147;  Slagle  v.  Anderson,  1  Mona.  (Pa.)  30;  Kernochan 
t.  Murray,  111  N.  Y.  306,  309,  Accord. 

See  Hecht  v.  Weaver,  34  Fed.  R.  111.  — Ed. 


SECT,  XIV.J  BECKETT   V.   ADDYMAN.  353 


BECKETT   &   CO.   v.   ADDYMAN. 

In  the  Court  of  Appeal,  July  3,  1882. 

[Reported  in  9  Queen's  Bench  Division,  783.] 

TnE  plaintiffs  sued  to  recover  a  sum  of  £250,  the  limit  of  a  joint 
and  several  continuing  guarantee,  in  the  form  of  a  bond,  by  the  de- 
fendant and  another  surety,  named  Wright,  for  advances  by  the  plain- 
tiffs as  bankers  to  Grayson  and  Hardisty,  who  had  an  account  with 
them. 

Wright,  the  defendant's  co-surety,  died  on  the  22d  of  March,  1872, 
and  both  the  plaintiffs  and  defendant  had  notice  of  the  death  at  the 
same  time. 

The  plaintiffs  continued  the  account  after  Wright's  death,  and  made 
further  advances  to  Grayson  and  Hardisty,  and  there  being  a  larger 
balance  due  on  the  account  to  the  plaintiffs  than  the  limit  of  £250,  it 
was  to  recover  the  latter  sum  that  the  action  was  brought. 

The  statement  of  defence  alleged  circumstances  connected  with 
Wright's  testamentary  dispositions  calculated  to  bring  the  case  within 
the  authority  of  the  recent  decision  of  Coulthart  v.  Clementson,  and  to 
this  statement  of  defence  the  plaintiffs  demurred.1 

Lord  Coleridge,  C.  J.  The  defendant  is  clearly  liable  upon  the 
terms  of  the  instrument,  at  least  by  the  principles  of  the  common 
law,  but  it  is  contended  that  there  is  some  principle  whereby  the  per- 
sons guaranteed  who  have  done  nothing  are  not  entitled  to  sue  upon 
the  bond  of  which  the  defendant  was  obligor ;  for  the  other  person 
who  as  a  surety  became  obligor  is  now  dead.  It  is  said  that  some 
ground  for  relief  exists  in  equit}-,  and  cases  in  equity  may  be  cited  in 
which  it  has  been  decided  that  relief  ought  to  be  granted,  because  the 
creditors  had  done  some  act  behind  the  back  of  the  surety.  But  no 
ground  like  that  exists  in  the  present  case.  I  think  it  must  be  taken 
that  by  the  terms  of  the  bond  the  death  of  one  of  the  sureties  was  to 
some  extent  contemplated,  and  that  it  was  not  intended  to  discharge 
the  other.  It  is  probable  that  the  defendant  could  have  teiminated 
his  liability  by  notice  ;  for  it  seems  to  be  clear  that  in  the  case  of  a 
continuing  guarantee  for  goods  to  be  supplied  or  money  to  be  ad- 
vanced, it  is  in  the  power  of  the  guai-antor  to  determine  his  liability ; 
but  if  the  surety  takes  no  steps  he  remains  liable.  In  the  present  case 
it  is  plain  that  the  creditors  can  recover  on  the  bond.  The  judgment 
of  the  court  below  must  be  affirmed. 

Brett,  L.  J.  This  bond  must  be  construed  as  a  joint  and  several 
obligation.  At  common  law  it  must  be  deemed  to  consist  of  separate 
deeds,  and  the  defendant  is  prima  facie  separately  liable.     What  are 

1  The  statement  of  the  case  is  taken  from  the  opinion  of  Field,  J.,  in  the  Queen's 
Bench  Division.  —  Ed. 

23 


354  BECKETT  V.    ADDYMAN.  [CHAP.  IL 

the  defendant's  rights  at  law  against  the  plaintiffs,  and  what  are  the 
plaintiffs'  rights  against  him  ?  The  defendant  might  have  given  notice 
to  determine  his  liability  ;  but  no  notice  has  ever  been  given.  At  law 
the  defendant  is  clearly  liable  until  he  has  given  notice.  Then,  has  the 
defendant  any  relief  in  equity?  The  cases  cited  during  the  argument 
do  not  show  that  airy  equity  exists  in  his  favor.  It  has  been  contended 
that  the  defendant  would  have  an  equity  against  his  co-obligor.  That 
may  be  true,  but  it  does  not  follow  that  the  liability  to  the  obligees  of 
the  bond  would  likewise  determine.  It  has  been  argued  that  the 
liability  of  the  estate  of  the  co-obligor  Las  determined,  and  therefore 
that  the  liability  of  the  defendant  is  at  an  end.  I  will  not  now  decide 
whether  the  estate  of  the  co-obligor  is  liable  ;  but  assuredly  the  deter- 
mination of  that  liability  can  in  no  case  discharge  the  defendant.  To 
hold  that  the  defendant  is  discharged  under  the  circumstances  dis- 
closed in  the  pleadings  would  be  tantamount  to  striking  out  the  obliga- 
tion contained  in  the  bond.  I  can  see  no  equity  against  the  plaintiffs. 
As  they  have  done  nothing,  no  equity  exists  against  them,  and  they 
ma}*  recover  upon  their  legal  right. 

Cotton,  L.  J.  At  law  the  defendant  is  clearly  liable.  But  it  is 
contended  that,  as  the  plaintiffs  had  notice  of  the  co-obligor's  will  and 
of  the  appointment  of  the  executors,  the  defendant  is  discharged.  It 
is  doubtful  whether  mere  notice  of  the  death  and  of  the  will  could  put 
an  end  to  the  liability  of  the  estate ;  but  I  will  assume  that  it  did. 
How  can  that  circumstance  alter  the  position  of  the  co-surety?  If  the 
creditor  deprives  the  surety  of  his  rights,  that  may  put  an  end  to 
his  liability ;  but  here  the  plaintiffs  have  done  no  act  to  discharge 
the  defendant ;  in  my  opinion  the  defendant  has  no  equity  against 
the  plaintiffs.     The  decision  in  the  Queen's  Bench  Division  was  right. 

Judgment  affirmed.1 

1  In  Ashby  v.  Day,  34  W.  R.  312,  the  Court  of  Appeal  expressly  refrained  from  giv- 
ing a  decision  as  to  whether  the  death  of  one  joint  guarantor  (not  joint  and  several)  ipso 
facto  determined  the  guarantee.  Bacon,  V.  C,  had  expressed  the  opinion  in  the 
Chancery  Division  that  the  liability  of  the  survivor  was  not  affected  by  the  death  of  his 
co-guarantor.  The  guarantee  in  this  case  was  not  under  seal,  but  this  fact  seems  not 
to  have  influenced  the  judges.  In  Fennell  v.  McGuire,  21  Up.  Can.  C.  P.  134,  two 
persons  gave  a  joint  (not  joint  and  several)  parol  guarantee,  that  is,  a  joint  offer  of  pay- 
ment for  goods  that  A.  should  from  time  to  time  sell  to  B.  Goods  were  sold  by  A.  to 
B.  after  the  death  of  one  of  the  joint  offerors.  The  other  was  nevertheless  held  liable 
as  a  guarantor  —  Ed. 


SECT.  XIV.]  HUNT  V.   ROBERTS.  355 


L.  K.  HUNT  and  Another,  Respondents,  v.  E.  ROBERTS, 

Appellant. 

In  the  Court  of  Appeals,  June,  1871. 
[Reported  in  45  New  York  Reports,  691. J 

Rapallo,  J.1  By  a  contract  dated  August  12,  1861,  the  plaintiffs 
agreed  with  Crossley  to  do  the  carpenters'  work  on  the  houses  for  the  sum 
of  $2,625,  and  to  complete  the  work  on  or  before  the  15th  of  October, 
1861  ;  Crossley  was  to  furnish  the  materials.  The  defendant  guaranteed 
the  fulfilment  of  the  contract  on  the  part  of  Crossley. 

The  work  was  not  finished  on  the  15th  of  October,  and  between  that 
day  and  the  1st  of  November  the  defendant  gave  notice  to  the  plain- 
tiffs that  if  the\T  did  not  complete  the  work  before  the  1st  of  November, 
1861,  he  would  not  be  responsible  as'  guarantor  after  that  day.  The 
plaintiffs,  nevertheless,  went  on  with  the  work  until  June,  1862,  and 
have  recovered  in  this  action  the  contract  price  of  the  work  up  to  that 
time. 

It  appears  from  the  findings  of  the  referee,  that  the  delay  in  com- 
pleting the  work  was  owing  to  the  fault  of  Crossle}'  in  furnishing  the 
materials  and  preparing  the  houses.  And,  further,  that  the  defendant 
had,  under  a  contract  with  Henry  Day,  the  owner  of  the  lots,  assumed 
the  obligations  of  Crossley  in  those  respects,  so  that  the  default  was 
in  fact  that  of  the  defendant.  What  the  arrangements  were  between 
Crossley  and  the  defendant  does  not  appear. 

The  defence  cannot  be  sustained  on  the  ground  of  any  breach  of  the 
contract  on  the  part  of  the  plaintiffs,  but  rests  wholly  upon  the  effect  of 
the  defendant's  notice  that  he  would  not  be  bound  as  guarantor  after 
the  1st  of  November. 

By  the  terms  of  the  original  contract,  the  work  was  to  have  been 
completed  on  the  15th  of  October.  If  not  performed  at  this  time,  the 
defendant,  had  he  not  interfered  in  the  transaction,  or  consented  to  an 
extension  of  the  time,  would  have  been  entitled  to  have  the  matter 
closed.  If  the  delay  had  been  owing  to  the  default  of  the  plaintiffs, 
the  defendant  would  have  been  discharged.  If  it  was  caused  by  Cross- 
ley,  he  had  been  guilty  of  a  breach,  and  the  defendant  would  have  been 
entitled  to  insist  upon  the  contract  being  terminated,  and,  on  such  ter- 
mination, would  have  been  liable  as  guarantor  for  the  work  done  up  to 
that  time,  and  for  the  damages  sustained  by  the  plaintiffs  in  not  being 
allowed  to  complete  the  job. 

The  effect  of  the  notice  was  to  extend  the  time  for  completion,  as  far 
as  the  guarantee  was  concerned,  to  the  1st  of  November.  We  think 
that  the  extension  left  the  parties  in  the  same  position  on  the  1st  of 
November  in  which  they  would  otherwise  have  been  on  the  15th  of 

1  Only  the  opinion  of  the  court  is  given,  and  that  too  somewhat  abridged.  — Ed. 


356  HUNT   V.   ROBERTS.  [CHAP.  II. 

October,  and  that  it  did  not  operate  as  an  extension  of  the  guarantee 
indefinitely  to  such  time  as  might  be  necessary  to  complete  the  work, 
but  that  the  defendant  had  the  right  to  insist  that  his  liability,  as  guar- 
antor, should  be  limited  to  the  debt  and  damages  which  the  plaintiff's 
were  entitled  to  claim  as  of  the  date  specified  in  his  notice. 

If  the  defence  rested  upon  the  allegation,  that  the  plaintiffs  had  failed 
to  perform  their  part  of  the  contract,  or  that  the  contract  had  been 
varied,  the  facts  found  by  the  referee  would  have  been  abundant  answers 
to  those  defences.  But  such  is  not  the  nature  of  the  defence.  It  is, 
that  after  the  contract  had  been  broken,  the  defendant,  in  his  character 
of  suret}-,  insisted  that  the  plaintiffs  should  not  go  on  and  add  to  his 
liability  as  guarantor,  but  that,  if  they  continued,  they  should  look  to 
the  principal  alone  for  all  work  done  after  that  time.  If  they  did  not 
think  proper  to  continue  on  those  terms,  the}'  should  have  stopped  work, 
and  would  have  been  entitled  to  recover  of  the  defendant  what  they 
had  earned  up  to  that  time  and  their  damages  for  not  being  allowed  to 
complete  the  job. 

The  learned  referee,  in  substance,  denied  all  effect  to  the  notice  given 
by  the  defendant,  and  seems  to  have  held  that  he  could  not  thereby  fix 
the  time  as  of  which  the  amount  of  his  liability  should  be  ascertained. 
There  is  authority  for  the  proposition,  that  a  suret\*  cannot,  before 
breach,  by  his  own  act  terminate  a  subsisting  suretyship  for  a  third 
person,  so  as  to  exempt  himself  from  liability  for  future  defaults  of  his 
principal,  Hough  v.  Warr  ;  1  Calvert  v.  Gordon  ; 2  Gordon  v.  Calvert ;  3 
Calvert  v.  Gordon  ; 4  although  an  agreement  to  guarantee  obligations 
to  be  incurred  ma}T  be  revoked  before  it  is  acted  upon.  (Offord  v. 
Davies  ;  5  Agawam  Bank  v.  Strever.6)  Without  now  determining  how 
far  a  surety  can,  before  a  breach  of  the  engagement  of  his  principal, 
protect  himself  from  future,  defaults,  we  are  clearly  of  opinion  that, 
after  a  breach  which  will  justify  a  termination  of  the  contract,  the 
surety  has  the  right  to  require  that  the  contract  with  the  principal  be 
terminated,  and  the  claim  against  the  surety  confined  to  the  damages 
then  recoverable. 

Judgment  reversed  and  new  trial  ordered,  costs  to  abide  the  event.'' 

1  1  Car.  &  P.  151.  -  1  M.  &  Ry.  497;  s.  c.  7  B.  &  C.  809. 

3  2  Sim.  253 ;  B.C.  4  Buss.  581.  *  3  M.  &  Ry.  124. 

»  31  L.  I.  C.  B.  319.  6  18  N.  Y.  513,  514. 

*  Dwelling  Co.  v.  Johnston,  90  Mich.  170,  Accord.  —  Ed. 


SECT.  L]  GODDARD    V.    WHYTE.  357 

CHAPTER  in.         Cx 
Sf**^r*~       V  T1IE  SURETY'S  RIGHTS.  tfT 

jf<jP  SECTION   I. 

Subrogation  to  the  Rights  of  the  Creditor. 

GODDARD  v.   WHYTE. 
In  Chancery,  before  Sir  John  Stuart,  V.  C,  November  16,  1860. 

[Reported  in  2  Gifford,  449.] 

This  bill  was  filed  by  John  Goddard  and  Arthur  Finch,  for  the  pur- 
pose of  obtaining  a  declaration  that  the  plaintiffs,  who  were  sureties  of 
one  Samuel  Hallett,  were  entitled  to  certain  securities,  which  had  been 
given  to  John  Sullivan  Ide,  the  holder  of  a  promissory  note,  which  had 
been  dishonored,  and  on  which  Hallett  was  liable.  The  bill  stated 
that,  prior  to  March  and  April,  1857,  George  W.  M'Dowell  and  Samuel 
Hallett  carried  on  business  as  bankers  (with  two  other  partners),  at 
Hornellsville,  in  the  State  of  New  York.  The  style  of  the  firm  was 
"Hallett  &  Company."  In  March  and  April  of  that  year,  G.  W. 
M'Dowell  made  two  promissory  notes  for  3000  dollars,  each  payable 
four  months  after  date  to  the  order  of  Truman  Warner,  at  the  Metro* 
politan  Bank  of  New  York.  The  notes,  before  the}7  became  due,  were 
indorsed  in  the  name  of  Samuel  Hallett  &  Co.,  to  the  Hornellsville  Bank, 
by  whom  they  were  indorsed  to  the  defendant  Ide.  On  the  notes  be- 
coming due,  Ide  presented  them  for  payment  at  the  Metropolitan  Bank 
of  New  York,  when  they  were  dishonored.  Notice  of  dishonor  was 
immediately  given  by  Ide  to  G.  W.  M'Dowell,  who  thereupon  agreed 
to  give  him  security  for  the  amount  due,  and  executed  to  him  a  mortgage 
on  several  parcels  of  land  to  secure  the  two  notes.  Ide  being  desirous 
of  enforcing  payment  of  the  notes,  indorsed  them  to  a  gentleman  in  Paris, 
who  indorsed  them  over  to  the  defendant  Whyte.  On  the  7th  of  April, 
1858,  Whyte  commenced  an  action  against  Hallett,  who  was  then  in  Lon- 
don. On  the  13th  of  October,  1858,  Whyte  caused  Samuel  Hallett  to  be 
arrested  on  a  capias  alleging  he  was  about  to  quit  England.  The  plain- 
tiffs in  these  proceedings  became  Hallett's  sureties,  but  he  shortly  after 
left  England  for  America,  thereby  rendering  them  liable.  On  the  19th 
of  February,  1859,  Whyte  obtained  a  verdict  against  Hallett,  and  on 
the  16th  of  March,  1859,  entered  up  judgment  in  the  action  for  £1631 

1  The  statement  of  facts  is  abridged.  —  Ed. 


358  GODDAED    V.    WHYTE.  [CHAP.  Ill 

8s.  Id.  for  damages,  interest  and  costs.     For  this  amount  the  plaintiffs 
were  liable.1 

The  Vice-Chancellor.  The  plaintiffs  have  paid  into  court  the  amount 
due  on  Whyte's,  or  rather  on  Ide's,  claim  on  these  promissory  notes. 
By  the  law  of  this  court,  a  surety  who  satisfies  the  debt  for  which  he  is 
liable,  is  entitled  to  have  from  the  creditor  whose  debt  he  pays  the 
securities  which  such  creditor  has  obtained  from  the  debtor  ;  and  if  such 
securities  are  not  voluntarily  given  up,  it  is  the  right  of  the  surety  t6 
come  to  this  court  to  have  such  security  delivered  up. 

In  this  case  the  plaintiffs  have  been  put  to  great  expense  ;  they  had 
been  compelled  to  pa}'  the  money  into  court  as  the  terms  of  stopping 
the  action  at  law,  and  have  clearly  established  their  right  to  have  the 
securities  in  the  possession  of  the  defendant  Ide. 

This  was  the  object  of  the  suit,  and  the}'  are  therefore  entitled  to  the 
costs,  even  if  the  conduct  of  the  defendants  had  been  more  straight- 
forward than  it  was.  The  great  expense  of  the  suit  has  arisen  from  the 
conduct  of  the  defendants. 

The  plaintiffs  are  therefore  entitled  to  a  decree,  that  their  costs  should 
be  taxed  and  paid  out  of  the  fund  in  court.  There  must  be  a  declara- 
tion that  they  are  entitled  to  have  the  mortgage  security  held  by  Ide 
delivered  up  to  them,1  and  that  Ide  is  entitled  to  the  residue  of  the  fund 

1  The  right  of  the  surety  to  be  subrogated,  upon  satisfying  the  creditor's  claim  against 
the  princTpaTTTo"  aTI  collateral  securities  heldby  the  creditor  for  the  payment  of  The 
chum  is  almost  everywhere  recognized.     Youge  v.  Reynell,  9  Hare,  809  ;   Faweetts   v. 

.^T&immey',  3a  Ala.  261  ;  Talbot  v.  Wilkins,  31  Ark.  411  ;  Billings  v.  Sprague,  49  111.  509  ; 
Jacques  v.  Fackney,  64  111.  87  ;  Beaver  v.  Slanker,  94  111.  175 ;  Jones  v.  Tincher,  15  Ind. 
308;  Josselyn  v.  Edwards,  57  Ind.  212;  Murray  v.  Catlett,  4  Greene  (Iowa),  108; 
Hutchinson  v.  Watkins,  17  Iowa,  473;  Keokuk  v.  Love,  31  Iowa,  119;  Band  v.  Bar- 
rett, 66  Iowa,  701  (but  see  Bockholt  v.  Kraft,  78  Iowa,  661);  Storms  v.  Storms,  3 
Bush,  77 ;  Norton  v.  Soule,  2  Greenl.  341 ;  McArthur  v.  Martin,  23  Minn.  74 ;  Felton 
v.  Bissell,  25  Minn.  15;  Conner  v.  Howe,  35  Minn.  518;  Torp  v.  Gussett,  37  Minn. 
135;  Allison  v.  Sutterlin,  50  Mo.  274;  May  v.  Burk,  80  Mo.  675;  Taylor  v.  Tarr,  84 
Mo.  420;  Wilson  v.  Burney,  8  Neb.  39;  Guthrie  v.  Ray,  36  Neb.  612;  ^Etna  Co.  v. 
Thompson  (New  Hampshire,  1894), 40  Atl.  R.  396  ;  Young  v.  Vough,  23  N.  J.  Eq.  325 ; 
Lewis  v.  Palmer,  28  N.  Y.  271  ;  State  Bank  v.  Smith,  155  N.  Y.  185  ;  Toronto  Bank  v. 
Hunter,  4  Bosw.  646 ;  Blalock  v.  Peake,  3  Jones  Eq.,  323  ;  Liles  v.  Rogers,  113  N.  Ca. 
197,  200;  Holden  v.  Stricklaud,  116  N.  Ca.  185  (but  see  Browning  v.  Porter,  116  N.  Ca. 
32);  Gossin  v.  Brown,  11  Pa.  527;  Klopp  v.  Lebanon  Bank,  46  Pa.  88;  Lowndes  v. 
Chisholm,  2  McC.  Ch.  455  ;  James  v.  Jaques,  26  Tex.  320 ;  Nat.  Bank  v.  Cushing,  53 
Vt.  321  ;  McNeale  v.  Reed,  7  Ir.  Ch.  251,  Accord. 
Moore  v.  Campbell,  36  Vt.  361 ,  Contra. 

The  right  exists  independently  of  any  agreement,  and  is.  therefore,  not  affectedjiy 
the  fact  that  the  surety  knew  nothing  about  the  collateral  security  when  he  contracted. 

~"7"Mayhew  v.  Crickett,  2  Sw.  185, 191  ;  Lake  v.  Brutton,  8  D.  M.  &  G.  440  ;  Duncan  v.  Fox, 

'     6  App.  Cas.  1 ;  Smith  v.  McLeod,  3  Ired.  Eq.  390;  Dempsey  v.  Bush,  18  Oh.  St.  376; 

Hevener  v.  Berry,  17  W.  Va.  474 ;  Scott  v.  Knox,  2  Jones  (Ir.)  778.    The  right  attaches 

to  securities  given  after  the  surety  contracted,  as  well  as  to  those  given  at  the  time  the 

-JRrety  became  bound.     Brandon  v.  Brandon,  3  He  G.  &  J.  524;  Lake  'v.  Brutton,  8  D. 

'M.-feG.  440;  Pearl  St.  Society  v.  Imlay,  23  Conn.  10  (semble);  Havens  v.  Willis,  100 

N.  Y.  482;  Third  Bank  v.  Shields,  55  Hun,  274;  Riverside  Bank  v.  Totten,  11  N.  Y. 

Sup.  519;  Scanland  v.  Settle,  Meigs,  169 :  Scott  v.  Knox,  2  Jones  (Ir.),  778.     See  also 

supra,  197,  n.  1.  —  Ed. 


SECT.  I.]  FULKERSON   V.    BROWNLEE.  359 

in  court,  after  payment  of  the  plaintiff's  costs  in  full  satisfaction  of  his 
claim  upon  the  notes.  It  is  unnecessary,  in  this  view  of  the  case,  to 
make  any  order  as  to  the  liabilities  between  the  defendants  Ide  and 
Whyte. 

The  bill  having  been  taken  pro  confesso  against  the  defendants 
M'Dowell  and  Hallett,  the  plaintiffs  are  entitled  to  a  declaration  that 
they  are  entitled  to  recover  against  such  defendants  the  full  amount  of 
principal,  interest,  and  costs,  and  to  a  decree  for  payment —  the  amount 
to  be  certified  by  affidavit  —  and  that  all  proper  assurances  should  be 
executed. 


FULKERSON,  Appellant,  v.  BROWNLEE. 

In  the  Supreme  Court,  Missouri,  April  Term,  1879. 

[Reported  in  69  Missouri  Reports,  371.] 

Hough,  J.  This  was  an  action  of  ejectment  instituted  September 
14,  1874.  On  the  4th  day  of  February,  1856,  the  count}'  of  Johnson 
sold  the  land  in  controversy  as  swamp  land,  on  a  credit  of  twelve 
months,  to  J.  V.  Cockrell,  who  executed  a  bond  therefor,  with  the 
plaintiff  as  suret}'.  On  December  16,  1858,  Cockrell  conveyed  said 
land  to  one  Carley,  from  whom,  through  sundry  mesne  conve3Tances,  and 
a  conveyance  to  himself  dated  May  9,  1870,  the  defendant  claims  title. 
Cockrell  made  default  iti  the  payment  of  his  bond.  On  the  22d  day  of 
February,  1871,  the  plaintiff,  as  surety  for  said  Cockrell,  with  knowl- 
edge of  the  defendant's  purchase  and  possession,  paid  to  the  county  of 
Johnson  the  purchase  money  and  interest,  and  received  from  the  county 
a  deed  to  the  land  sued  for.  The  defendant  relied  upon  the  statute  of 
limitations.  There  was  testimony  tending  to  show  that  prior  to  the 
payment  by  plaintiff  of  the  bond  on  which  he  was  surety,  he  notified 
the  defendant  that  the  purchase  mone\T  had  not  been  paid,  and  re- 
quested him  to  pay  the  same  and  relieve  plaintiff  of  his  liability  as 
surety,  which  defendant  refused  to  do.  The  Circuit  Court  held  that 
the  plaintiff  was  barred  by  the  statute,  and  could  not,  therefore, 
recover. 

The  purchase  money  never  having  been  paid  by  Cockrell,  he  and  all 
the  grantees  under  him,  including  the  defendant,  took  and  held  posses- 
sion of  the  land  sued  for,  in  subordination  to  the  right  of  the  county, 
and  we  find  nothing  in  the  record  which  will  warrant  us  in  holding  that 
such  possession  ever  assumed  a  hostile  or  adverse  character.  Hamil- 
ton v.  Boggess ;  l  Budd  v.  Collins.2  After  default  in  the  payment  of 
the  purchase  money,  and  refusal  to  pay,  the  county  could  have  main- 
tained ejectment.     Gibbs  v.  Sullens  ; 3  Glascock  v.  Robards  ; 4  Wright 

1  63  Mo.  233.  2  69  Mo.  129. 

3  48  Mo.  237.  *  14  Mo.  350. 


360  UZZELL   V.    MACK.  [CHAP.  IIL 

v.  Moore  •,  !  Powers  v.  Ingraham  ; 2  Pierce  v.  Tuttle.3  The  county  hav- 
ing transferred  the  legal  title  to  the  plaintiff,  on  the  payment  of  the 
purchase  money  by  hina  as  surety,  it  would  seem  that  his  right  should 
be  equal  to  that  of  the  county.  Furnald  v.  Bank.4  We  are  of  opinion, 
therefore,  that  the  plaintiff  can  recover  in  ejectment,  unless  the  defend- 
ant refunds  to  him  the  purchase  money  so  paid.  Vide  Ellsworth  v. 
Lockwood.5    All  concur.     Judgment  reversed  and  cause  remanded. 

Reversed. 


UZZELL  v.   MACK. 

In  the  Supreme  Court,  Tennessee,  December  Term,  1843. 

[Reported  in  4  Humphrey,  319  ] 

Green,  J.,  delivered  the  opinion  of  the  court.7 

The  complainant  in  this  bill,  seeks  to  be  substituted  to  the  rights  of  a 
creditor,  whose  debt  he  has  paid  as  a  surety,  to  enforce  the  creditor's  lien 
for  the  purchase  money  of  the  estate.     The  facts  are  shortly  these  :  — 

James  R.  Plummer  purchased  of  Henry  D.  Houser,  two  lots  in 
Columbia  for  $1995,  to  be  paid  in  three  annual  instalments,  of  1665 
each.  To  secure  these  payments,  he  executed  his  three  several  notes, 
with  P.  Nelson  and  Elisha  Uzzell  as  his  sureties.  A  deed  was  made  to 
Plummer  by  Houser,  on  the  face  of  which  it  is  stipulated,  that  Houser 
retains  a  lien  upon  the  lots  for  the  purchase  money. 

Sometime  afterwards,  Robert  Mack  purchased  the  lots  from  Plummer, 
at  the  price  of  $2800,  and  in  part  payment  thereof,  he  took  up  the  two 
last  notes  Plummer  had  given  to  Houser,  and  paid  in  cash  $300  on  the 

i  21  Wend.  230.  2  3  Barb.  576.  3  53  Barb.  155. 

4  44  Mo.  336.  5  42  N.  Y.    89. 

G  When  property  is  sold,  the  legal  title  to  remain  in  the  vendor  till  the  purchase 
money  is  paid,  the  relation  between  the  vendor  and  vendee  is  virtually  that  of  mort- 
gagee and  mortgagor,  and  the  surety  for  the  vendee,  upon  paying  the  purchase  money 
is  subrogated  to  the  vendor's  rights  as  mortgagee.  Beatty  v.  Dickinson,  39  Ark.  205  ; 
Keith  v.  Hudson,  74  Ind.  333  ;  Bellew  v.  Roler,  124  Ind.  557  ;  Kleiser  v.  Scott,  6  Dana, 
138  ;  Burk  v.  Chrisman,  3  B.  Mon.  50;  Highland  v.  Anderson  (Kentucky,  1891),  17 
S.  W.  R.  866  ;  Ghiselin  v.  Ferguson,  4  Har.  &  J.  522  ;  Magruder  ?•.  Peter,  11  Gill  &  J. 
217  ;  Tuck  v.  Calvert,  33  Md.  209  ;  Myres  v.  Yaple,  60  Mich.  339 ;  Torp  v.  Gulseth, 
37  Minn.  135  ;  Smith  u.  Schneider,  23  Mo.  447  ;  Green  v.  Crockett,  2  Dev.  &  B.  Eq. 
390;  Polk  v.  Gallant,  2  Dev.  &  B.  Eq.  395;  Schoffner  v.  Eoglenan,  Winst.  Eq.  12; 
Arnold  ?>.  Hicks,  3  Ired.  Eq.  17  ;  Barnes  r.  Morris,  4  Ired.  Eq.  22 ;  Egerton  v.  Allen,  6 
Ired.  Eq.  188;  Ex  parte  Petillo.  80  N.  Ca.  50;  Stenhouse  v.  Davis,  82  N.  Ca.  432; 
Deitzler  ;;.  Mishler,  37  Pa.  82 ;  Henry  v.  Compton,  2  Head,  549  ;  Galliher  v.  Galliher, 
10  Lea,  23;  Hatcher  v.  Hatcher,  1  Rand.  53. 

In  Sawyers  v.  Baker,  72  Ala.  49,  the  purchaser,  i.  e.  mortgagor,  sold  a  moiety  of  the 
land  purchased,  and  the  sub-vendee's  payment  of  his  purchase  money  was  credited 
upon  the  purchase  money  note  given  by  the  first  vendee  with  a  surety  to  his  vendor. 
The  surety  paid  what  remained  due  on  this  note,  but  was  not  permitted  to  enforce,  by 
subrogation,  the  original  vendor's  lien  upon  the  moiety  sold  to  the  sub-vendee.  —  Ed. 

7  Only  the  opinion  of  the  court  is  given.  —  Ed. 


SECT.  I.]  UZZELL  V.  MACK.  361 

first  note,  which  left  upwards  of  $300  of  the  purchase  money  unpaid  to 
Houser. 

Subsequently  Plummer  has  become  insolvent,  and  Uzzell  has  paid  to 
Houser  the  balance  due  him  for  the  lots,  and  for  the  payment  of  which 
he  was  bound  as  Plummer's  surety. 

When  Mack  purchased  the  lots,  he  knew  that  a  lien  was  retained  by 
Houser,  in  the  deed  to  Plummer,  and  he  also  knew  that  the  purchase 
money  had  not  all  been  fully  paid. 

There  is  no  question  but  that,  as  a  general  principle,  sureties,  who 
pay  a  debt,  are  entitled  to  stand  in  the  place  of  a  creditor,  as  to  all 
securities  or  liens,  which  he  may  have  against  other  persons  or  property 
on  account  of  the  debt. 

The  only  question  here  is,  whether  there  was  any  thing  remaining 
after  Houser's  debt  was  paid,  to  which  the  surety,  paying  it,  could  be 
substituted.  Where  a  surety  pays  a  bond,  or  discharges  a  judgment, 
he  extinguishes  the  only  security  the  creditor  has,  and  that  being  extin- 
guished, there  is  nothing  to  which  he  can  be  substituted.  But  if  the 
creditor  has  a  security  against  another  person,  for  the  same  debt,  or 
upon  other  property,  these  being  distinct  from  the  obligation  he  held 
on  the  surety,  the  discharge  of  that  obligation  by  the  surety  does  not 
extinguish  such  other  security  or  lien  ;  as  against  such  security  or  lien 
the  debt  still  remains.  The  suret}*  who  paid  the  creditor  is  entitled  to 
stand  in  his  place,  and  to  be  substituted  to  all  his  rights. 

In  the  case  before  the  court,  Houser  had  two  securities  for  his  money: 
the  bond  of  Plummer,  Nelson,  and  Uzzell,  and  the  lien  reserved  in  the 
deed. 

When  Uzzell,  as  Plummer's  surety,  paid  the  bond,  that  was  extin- 
guished ;  but  the  lien  on  the  land  is  a  distinct  thing,  constituting  a  dif- 
ferent security,  which  the  paj'ment  of  the  bond  by  Uzzell  does  not  affect. 
Uzzell  stands  in  the  shoes  of  Houser,  and  the  purchase  money  being 
unpaid,  the  lien  on  the  land  continues  by  the  veiy  terms  of  the  deed. 

We  think  this  a  clear  case  for  substitution,  and  reverse  the  decree, 
and  order  that  a  decree  be  entered  for  the  complainant.1 

1  Vendor's  lien  on  land  conveyed  to  vendee.  Lang  v.  Constance  (Kentucky,  1898), 
46  S.  W.  R.  692 ;  Carter  v.  Sims,  2  Heisk.  166  ;  Ellis  v.  Roscoe,  4  Baxter,  418,  Accord. 
Foster  v.  Trustees,  3  Ala.  302  ;  McNeill  v.  McNeill,  36  Ala.  109  (but  see  Sawyers  v. 
Baker,  72  Ala.  49,  55),  Contra. 

There  was  no  subrogation  in  Bradford  v.  Morris,  2  Ela.  463  ;  Blake  v.  Koons,  71 
Iowa,  356 ;  Miller  v.  Miller,  Phillips  Eq.  85,  because  by  the  law  of  the  State  the  vendor 
had  no  lien. 

Corporation's  lien  on  shares  of  stockholders.  Young  v.  Vough,  23  N.  J.  Eq.  325; 
Klopp  v.  Lebanon  Bank,  46  Pa.  88  ;  Petersburg  Co.  v.  Lumsden,  75  Va.  327. 

Statutory  hens :  (a)  on  property  of  obligors  in  tax-collector's  bond.  Knighton  v. 
Curry,  62  Ala.  404  ;  Turner  v.  Teague,  73  Ala.  554  ;  Watts  v.  Eufaula  Bank!  76  Ala. 
474  ;  Schnessler  v.  Dudley,  80  Ala.  547  ;  Cummings  v.  Macv,  110  Ala.  479 ;  Richeson  v. 
Crawford,  94  111.  165.  101  Bl.  351  ;  Hook  v.  Richeson,  115" Bl.  431. 

(b)  Agricultural  lien.     McCoy  v.  Wood,  70  N.  Ca.  125. 

(c)  Lien  incident  to  bond  to  prevent  sacrifice  of  property  by  forced  sale  Bargor  v 
Brechland,  28  Grat.  850,  Accord.  —  Ed. 


362  "  PIERCE   V.    HOLZER.  w  [  CHAP.  I1L 

^<i<-.^+    S&»~7-  *<?s^<-~  *?  ^    ^^^   ^Q     ^_ 

*L///)W         toIterpierce  Dannie  e.  holzer.  ,     ^*^ 

tsvf*  -■  P****     Tnthe  Supreme  CjTTjrt,  J$nrmGANCApj£Ll4,  18877" 

Champlin,  J.1  Complainant  is  surety  upon  the  bond  of  defendant, 
given  to  the  judge  of  probate  of  Kent  County,  as  administratrix  of  the 
estate  of  Edward  Welsh,  deceased. 

After  making  all  allowances,  the  judge  of  probate  found  that  the 
administratrix  had  in  her  hands  belonging  to  the  estate,  subject  to  dis- 
tribution among  the  creditors,  the  sum  of  $755.71.  He  also  found  that 
the  unpaid  indebtedness  amounted  to  $2,082.75,  and  that  she  should 
pay  to  each  creditor  36.28  per  cent  of  his  claim  ;  and  thereupon,  on  the 
thirtieth  day  of  December,  1876,  made  an  order  that  the  $755.71  should 
be  distributed  to  the  creditors  within  sixty  days  from  that  date. 

The  administratrix  having  neglected  to  make  the  distribution  or- 
dered, A.  R.  and  W.  F.  Linn,  as  creditors  entitled  to  a  distributive 
share,  applied  to  and  obtained  leave  from  the  judge  of  probate,  on  the 
eighteenth  of  March,  1878,  to  sue  her  bond,  which  was  done,  and  judg- 
ment recovered  against  the  administratrix  and  the  sureties  in  the  bond 
on  the  fourteenth  day  of  June,  1879,  for  $296.30  damages,  and  costs 
taxed  at  $28. 

The  defendant  was  appointed  administratrix  on  the  tenth  of  March, 
1873.  On  or  about  the  twenty-eighth  day  of  August,  1873,  she  pur- 
chased of  George  W.  Griggs,  lot  No.  4,  block  6,  Wenham's  addition  to 
the  city  of  Grand  Rapids,  for  $2,500,  and  paid  $1,200  down,  and  gave 
back  a  mortgage  to  secure  the  payment  of  the  balance  of  $1,300.  She 
took  the  deed  from  Griggs  in  her  individual  name.  The  bill  of  com- 
plaint  alleges,  and  the  answer  denies,  — 

"  That  she  took  of  the  money  of  the  estate,  realized  by  her  as  such 
administratrix  from  the  sales  of  the  property  of  said  estate,  the  sum  of 
$1,200,  which  ought  to  have  been  applied  and  used  in  the  payment  of 
the  debts  owing  by  the  estate,  and  paid  the  same  to  George  W.  Griggs 
to  apply  upon  the  said  purchase  price  of  said  lot." 

She  immediately  after  the  purchase  went  into  the  possession  of  this 
property,  and  has  ever  since  used  and  occupied  it  as  her  homestead. 

She  neglected  to  pay  the  judgment  obtained  against  her  and  her  sure- 
ties, and,  the  other  surety  being  pecuniarily  irresponsible,  the  com- 
plainant made  arrangements  whereby  the  sheriff  levied  the  execution 
issued  upon  the  judgment  upon  the  lot  above  described,  and  advertised 
and  sold  the  same  to  satisfy  such  judgment.  Complainant  obtained 
Moses  V.  Aldrich  to  bid  the  property  off,  and  hold  it  for  complainant's 
benefit,  which  he  did,  and  complainant  refunded  to  him  the  money 
therefor,  and  obtained  an  assignment  of  the  sheriff's  certificate  of  sale, 
and,  after  the  time  of  redemption  expired,  received  from  the  sheriff  a 

1  Only  a  portion  of  the  opinion  is  given.  —  Ed. 


SECT.  I.]  PIERCE   V.    HOLZER.  363 

deed  of  the  premises.  Complainant  then  brought  ejectment  against 
defendant,  and  was  defeated  in  the  suit,  upon  the  ground  that  the  prem- 
ises were  defendant's  homestead,  and  not  liable  to  be  sold  upon  the 
execution  issued  upon  said  judgment. 

Counsel  for  complainant  contends  that  the  money  in  the  hands  of  the 
administratrix  was  a  trust  fund  for  the  payment  of  the  debts  of  the 
estate,  and  that,  wherever  the  property  of  a  party  has  been  wrongfully1 
misapplied,  or  a  trust  fund  has  been  wrongful!}'  converted  into  another 
species  of  property,  if  its  identity  can  be  traced,  it  will  be  held  in  its 
new  form  liable  to  the  rights  of  the  original  owner ;  and  if  an  executor 
or  administrator  purchase  property  with  money  belonging  to  the  estate, 
a  trust  in  the  property  will  result  to  the  persons  entitled  to  the  bene- 
ficial interests  in  the  estate.  And  the  complainant  asks  to  have  this 
property  sold  to  satisfy  him  for  the  amount  he  has  been  obliged  to  pay 
to  the  creditors  of  the  estate  of  Edward  Welsh ;  in  other  words,  to  be 
subrogated  to  the  rights  of  the  creditors  against  this  property  ;  that 
the  complainant  occupies  the  position  of  surety  to  defendant,  and, 
by  performing  the  contract  of  suretyship,  the  principal  obligation  is 
discharged  against  the  debtor,  and  is  kept  alive  between  the  creditor, 
the  debtor,  and  the  surety  for  the  purpose  of  enforcing  the  last. 

Issue  is  taken  by  defendant's  counsel  both  upon  the  facts  and  the 
law  as  applicable  to  the  facts  disclosed  by  the  record.  .  .  -1 

The  counsel  for  defendant  insists  that  the  complainant  is  not  entitled 
to  the  relief  prayed  for  because,  — 

1.  The  house  and  lot  is  the  homestead  of  defendant,  recognized  and 
treated  by  complainant  as  her  individual  property. 

2.  The  complainant  is  not  a  creditor  of  the  estate  ;  that  the  case 
made  by  the  bill  shows  simply  a  contract  relation  between  complainant 
and  defendant,  and,  as  such,  his  remedies  for  enforcing  contract  obliga- 
tions in  this  case  are  no  broader  and  are  of  no  different  character  than 
those  provided  in  ordinary  cases. 

The  second  reason  will  be  considered  first ;  for,  if  complainant  is 
not  entitled  to  be  subrogated  to  the  rights  of  the  creditors  to  whom  he 
has  paid  the  debt  of  defendant,  it  is  an  end  of  his  case.  The  relation 
between  complainant  and  defendant  was  not  that  of  a  surety  to  an 
ordinary  debtor.  He  was  the  surety  to  a  trustee.  He  undertook  in 
behalf  of  defendant  that  she  should  faithfully  execute  her  trusts  as 
administratrix,  and  among  others,  that  she  would  faithfully  collect  the 
assets,  and  apply  them  to  the  payment  of  the  debts  of  the  deceased. 

The  administrator  of  an  estate  stands  in  the  relation  of  a  trustee  to 
all  those  interested  in  the  estate.  Rights  and  remedies  against  him 
are  not  more  restricted  than  in  the  case  of  any  other  trustee  intrusted 
with  the  care,  management,  or  disposition  of  property  ;  and  it  is  well 
settled  that  when  property  held  upon  any  trust  to  keep,  use,  disburse, 

1  The  court  found  that  the  administratrix  had  invested  at  least  $755.71  belonging  to 
the  estate  iu  the  purchase  of  the  house  and  lot  in  question.  —  Ed. 


364  PIERCE   V.    HOLZER.  [CHAP.  IIL 

or  invest  in  a  particular  way,  or  to  or  for  particular  persons,  is  misap- 
plied by  the  trustee,  and  converted  into  different  property,  or  is  sold 
and  the  proceeds  are  thus  misapplied,  the  property  can  be  followed 
wherever  it  can  be  traced  through  its  transformations,  and  will  be  sub- 
ject when  found  in  its  new  form  to  the  rights  of  the  original  owner  or 
cestui  que  trust.     Cook  v.  Tullis.1 

When  an  administrator  misapplies  the  assets  in  his  hands,  to  the 

injury  of  the  creditors  of  the  estate  to  whom   distribution    has  been 

ordered,  they  have  a  choice  of  remedies.     They  may  obtain  permission 

and  sue  the  bond,  or  they  may  pursue  the  fund,  if  they  are  abTe  to 

tracTr~Trfl6?^leiitify  it,    aiiitiro  more  tnan  proof  of  substantial  identity 

'is  required.     Neely  v.  Rood.2    These  remedies  are  concurrent,  and  the 

election  or  one  does  not  preclude  resort  to  the  other.     A  suit  upon  the 

bond  does  not  ratify  the  misapplication,  and  a  pursuit  of  the  fund  does 

not  preclude  a  suit  upon  the  bond.     It  would  be  to  the  benefit  of  the 

sureties  if  the  creditor  should  first  proceed  to  recover  and  apply  the 

fund  misappropriated.      But  if  he  should  proceed  in  the  first  instance, 

and  enforce  paj'ment  by  the  sureties,  I  can  see  no  good  reason  why 

'        the   sureties  may  not  be  subrogated  to   his  rights   and   remedies  to 

Z^^^J.      enforce  pa}ment  out  "of  the  fund,  to  the  same  extent  the  creditor  could 

V        have  cione"~~ 

The  law  subjects  the  assets  of  a  deceased  person  to  the  paj-ment  of 
his  debts,  and  for  this  reason  the  creditor  has  an  equitable  lien  thereon, 
which  he  can  enforce  through  the  administrator  in  a  proper  case  for 
equitable  interference.  The  misapplication  of  the  assets  to  the  injury 
of  the  creditors,  and  neglect  to  pay  after  an  order  of  distribution,  is 
such  a  case.  In  such  case  the  creditor  can  follow  the  fund,  if  he  can 
trace  it  in  its  changed  form,  in  the  hands  of  the  trustee  or  purchaser 
with  notice,  and,  upon  a  familiar  principle,  the  surety  who  satisfies  the 
debt  is  entitled  to  the  securities  against  the  principal  debtor  that  the 
creditor  has  for  reimbursement. 

The  first  reason  above  stated  why  the  complainant  is  not  entitled  to 
relief  is  equally  without  merit.  A  trustee  cannot  escape  making  repara- 
tion, nor  discharge  propert}-  from  its  trust  character,  by  transforming 
it  into  a  homestead.  A  homestead  is  not  an  asylum  for  fraud;  and 
trust  moneys  invested  in  it  do  not  exempt  the  property  from  the  estab- 
lished doctrine  of  being  subject  to  the  trust. 

It  is  further  insisted  that  the  complainant,  having  treated  the  prem- 
ises as  the  property  of  the  defendant  ever  since  she  purchased  them, 
and  caused  the  same  to  be  levied  on  and  sold  under  the  execution,  and 
procured  a  deed  from  the  sheriff,  brought  ejectment  based  upon  such 
deed,  is  bound  by  the  result  of  that  judgment.  I  can  see  nothing  in 
these  facts  that  affects  the  equities  of  complainant's  case.  They  do  not 
constitute  an  estoppel  as  between  these  parties.  The}7  disclose  an  effort 
to  obtain  satisfaction  at  law  of  the  obligation  due  to  him  as  surety  from 

1  18  Wall.  341.  2  54  Mich.  134. 


SECT.  I.]  BLAKE   V.   TEADERS'   NATIONAL    BANK.  365 

defendant  as  principal,  and  the  result  merely  shows  that  the  law  is  in- 
adequate to  afford  relief. 

The  complainant  is  entitled  to  a  decree  subrogating  him  to  the  rights 
and  remedies  of  the  creditors  of  the  estate  whose  judgments  he  has 
paid,  as  against  defendant,  and  the  estate  in  her  hands,  declaring  a 
lien  on  the  premises  described  in  the  bill  of  complaint  in  his  favor  to 
the  amount  of  $755.71,  and  interest  thereon  from  the  thirtieth  day  of 
December,  1876.  The  lien  thus  declared  is  subject  to  all  legal  incum- 
brances which,  in  good  faith  and  without  notice  of  the  trust  character 
of  the  funds  invested  by  defendant,  have  been  placed  thereon  by  her 
prior  to  the  filing  of  the  bill  of  complaint. 

The  defendant  must  pay  the  amount  of  $755.71,  and  interest  and 
costs  awarded  against  her,  in  sixtv  days  from  the  entry  of  the  decree 
in  this  court,  and,  in  default  thereof,  the  premises  are  to  be  sold  in  the 
same  manner  as  sales  of  lands  upon  the  foreclosure  of  mortgages  ;  such 
sale  to  bar  defendant,  and  those  claiming  under  her  since  the  filing  of 
this  bill,  of  all  equity  of  redemption  ;  the  complainant  to  be  permitted 
to  bid  at  the  sale.  The  ordering  part  of  the  decree  appealed  from, 
modified  as  above  indicated,  will  be  affirmed.  Neither  part}'  to  recover 
costs  in  this  court.  The  record  and  decree  will  be  remanded  to  the 
court  below  for  execution. 

The  other  justices  concurred.1  ~  «■ — 


& 


^Z^v  *~y&    ^%.  A  ^4-^  <^,  r^d  <&^?-y 

A.  W.  BLAKE  and  Another,   Executors/4.  TRADERS' 
In  the  Supreme  Judicial  Court,  Massachusetts,  .Jjjne  30^1887. 

^V/^llex,  *\T.     In^r555,  the  plaintiffs'  testator  beoirme  a  «^wy  ^- 

upon  the  probate  bond  of  a  trustee.     In  1864,  the  trustee  pledged  cer-    ,^«..«.,>A-< 
tain  stocks,  a  part  of  the  trust  estate,  to  the  Traders'  Bank,  to  secure  £  ^"" 

a  debt  due  from  the  firm  of  which  he  was  a  member.  In  1865,  the 
Traders'  Bank  was  organized  as  the  Traders'  National  Bank,  the 
defendant,  and  received  the  stock  in  question,  the  debt  not  being  paid. 
In  1867,  the  defendant,  at  the  request  of  the  trustee,  sold  the  stock 
and  applied  the  proceeds  on  the  debt.  The  certificate  and  the  assign- 
ment showed  that  the  stock  was  held  in  trust.  The  trust  estate 
received  no  benefit  from  the  pledge  or  the  sale  of  the  stock.  The  trustee 

1  Rice  v.  Rice,  108  111.  190,  Accord. 

A  surety  in  a  guardian's  bond  being  subrogated,  on  payment,  to  tbe  ward's  claim 
against  the  guardian,  the  latter  being  a  fiduciary  cannot  claim  the  exemption  allowed 
ordinary  obligors.     Gilbert  v.  Neeley,  35  Ark.  24  ;  State  v.  Atkins,  53  Ark.  303.  Jmijii 
ilarly  a  surety  may  by  subrogation  obtain  the  preference  belonging  to  the  creditor  of* 
a  nauciary.     Muldoon  v.  Crawford,  14  Bush,  125. — Ed. 


366  BLAKE   V.    TRADERS'   NATIONAL   BANK.  [CHAP.  IIL 

was  afterwards  removed,  and  new  trustees  were  appointed  in  bis  place. 
Before  the  removal  of  the  trustee,  suit  was  commenced  against  the 
plaintiffs  on  the  bond,  which  was  prosecuted  after  the  appointment  of 
the  new  trustees,  and  judgment  recovered,  upon  which  execution 
issued  for  the  value  of  the  stocks,  among  other  things,  and  the  judg- 
ment w:is  paid  by  the  plaintiffs.  These  facts  show  that  the  defendant 
received  and  sold  the  stocks,  with  notice  of  the  trust,  and  was  liable 
to  the  new  trustees,  and  to  the  cestuis  que  trust  for  the  avails.  Shaw 
^""Spencer  ; i  boring  v.  Brodie  ; 2  Montreal  Bank  v.  Sweeny.3 

The  general  rule,  as  stated  by  Lord  Brougham  in  Hodgson  v.  Shaw,4 
is,  "  that  the  surety  paying  off  a  debt  shall  stand  in  the  place  of  the 
creditor,  and  have  all  the  rights  which  he  has,  for  the  purpose  of 
obtaining  his  reimbursement."  In  this  case,  the  judge  of  probate  was 
the  obligee  in  the  bond  which  constituted  the  debt,  but  it  was  for  the 
benefit  of  the  trust  estate,  and  the  legal  and  beneficial  owners  of  that 
estate  were  the  real  creditors,  to  whose  rights  the  suret}*  would  be 
subrogated  on  paying  the  debt.  It  is  true  that  the  trustees  elected  to 
pursue  their  remedy  upon  the  bond  against  the  surety,  and  neither  the 
trustees  nor  the  cestitis  que  trust  would  have  a  right  of  action  against 
the  defendant,  after  full  indemnity  had  been  obtained  in  the  action  on 
the  bond  ;  but  there  was  no  other  election  of  remedy,  or  discharge  or 
satisfaction  of  a  cause  of  action,  than  is  always  the  case  when  a  credi- 
tor who  holds  collateral  security  for  a  debt  gets  satisfaction  from  a 
surety  of  the  debtor.  The  surety  takes  the  place  of  the  creditor _as  to 
the  debt,  and  as  to  the  security.  See  cases  cited  in  notes  to  Dering  v. 
Winchelsea.5  If,  as  is  argued,  the  original  trustee  had  no  right  of 
action  against  the  defendant,  and  the  stock  was  not  his  property,  and 
was  not  pledged  by  him  as  security  for  the  debt  which  the  plaintiffs 
paid,  and  if  the  defendant  was  only  liable  to  the  new  trustees  as  hold- 
ing, or  for  having  converted,  the  trust  fund,  and  if  the  fund  was  made 
good  by  the  payment  to  the  trustees  by  the  suret}',  it  would  make  no 
difference.  The  payment  was  to  the  trustees,  and  was  a  substitute  for 
the  fund  which  was  in  the  hands  of  the  defendant,  ana  w~hich  IT  was 
bound  to  account  for  to  the  trustees,  and  would  give  to  the  surety  all 
tfie  rights  winch  the  trustees  had  to  recover  the  fund  ;  it  would  operate 
as  an  assignment  to  the  surety  of  the  fund,  and  of  the  right  of  action 
of  the  trustees  to  recover  "TE  In  this  case,  the  defendant  and  the 
surety  were  both  liable  to  the  trustees  for  the  amount  of  the  trust  prop- 
erty ;  the  former,  in  consequence  of  participating  in  the  wrongful  act 
of  the  first  trustee  ;  and  the  latter,  by  his  contract  to  indemnify  the 
estate  against  such  act.  The  cases  are  analogous  where  one  owner  of 
property  has  claims  for  a  loss  against  an  insurer  and  a  tortfeasor. 
The  insurer  is  in  the  nature  of  a  surety,  and,  upon  paying  the  loss,  he 
is  subrogated  to  the  rights  of  the  owner  to  recover  for  the  tort.     Hart 

1  100  Mass.  382.  2  134  Mass.  453. 

3  12  App.  Cas.  617.  4  3  Myl.  &  K.  183,  190. 

5  1  White  &  Tudor'sLead.  Cas.  in  Eq.  (6th  ed.)  114. 


SECT.  I.] 


BITTICK   V.   WILKINS. 


367 


v.  Western  Railroad ;  *  Clark  v.  Wilson ; 2  Mercantile  Ins.  Co.  v. 
Clark.3  The  cases  cited  in  Sheldon  on  Subrogation,  §  89,  sustain  the 
proposition  in  the  text,  that,  "  where  the  sureties  of  a  trustee  have 
been  compelled  to  answer  for  his  breach  of  trust,  they  are  subrogated 
to  the  rights  of  both  the  trustee  and  the  cestuis  que  trust  against 
those  who  have  participated  in  his  wrongful  acts."  4 

The  defendant  bank  contends  that  the  right  of  action  to  which  the 
surety  was  subrogated  was  barred  b}*  the  statute  of  limitations.  The 
bank  took  the  stock  charged  with  the  trust,  and  it  hold  the  specific 
property,  and  the  proceeds  of  the  sale  of  it,  as  a  trust  fund,  under  a 
trust  to  return  it  to  the  trustees.  The  trustees  and  cestuis  que  trust 
both  had  an  equitable  remedy  against  it  as  such  trustee.  This  remedy 
would  not  be  affected  by  the  statute  of  limitations.  1  Perry  on  Trusts, 
§  217.     2  lb.  §  828.6 


(7 


x^/u^ 


C.  S.  BITTICK  and  Another  v.  J.  A.  WILKINS  and  Another. 
In  the  Supreme  Court,  Tennessee,  January  31,  1872. 

[Reported  in  7  Ileiskell,  307.] 

Deaderick,  J.,  delivered  the  opinion  of  the  court.6 

The  complainants  as  sureties  of  H.  Hill,  sheriff  of  Williamson  County, 
paid  a  large  sum  of  mone}-  to  B.  R.  Hughes,  who  had  obtained  judg- 
ment against  defendant  Wilkins  and  others,  upon  which  execution  was 
issued,  which  came  to  the  hands  of  the  sheriff.  The  sheriff  failed  to 
make  due  return,  and  judgment  upon  motion  was  rendered  against  him 
and  his  sureties,  upon  which  execution  issued  ;  and  having  paid  the 
judgment,  complainants  filed  their  injunction  and  attachment  bill  in  the 
Chancery  Court  at  Franklin,  seeking  to  have  a  debt  due  from  the  county 
of  Williamson  to  defendant  Wilkins,  of  about  $600,  applied  towards  the 
satisfaction  of  the  amount  paid  by  them  on  his  debt  to  Hughes. 

Complainants  claim  that,  as  sureties  of  the  sheriff,  having  paid  Wil- 
kins's  debt  to  Hughes,  they  have  an  equity  to  be  substituted  to  the  rights 
of  Hughes  against  Wilkins.    The  complainant  Bittick  died  pending  the 


l  13  Met.  99.  2  103  Mass.  219.  3  118  Mass.  288. 

4  Wheeler  v.  Hawkins,  .116  Ind.  515  ;  Wernecke  v.  Kenyon,  66  Mo.  275  ;  Cowgill  v. 
Linville,  20  Mo.  Ap.  138 ;  Clark  v.  First  Bank,  57  Mo.  Ap.  277  ;  Brown  v.  Houck,  41 
Hun,  16;  Bunting  v.  Ricks,  2  Dev.  &  B.  Eq.  130;  Powell  v.  Jones,  1  Ired.  Eq.  337 
(semble) ;  Fox  v.  Alexander,  1  Ired.  Eq.  340 ;  Kennedy  v.  Pickens,  3  Ired.  Eq.  147 ; 
Wilson  v.  Doster,  7  Ired.  Eq.  231;  Harris  v.  Harrison,  78  N.  Ca.  202;  Thompson  v. 
Humphrey.  83  N.  Ca.  416;  Rhame  v.  Lewis,  13  Rich.  Eq.  269  ;  Davidson  v.  Crisp 
(Tennessee  1874),  24  A.  &  E.  Encyc.  of  Law,  218  (cited) ;  Edmunds  v.  Venable,  1 
Pat  &  H.  121  ;  Pinckard  v.  Woods,  8  Grat.  140,  Accord. 

Compare  Winslow  v.  Otis,  5  Gray,  360.  —  Ed. 

s  The  rest  of  the  opinion  is  omitted-  — Ed. 

6  Only  a  portion  of  the  opinion  of  the  court  is  given.  —  Ed. 


368  BRINSON    V.    THOMAS.  [CHAP.  III. 

suit,  and  it  was  revived  in  the  names  of  Jo.  J.  Green  and  Jas.  T.  Shan- 
non, his  executors. 

A  surety,  by  paying  the  debt  of  his  principal,  becomes  entitled  to  be 
substituted  to  all  the  rights  of  the  creditor,  and  to  have  the  benefit  of 
all  the  securities  which  the  creditor  had  for  the  payment  of  the  debt, 
without  any  exception  ;  and  is  entitled  to  all  his  rights  to  airy  fund,  lien, 
or  equity,  against  any  other  person  or  property,  on  account  of  the  debt. 
1  L.  C.  Eq.,  92-3,  and  this  right  of  substitution  subsists  in  favor  of  a 
person  who  is  compelled  to  pay  the  debt  of  another,  in  order  to  protect 
his  own  interest. 

The  complainants,  as  sureties  of  Hill,  the  sheriff,  paid  the  debt  of 
Hughes,  for  which  defendant  Wilkins  was  primarily  liable.  Hughes  had 
the  right,  upon  his  judgment,  upon  which  execution  had  been  issued, 
to  file  his  bill  to  subject  the  debts  due  to  Wilkins  to  the  satisfaction  of 
the  judgment ;  and  upon  the  payment  of  the  debt  by  the  sureties  of  Hill, 
they  were  substituted  to  all  the  rights  of  Hughes  to  any  fund  or  equity 
which  he  had  against  any  person  or  property,  on  account  of  the  debt. 

It  was  therefore  not  necessary  that  complainants  should  have  obtained 
judgment,  and  issued  execution  thereon,  before  filing  their  bill.1 


H.  BRINSON  and  Others  v.  F.  D.  THOMAS  and  Others. 

In  the  Supreme  Court,  North  Carolina,  June  Term,  1856. 

[Reported  in  2  Jones,  Equity,  414.] 

Nash,  C.  J.  Francis  J.  Prentiss  was  duly  elected  sheriff  of  the  county 
of  Craven,  and  executed  his  official  bond,  with  the  plaintiffs  as  his  sure- 
ties. Prentiss  appointed  the  defendant  Thomas,  as  his  deputy,  and 
took  from  him  a  bond,  with  the  other  defendants  as  his  sureties,  for  the 
due  discharge  of  his  duties.  Among  the  covenants  is  the  following : 
"  So  that  the  said  Francis  J.  Prentiss  shall  not,  by  a.x\y  act  or  omission 
of  the  said  Francis  D.  Thomas,  become  liable,  or  subject,  to  any  dam- 
age, loss,  or  cost."  Claims  were  put  into  the  hands  of  the  deputy, 
Thomas,  by  one  Lovick,  to  a  considerable  amount,  which  were  collected 
by  him,  and  appropriated  to  his  own  use.  The  plaintiffs  are  the  sure- 
ties of  the  sheriff,  Prentiss,  upon  his  official  bond,  and  having  been 
compelled  to  pay  to  Lovick  the  amount  received  by  Thomas,  this  bill  is 

l  Saint  v.  Ledyard,  14  Ala.  244  ;  Sweet  v.  Jeffries,  48  Mo.  279,  Accord. 

Dillon  v.  Cook,  13  Miss.  773,  Contra. 

Similarly,  if  a  sheriff  by  mistake  takes  the  goods  of  A.  on  an  execution  against  X.  and 
delivers  them  to  the  judgment  creditor,  and  if  A.  then  compels  the  surety  of  the  sheriff 
to  pay  for  the  latter's  trespass,  the  surety  is  subrogated  to  A. 's  right  to  sue  the  judgment 
creditor  for  the  value  of  the  goods.     Skiff  v.  Cross,  21  Iowa,  459. 

A  surety  for  a  sheriff,  compelled  by  the  default  of  his  principal  to  pay  the  person 
fnjured  by  his  default,  is,  of  course,  subrogated  to  the  latter's  rights  against  the  sheriff. 
Merryman  v.  State,  5  Har.  &  J.  423  ;  Boughton  v.  Bank,  2  Barb.  Ch.  458. 


SECT.  I.]  BKINSON    V.    THOMAS.  369 

brought  by  them  to  subject  Thomas  and  his  sureties  to  the  repayment 
of  the  money  so  by  them  paid.     The  sheriff,  Prentiss,  is  insolvent. 

On  the  part  of  the  defendants  it  is  objected,  that  the  plaintiffs  cannot 
subject  them  on  their  bond,  because  there  is  no  privity  between  the 
plaintiffs    and    defendants.      The  deputy  sheriff  is  an  officer,    strictly 
speaking,  unknown  to  the  law.      His  acts,  as  such,  are  the  acts  of  the 
sheriff,  and  in  the  name  of  the  latter  he  executes,  and  returns,  all  pro- 
cess.    The  bond  he  gives,  therefore,  is  not  an  official  bond,  but  a  per- 
sonal contract  between  the  parties.     A  sheriff,  in  most  of  our  counties, 
cannot  personally  perform  all  his  official  duties,  and  for  his  ease,  and 
for  the  public  convenience,  he  is  allowed  to  appoint  as  many  deputies 
as  he  thinks  proper.     These  deputies  are  his  agents,  and  all  their  law- 
ful acts  are  his  acts,  and  all  their  misfeasances  are  his  misfeasances. 
The  bonds  which  they  give  the  sheriff  are  for  his  protection.      Persons 
who  are  injured  by  his  malversation  in  office,  either  in  not  executing 
process,  or  in  appropriating  to  his  own  use,  moneys  which  come  into  his 
hands  by  virtue  of  his  appointment,  can  have  no  redress  upon  his  bond, 
either  against  him  or  his  sureties.      The  deputy's  bond  to  the  sheriff  is 
not  cumulative.      The  claim  of  the  plaintiffs,  in  this  case,  rests  upon  a 
different  principle  ;  the  right  in  equity  of  a  suret}'  who  pays  a  debt,  his 
principal  was  bound  to  pay,  to  be  substituted  to  his  rights.      He  is  also 
entitled  in  equity  to  the  benefit  of  such  collateral  securities  as  his  prin- 
cipal has  taken  to  secure  himself.      In  this  case,  the  plaintiffs  were  co- 
sureties on  the  sheriff's  bond,  and  though  there  is  no  privity  between 
them  and  the  defendants,  on  the  deput}T's  bond,  }-et,  they  stand  so  far 
in  that  relation  to  them,  that,  in  a  Court  of  Equity,  the  doctrine  of  sub- 
stitution or  subrogation  will  be  applied.     And,  as  between  those  stand- 
ing strictly  in  the  relation  of  co-sureties,  the  doctrine  of  equality  is  full}' 
settled.     Adams' Eq.  269-270.    And  the  ground  of  relief  does  not  stand 
upon  the  notion  of  mutual  contract,  expressed  or  implied,  between  them  ; 
but  it  arises  from  principles  of  equity,  independently  of  contract.     1  Sto. 
Eq.  Jur.  p.  472,  The  duty  of  exoneration  extends  to  all  persons  who  are 
within  the  scope  of  the  equitable  obligation.      1  Sto.  Eq.  Ju.  s.  493,  5. 
The  equity  of  the  plaintiffs  does  not  depend  upon  an}-  contract  between 
them  and  the  defendants,  but  upon  the  equity  existing  between  them 
and  the  sheriff,  Prentiss,  which  consists,  not  only  in  compelling  relief 
from  him,  but  the  right  to  be  subrogated  to  his  place,  and  to  his  collat- 
eral securities.    By  the  bond  of  the  defendant  Thomas,  the  latter  bound 
himself  to  indemnif}'  the  sheriff,  not  only  against  any  damage,  loss,  or 
cost,  arising  from  any  act,  or  omission  of  his,  the  defendant  Thomas ; 
but  further,  that  he  should  not  become  liable  or  subject  to  an}'  loss, 
damage,  or  cost,  accruing  for  airy  act  or  omission.    Now,  there  can  be  no 
doubt  that,  upon  the  failure  of  the  defendant  Thomas,  to  pay  to  Lovick 
the  money  collected  for  him,   a  right  of  action,    under  the  covenant 
recited,  accrued  to  the   sheriff;  it  was  an  "  omission  "  on  the  part  of 
Thomas,  which  amounted  to  a  breach  of  his  bond  ;  because  he,  the 
sheriff,  became  liable  to  pa\'  the  amount  to  Lovick,  and  subject  to  a  suit 

24 


370  PHILBRICK   V.    SHAW.  [CHAP.  IIL 

on  his  official  bond.  The  plaintiffs  who  have  paid  the  debt  due  to 
Lovick,  as  the  sureties  of  the  sheriff,  have  a  right  to  be  subrogated  in 
this  court,  to  his  rights  against  the  defendants,  and  to  a  decree  for  all 
the  moneys  paid  b}T  them  to  Lovick,  as  sureties  of  the  sheriff,  deducting 
all  just  credits  to  which  Thomas  may  be  entitled  against  the  sheriff. 

It  is  objected  by  the  defendants,  that  persons  are  made  plaintiffs  who 
have  no  interest  in  the  controversy.  All  the  sureties  on  the  sheriff's 
bond  are  complainants  ;  whereas  the  claim  of  Lovick  was  paid  bj*  Hiram 
Brinson  and  Samuel  Mastin  ;  they,  therefore,  are  the  parties  immediately 
interested  in  the  claim  now  brought  forward  against  Thomas.  The  other 
plaintiffs  are  also  interested  ;  for,  if  the  debt  should  not  be  made  out  of 
the  defendants,  they  will  be  liable  for  contribution. 

The  case  must  be  referred  to  the  master,  to  take  an  account  of  the 
money  paid  by  the  plaintiffs  Brinson  and  Mastin,  to  Lovick,  as  sureties 
on  the  official  bond  of  the  sheriff  ;  and,  in  taking  the  account,  the  master 
will  allow  the  defendants  all  just  credits  against  the  sheriff. 

Per  Curiam.  Declare  accordingly.1 


PHILBRICK  and  Another  v.  SHAW. 
Tn  the  Supreme  Court,  New  Hampshire,  December,  1881. 

[Reported  in  61  New  Hampshire  Reports,  356.] 

In  equity.  The  material  allegations  in  the  bill  are,  that  at  the 
April  term,  1870,  of  the  Supreme  Judicial  Court  for  this  county,  one 
Smith  recovered  judgment  against  one  Kayes,  upon  which  execution 
was  duly  issued  and  placed  in  the  hands  of  one  Haynes,  a  deputy 
sheriff,  since  deceased,  for  collection,  with  orders  to  lev}'  it  on  certain 
personal  property  belonging  to  Kayes  ;  that  at  the  same  term  the  de- 
fendant recovered  judgment  against  Kayes,  upon  which  an  execution 
issued,  and  was  committed  to  Haynes  with  directions  to  levy  it  on  the 
same  property ;  that  the  defendant  gave  Haynes  a  bond  of  indemnity 
in  the  usual  form  to  indemnify  him  for  levying  his  execution,  and 
thereupon  Haynes  made  the  levy  and  applied  the  proceeds  of  the  prop- 
erty on  the  defendant's  execution,  and  returned  that  of  Smith  unsatis- 
fied ;  that  Haynes  has  since  died  insolvent,  and  with  no  estate  for  the 
pavment  of  his  debts  ;  that  in  1874  Smith  brought  suit  against  the 
sheriff  of  the  county  for  the  default  of  Haynes,  his  deputy,  in  applying 

l  Blalock  v.  Peake,  3  Jones,  Eq.  323 ;  Briggs  v.  Huston,  14  Lea,  233 ;  Nebergall  v. 
Tyree,  2  W.  Va.  474,  Accord. 

See  also  People  v.  Schuyler,  4  N.  Y.  173,  183. 

A  suretv  for  a  trustee,  upon  paying  the  latter's  liability  incurred  in  behalf  of  the  trust 
estate,  is  permitted  to  reimburse  himself  through  the  trustee's  right  to  compel  exonera- 
tion from  the  trust  estate.  Bushong  v.  Taylor,  82  Mo.  680;  Boyd  v.  Myers,  12  Lea, 
175.  — Ed. 


SECT.  i.1  PHILBRICK   V.   SHAW.  371 

the  proceeds  of  the  property  on  the  defendant's  execution,  and  recov- 
ered judgment  against  him,  which  he  has  paid ;  that  thereupon  the 
sheriff  brought  suit  against  the  plaintiff  Philbrick,  who  was  a  surety  on 
Haynes's  official  bond,  for  the  amount  so  paid ;  that  the  suit  was 
entered  in  court,  and  Philbrick  notified  the  defendant  to  appear  and 
defend  it,  which  he  neglected  to  do ;  and  that  judgment  was  rendered 
against  Philbrick  in  said  suit,  which  he  has  since  paid.  The  prayer  is, 
that  the  defendant's  bond  may  be  set  apart  for  Philbrick's  benefit ;  that 
he  may  be  subrogated  to  the  rights  of  Philbrick  therein;  and  that 
judgment  may  be  entered  thereon  for  his  benefit  for  the  amount  paid 
by  him  to  the  sheriff,  with  interest  and  costs.  General  demurrer  by 
defendant. 

J.  H.  Albin  and  W.  S.  LacM,  for  the  plaintiffs. 

J.  Y.  Mugridge  and  W.  L.  Foster,  for  the  defendant. 

Blodgett,  J.  The  contention  of  the  defendant  is,  that  there  is  no 
privity  of  contract  or  obligation  between  the  plaintiff  and  himself;  that 
the  condition  of  his  bond  was  to  save  Haynes  harmless,  and  not  his 
sureties  ;  and  that  inasmuch  as  neither  Haynes  nor  his  estate  has  sus- 
tained any  loss,  the  contingenc}'  upon  which  the  obligation  depended  has 
not  happened,  and  there  has  consequently  been  no  breach  of  the  bond. 

This  defence  is  both  ingenious  and  novel,  but  it  has  no  foundation 
in  principle  or  upon  authority.  The  right  of  subrogation  does  not  rest 
upon  contract  or  privity,  but  depends  upon  principles  of  natural  justice 
and  equity,  and  will  be  applied  in  favor  of  one  who  has  been  compelled 
to  perform  the  obligations  of  another.  Sheld.  Sub.,  ss.  3,  93,  and 
authorities  cited.  Nor  was  the  defendant's  bond  for  the  protection  of 
Haynes  alone.  His  sureties  were  responsible  for  his  official  conduct, 
and  equally  liable  with  him  to  make  compensation  to  any  injured  party 
for  his  wrongful  acts.  His  protection  was  their  protection  ;  and  as 
both  stood  upon  a  common  ground  of  interest  in  respect  to  the  bond, 
it  is  to  be  regarded  in  equity  as  intended  for  the  joint  benefit  of  both, 
and  as  now  held  by  the  administrator  of  Haynes  in  trust  for  the  plain- 
tiff surety. 

But  even  if  it  was  intended  for  the  sole  benefit  of  Haynes,  Philbrick, 
having  performed  the  obligations  resulting  from  Haynes's  default, 
which  the  defendant  occasioned,  and  from  which  he  derived  a  substan- 
tial benefit,  is  entitled  to  be  subrogated  to  all  the  rights  Haynes  had, 
or  would  have  had  if  living,  against  the  defendant,  and  may  therefore 
resort  to  the  bond  as  a  means  of  reimbursement.  Brinson  v.  Thomas  ; 
Blaklock  v.  Peake  ; 1  Miller  v.  Sawyer  ; 2  Skiff  v.  Cross  ;  3  Lewis  v. 
Palmer ; 4  R.  R.  Co.  v.  Trimble.5 

The  right  of  subrogation  exists  where,  from  all  the  circumstances  of 
the  case,  it  ought  in  equity  and  good  conscience  to  exist     Mosier's 

1  3  Jones  Eq.  323.  2  30  Vt  412. 

*  21  Iowa,  459.  *  28  N.  Y.  271. 

&  51  Md.  99 ;  Sheld.  Sub.,  ss.  86,  87,  and  authorities  cited ;  5  Wait  Act.  and  Def.  213. 


372  COMMONWEALTH  V.   STRATON.  [CHAP.  IIL 

Appeal;1  Shotwell  v.  Ins.  Co.;*  Kernochan  v.  Ins.  Co. ; 8  Goswiler's 
Estate.4     This  is  such  a  case. 

Demurrer  overruled,  and  case  discharged. 


THE  COMMONWEALTH  for  use,  &c.  v.  STRATON,  &c. 

In  the  Court  of  Appeals,  Kentucky,  November  14,  1831. 

[Reported  in  7  J.  J.  Marshall,  90.] 

This  is  an  action  of  covenant  founded  on  the  official  bond  of  Straton 
against  him  and  his  sureties.  The  breaches  assigned  are  in  substance, 
that  two  executions  issued  on  the  3d  of  March,  which,  on  that  day, 
were  placed  in  the  hands  of  one  of  Straton's  deputies  for  collection. 
These  executions  were  against  Alexander  Gill,  Wrn.  Patterson,  and  H. 
M.  Gill,  the  two  last  being  but  sureties  for  the  former.  That  the  deputy, 
on  the  5th  of  March,  received  other  executions  which  issued,  on  that 
day,  against  the  estate  of  Alexander  Gill.  That  while  all  these  execu- 
tions were  in  full  force  in  the  hands  of  the  deputy,  Alexander  Gill,  at 
the  request  of  his  sureties,  Patterson  and  H.  M.  Gill  surrendered  prop- 
erty for  the  satisfaction  of  the  executions  against  the  sureties,  and 
required  the  deputy  to  levy  the  executions  against  the  sureties  on  the 
property  thus  surrendered.  That  said  deputy  in  violation  of  law  levied 
the  executions  which  issued,  on  the  5th,  upon  the  property  given  up  for 
the  benefit  of  the  sureties,  and  gave  the  executions  so  levied  a'preference 
over  those  which  issued  on  the  3d,  and  which  came  to  his  hands  first. 
That  the  deputy,  after  levying  the  executions  against  the  sureties  upon 
some  personal  property,  illegally  permitted  a  constable  to  take  it  and 
dispose  of  it.  That,  in  consequence  of  the  illegal  acts  of  the  deputy  in 
permitting  the  property  of  A.  Gill,  which  should  have  been  applied  in 
satisfying  the  executions  against  the  sureties,  to  be  disposed  of  other- 
wise, Win.  Patterson  had  been  compelled  to  pay  off  one  of  the  execu- 
tions, and  H.  M.  Gill  had  been  compelled  to  pay  off  the  other  out  of 
their  own  estates  to  their  great  injury,  &c. 

The  defendants  demurred  to  the  declaration,  and  the  court  gave  judg- 
ment in  their  favor.  To  the  form  of  the  declaration  we  perceive  no 
objection.  It  contains  every  averment  necessary  to  present  the  matter 
relied  on  fully.  The  decision  of  the  demurrer  must  turn  upon  the  facts. 
In  behalf  of  the  defendants,  two  grounds  are  assumed  :  1st,  that  the 
facts  averred  being  true,  do  not  show  any  liability  on  the  part  of  the 
defendants  to  the  relators,  and  2d,  if  there  be  any  liability,  it  is  sepa- 
rate and  not  joint ;  and  so  the  relators  have  misconceived  their  action 
by  uniting.  Upon  the  first  point,  it  is  contended,  that  the  law  provid- 
ing that  an  execution  shall  bind  the  defendants'  property  from  the  time 
of  its  ^livery,  and  requiring  the  execution  first  delivered  to  be  first 

i  56  Penn.  St.  76.  2  5  Bosw.  263. 

3  17  N.  Y.  428.  4  3  P.  &  W.  200. 


SECT.  I.]  COMMONWEALTH   V.    STRATON.  373 

satisfied,  &c,  was  designed  for  the  benefit  of  the  plaintiffs  in  the  execu« 
tion  alone,  and  if  disregarded  b}'  the  officer,  no  one  can  be  injured, 
provided  the  plaintiff's  debt  is  made.  In  addition  it  is  urged,  that  the 
claim  of  the  relators  against  A.  Gill,  is  in  dignity  not  higher  than  a 
simple  contract  and  that  to  permit  their  success  in  this  case,  would  be 
to  give  them  a  preference  over  judgment  creditors  whose  executions 
must  have  remained  unsatisfied,  but  for  the  course  taken  by  the  deputy 
sheriff.  The  8th  section  of  the  act  to  amend  and  reduce  into  one,  the 
execution  laws  approved  12th  February,  1828,  provides  that  no  writ  of 
execution  shall  bind  the  estate  of  the  defendant,  but  from  the  time  of 
its  delivery.  For  the  better  manifestation  of  said  time  the  officer  is 
required  to  endorse  the  da}r  of  the  month,  time  of  da}'  and  year  when 
the  writ  is  received  ;  ';  and  if  two  or  more  writs  of  execution  in  favor 
of  different  parties  against  the  same  person  shall  be  delivered  to  the 
officer  upon  the  same,  or  different  days,  that  which  came  first  to  his 
hands  shall  be  satisfied  first."  Here  is  a  very  plain  rule  for  the  obser- 
vance of  officers  laid  down.  It  is  unquestionably  their  duty  to  obey  it. 
But  if  they  do  not,  then  it  is  insisted,  no  one  can  complain,  unless  he 
be  plaintiff  in  the  execution  first  delivered,  and  which  has,  in  violation 
of  the  rule,  been  postponed.  Why  restrict  it  to  plaintiffs  in  execution? 
There  is  nothing  in  any  act  of  assembly  which  gives  such  a  limitation, 
in  express  terms,  to  the  officer's  responsibility :  nor  can  we  discern  the 
principles  upon  which,  b}-  construction,  we  can  decide  in  favor  of  such 
a  limitation.  The  sheriff  is  required  to  covenant  in  his  bond  of  office, 
that  "  in  all  things  he  will  truly  and  faithfully  execute  and  perform  his 
office  according  to  law,"  and  "  an}7  person  injured  by  a  breach  of  the 
condition  of  his  bond,  may  prosecute  a  suit  thereon  and  recover  dam- 
ages." II  Digest,  1133.  Under  these  provisions,  the  only  questions 
in  fixing  the  sheriff's  liability  seem  to  be,  first,  has  he  violated  any  con- 
dition of  his  bond,  and  second,  has  the  relator  been  injured  by  it?  If 
the  bond  has  been  violated,  3-et  if  there  has  been  no  injury  to  the  relator, 
he  must  fail  in  his  suit.  It  might,  therefore,  be  conceded,  that  if  A. 
Gill  had  instituted  this  suit,  because  the  rule  for  satisfying  the  execu- 
tion against  him  had  not  been  observed  by  the  sheriff,  he  could  not 
recover  in  an}r  event  more  than  nominal  damages,  if  that :  for  if  his 
property  went  to  pa}-  his  just  debts,  the  order  in  which  they  were  paid 
could  be  to  him  no  more  than  a  matter  of  conscience  and  feeling,  and 
to  remunerate  his  chagrin  in  not  being  permitted  to  discriminate  and 
show  favoritism  among  his  creditors,  could  not  be  done  bj'  any  standard 
known  to  the  law.  But  this,  we  conceive,  is  a  very  different  thing  from 
that  of  making  individuals  liable  for  a  debt,  and  ultimately  compelling 
them  to  pay  it ;  when,  if  the  rule  prescribed  for  sheriffs  had  been 
observed,  no  such  burden  would  have  fallen  on  them.  If  the  executions 
first  delivered  had  been  satisfied  first,  as  the  law  directed,  the  relators 
would  have  been  entirely  discharged  from  responsibility  ;  but  A.  Gill 
would  still  have  remained  bound  for  whatever  sum  his  property  could 
not  pay,  and  this,  in  respect  to  him,  must  have  been  the  case  in  every 
event.    The  consequence  resulting  is,  that  he  could  not  be  injured.    But 


37-4  COMMONWEALTH   V.    STKATON.  [CHAP.  III. 

the  injury  to  the  relators  is  striking ;  if  the  sheriff  does  his  duty,  they 
pa}'  nothing;  if  the  sheriff  violates  his  duty,  they  are  made  to  pay. 
This  to  them  as  sureties,  if  their  principal  is  insolvent,  is  as  grievous 
as  it  would  be,  were  the  sheriff  to  take  their  property  under  color  of  his 
office  to  satisfy  an  execution  in  which  they  were  not  bound.  It  is  in 
either  case,  the  loss  of  so  much  estate  both  proceeding  from  the  wrong- 
ful acts  of  the  officer,  and  we  cannot  see  why  good  policy  and  sound 
morality  should  not,  in  both  instances  alike,  hold  him  answerable.  It 
is  asked,  shall  the  sheriff  be  bound  to  know  who  is  principal,  and  who 
is  surety  in  an  execution  ?  We  answer,  he  is  not ;  but  he  is  bound  to 
do  his  duty  "  according  to  law"  If  he  fails,  he  risks  all  consequences, 
and  cannot  thereafter  excuse  himself  upon  the  ground,  that  the  process 
did  not  point  out  his  danger.  If  the  sheriff,  or  his  deputy,  had  levied 
the  executions  first  delivered  on  the  property  of  the  sureties,  it  is  prob- 
able, they  might  have  protected  it  to  some  extent,  if  not  entirely  under 
the  provisions  of  the  35th  section  of  the  aforesaid  act  of  1828.  But  it 
is  deemed  unnecessary  to  investigate  the  point  now,  how  far  the  prop- 
erty of  the  principal  could  be  substituted  as  matter  of  right  to  save  that 
of  the  surety.  No  levy  seems  to  have  been  made  on  the  estate  of  the 
sureties  until  after  the  sale  of  the  property  of  the  principal,  and  the 
application  of  the  proceeds  to  the  payment  of  the  junior  executions. 

Permitting  the  constable  to  take  off  a  part  of  the  property  levied  on 
by  the  sheriff,  he  having  made  the  first  levy,  was  likewise  a  violation  of 
the  condition  of  the  bond.  The  officer  holding  the  oldest  execution  is 
not  entitled  to  take  property  out  of  the  hands  of  another  officer  who  has 
made  the  first  levy,  although  it  be  in  virtue  of  a  younger  execution. 

We  do  not  perceive  the  weight  of  the  arguments  founded  on  the  rela- 
tive dignity  of  the  debts,  or  claims,  in  behalf  of  the  relators  against  A. 
Gill,  and  those  of  his  judgment  creditors.  The  rule  which  directs  exe- 
cutors and  administrators  to  respect  the  dignity  of  debts  canuot  operate 
in  the  application  of  the  rules  prescribed  by  statute  for  the  government 
of  sheriffs  to  the  facts  of  this  case.  We  are,  therefore,  of  opinion,  that 
the  declaration  contains  averments  of  facts  which  show  that  the  relators 
have  been  injured  by  the  conduct  of  Straton's  deputy,  and  for  which 
they  are  entitled  to  a  remedy  on  the  official  bond. 

Upon  the  second  point  we  are  divided  in  opinion.  The  Chief  Justice 
thinks  that  the  relators  have  sustained  that  kind  of  an  injury  for  which 
they  may  unite  in  the  present  action,  or  sue  severally.  Judge  Under-- 
wood  is  of  opinion,  that  their  injury  is  altogether  several,  and  that  they 
cannot  sue  jointly. 

Wherefore,  the  judgment  must  be  affirmed  with  costs. 

Mills  and  Brown,  for  plaintiffs  ;  Monroe,  for  defendants. 

Absent,  Judge  Buckner.1 

l  Hill  v.  Sewell,  27  Ark.  15 ;  Straton  v.  Commw,  2  Dana,  397  ;  Rowe  v.  Williams, 
7  B.  Mon.  202 ;  Miller  v.  Dyer,  t  Duv.  263,  Accord. 

O'Hara  v.  Schwab,  26  La.  An.  78,  Contra. 

The  surety  under  the  circumstances  of  the  principal  case  cannot  maintain  an  action 
of  tort  against  the  sheriff.     Livingston  v.  Anderson,  9  Mass.  251.  —  Ed. 


SECT.  I.]  REGINA   V.   ROBINSON.  375 


REGINA   v.   HENRY   ROBINSON. 
In  the  Exchequer,  May  25,   1855. 

[Reported  in  Ifurlstone  §•  Norman,  275,  note  (a).] 

Watson,  in  Easter  Term  (May  1.  1855),  moved  that  James  Robinson, 
a  surety,  who  bad  paid  the  debt  of  the  defendant  to  the  Crown,  should  be 
placed  in  the  situation  of  the  Crown ;  and  that  a  writ  of  extent,  which 
had  issued  against  the  defendant,  might  be  put  in  force  in  his  behalf.1 

Watson,  in  support  of  his  motion.  It  is  the  practice  of  the  Court  of 
Exchequer,  where  a  surety  pays  the  debt  due  from  any  defaulter  to  the 
Crown,  to  allow  him  to  stand  in  the  place  of  the  Crown,  and  to  give 
him  the  benefit  of  the  prerogative  process  against  the  principal.  This 
is  not  an  extent  in  aid.'2  A  surety  who  pays  the  debt  of  his  principal 
is  entitled  to  an  assignment  of  the  securities  for  the  debt.  The  prac- 
tice was  stated  by  the  court  in  The  King  v.  Bennett.3  That  case  shows 
that  the  debt  to  the  Crown  is  not  extinguished.  Reg.  v.  Doughty  is 
a  case  where  the  sureties  of  a  bond,  having  paid  the  bond  debts  to  the 
Crown,  got  the  benefit  of  the  bond.  Rex  v.  Webber4  is  to  the  same 
effect.  [Parke,  B.  In  Copis  v.  Middleton  Lord  Eldon  said  that 
he  took  it  to  be  clear,  tl  that  if  at  the  time  a  bond  is  given  a  mortgage 
is  made  also  for  securing  the  debt,  the  surety,  if  he  pays  the  bond,  has 
a  right  to  stand  in  the  place  of  the  mortgagee,  and  as  the  mortgagee 
cannot  get  back  his  estate  without  a  conveyance,  that  securitj-  remains 
a  valid  and  effectual  security  notwithstanding  the  bond  debt  is  paid  ; 
but  if  there  is  nothing  but  the  bond,  my  notion  is,  that,  as  the  law  says 
that  bond  is  discharged  by  the  payment  of  what  was  due  upon  it,  the 
bond  is  gone  and  cannot  be  set  up."  That  case  decided  that  the  surety 
does  not  become  a  {specialty  creditor,  and  therefore  it  cannot  be  said 
that  he  is  entitled  to  all  the  creditor's  rights.  The  cases  in  Wightwick 
occurred  before  the  decision  in  Copis  v.  Middleton.]  It  is  the  constant 
practice  for  a  surety  paying  a  debt  to  take  an  assignment  of  a  judg- 
ment.5 [Parke,  B.  In  the  present  case  the  extent  did  not  go  upon 
the  bond.] 

Per  Curiam.  Take  an  order  nisi*  to  be  served  on  the  defendant 
and  the  Crown.7 


1  The  case  is  somewhat  abridged.  —  Ed. 

2  See  as  to  this  Hex  (in  aid  of)  Hollis  v.  Bingham,  1  Cr.  &  M.  862;  s.  c.  2  C.  &  J. 
130;  57  Geo.  III.,  c.  117. 

3  Wightwick,  1 .  *  Wightwick,  3,  note. 

5  He  cited  Anon.  Sav.  52,  pi.  111.  See  further  West  on  Extents,  307;  Manning's 
Exchequer  Practice,  Revenue  Branch,  71 ;  Anon.  Sav.  30,  pi.  72  ;  Burge  on  Principal 
and  Surety,  352  ;  Whitehouse  v.  Partridge,  3  Swanst.  365,  376. 

6  The  order  was  afterwards  made  absolute,  the  counsel  for  the  Crown  appearing 
and  not  opposing.  —  Ed. 

7  Regina  v.  Salter,  1  H.  &  N.  274  ;  Hunter  v.  U.  S.,  5  Pet.  173,  5  Mas.  62 ;  Dias  o 
Bouchaed,  10  Paige,  445,  3  Edw.  485,  Accord.  —  Ed. 


376  TtOWBIGGEN  'v.    BOVRNE.  -{[CHAP.  UL 

In  the  Exchequer,  February  15,   1837. 

[Reported  in  2  Younge  Sf  Collyer,  462.] 


r7 


The  Bournes  had  obtained  two  separate  judgments  on  a  joint  and 
several  note  executed  by  Cawthorne  as  principal  and  the  plaintiff  as 
surety.  The  plaintiff  had  paid  the  amount  of  the  judgment  against 
herself.  The  bill  prayed  a  declaration,  that  the  plaintiff  was  entitled 
to  have  the  judgment,  obtained  by  the  Bournes  against  the  defend- 
ant Cawthorne,  assigned  by  the  defendants,  the  Bournes,  to  the 
plaintiff,  with  power  to  issue  execution  thereon,  and  that  the  defend- 
ants might  be  decreed  to  deliver  the  judgment  paper  in  respect  of  the 
said  judgment  to  the  plaintiff,  and  that  it  might  be  referred  to  the 
Master  to  settle  an  assignment  of  the  said  judgment,  the  plaintiff  offer- 
ing to  pa}'  what,  if  anything,  was  due  to  the  defendants  on  the  said 
judgment,  and  to  indemnify  them  against  all  costs,  charges,  damages, 
and  expenses,  by  reason  of  any  proceedings  by  the  plaintiff  under  such 
assignment.  The  bill  also  prayed  an  injunction  to  restrain  the  defend- 
ants from  entering  up  satisfaction  on  the  said  judgment,  or  releasing 
or  discharging  the  same. 

To  this  bill  the  defendant  Cawthorne  filed  a  general  demurrer,  for 
want  of  equit}'.1 

Alderson,  B.  I  expressed  my  opinion  on  the  hearing  of  this  case, 
that  the  plaintiff  could  not  derive  any  benefit  from  the  assignment  of 
the  judgment  against  Cawthorne  ;  and  that,  supposing  that  to  be  the 
case,  there  was  not  any  ground  for  the  interference  of  a  court  of  equity 
to  decree  that  assignment.  The  question  I  desired  an  opportunity  to 
consider  was,  whether  under  the  circumstances  there  would  be  any 
remedy  at  law,  supposing  an  assignment  of  the  judgment  were  actually 
executed  to  the  executors  of  Mr.  Dowbiggen.  It  is  quite  clear  from 
the  authorities,  that  a  surety  who  pays  the  debt  of  the  principal  debtor 
is  entitled  to  the  benefit  of  all  those  securities  which  the  creditor  him- 
self could  render  available  against  the  principal  debtor.  That  point 
was  in  effect  determined  by  Chief  Baron  Alexander,  on  the  argument 
of  the  demurrer  in  this  case  ;  and  I  cannot  help  regretting  that  he  did 
not  then  dispose  of  the  question  of  law  which  is  now  raised,  and  which 
was  as  ripe  for  discussion  seven  years  ago  as  it  is  at  the  present  time. 

In  this  case  the  assignee,  if  he  obtain  an  assignment  of  the  judg- 
ment, must  necessarily  proceed  in  the  name  of  the  assignor,  to  enforce 
that  judgment.  Now.  what  are  the  facts  of  the  case?  A  joint  and 
several  promissory  note  was  entered  into  by  Cawthorne  and  Dowbig- 
gen as  his  suret}^.  The  note  when  due  was  not  paid,  and  the  payee  of 
the  promissory  note  brought  an  action,  and  obtained  judgment  for  the 
full  amount  of  the  note  and  interest  against  Cawthorne,  the  principal 

1  The  statement  of  the  ease  is  condensed  and  the  arguments  are  omitted.  —  Ed. 


SECT.  I.J  DOWBIGGEN   V.    BOURNE.  377 

debtor.  For  I  think  it  is  fully  established  that  Cawthorne  was  the  prin 
eipal  debtor.  The  holder  of  the  note,  having  obtained  this  judgment 
against  Cawthorne,  finding  that  it  was  not  likely  to  be  made  available, 
brought  another  action,  as  he  was  entitled  to  do,  against  Dowbiggen  the 
surety,  and  recovered  judgment  against  Dowbiggen  for  the  amount  of  the 
note  and  interest.  Dowbiggen  paid  the  amount  of  the  principal  money 
and  interest  due  on  the  note,  and  the  costs  of  the  action  against  him,  and 
the  holder  of  the  note,  having  been  thus  satisfied  the  whole  of  the  prin- 
cipal money  and  interest,  had  no  further  claim,  except  perhaps  in 
respect  of  the  costs  of  the  action  against  Cawthorne ;  and  if  he  had 
afterwards  ventured  to  proceed  on  the  judgment  against  Cawthorne, 
the  Court  of  King's  Bench,  in  which  the  judgment  was  recovered, 
would  have  interfered  in  a  summary  manner  to  stay  proceedings  on  the 
judgment,  except  for  these  costs.  The  whole  effect,  therefore,  of 
assigning  the  judgment  to  the  plaintiff  would  be  to  give  her  that  which 
would  be  wholly  useless,  except  for  the  purpose  of  recovering  the"costs 
o'l  tne  action  against  Cawthorne,  and  to  which,  as  administratrix  of 
DowBTggeii,  she  could  not  possibly  have  any  right.  And  that~it  had 
been  felt  that  she  had  no  such  right,  was  evident  from  the  tender  to 
the  defendants,  the  Bournes,  of  those  costs.  The  case  in  substance  is 
not  distinguishable  from  the  case  1  before  Lord  Eldox,  in  which  he 
says,  that  if  a  bond  is  given  by  principal  and  surety,  and  at  the  same 
time  a  mortgage  is  made  for  securing  the  debt,  the  surety  paying  the 
bond  has  a  right  to  stand  in  the  place  of  the  mortgagee ;  but  that  if 
there  is  nothing  but  the  bond,  the  surety,  after  discharging  it,  cannot 
set  it  up  against  the  principal  debtor. 

It  appears  to  me  that  any  assignment  of  the  judgment  would  be  en- 
tirely useless  ;  and,  therefore,  under  the  whole  of  the  circumstances,  I 
think  the  bill  must  be  dismissed  ;  but  as  the  Bournes  might,  I  think, 
readily  have  given  to  Mrs.  Dowbiggen  what  she  required,  though  it 
was  perfectly  useless,  I  think  the  bill  must  be  dismissed  against  them 
without  costs.  There  is  no  ground  or  pretext  for  making  the  surety- 
pa}'  the  costs  of  the  principal ;  the  bill  must,  therefore,  also  be  dis- 
missed without  costs  against  the  defendant  Cawthorne.2 

*  Turn.  &  Russ.  231. 

2  State  v.  Miller,  5  Blackf.  381  ;  Sherwood  v.  Collier,  3  Dev.  380,  Accord. 

Norris  v.  Ham,  R.  M.  Charlt.  267  ;  Norwood  v.  Norwood,  2  Har.  &  J.  238  {semble) ; 
Sotheren  v.  Reed,  4  Har.  &  J.  307;  Perkins  v.  Kershaw,  1  Hill,  Ch.  235  ;  Thomson 
v.  Palmer,  3  Rich.  Eq.  139 ;  Hill  v.  Kelly,  Ir.  T.  R.  265 ;  Purdon  v.  Purdon,  1  Hud. 
&  Bro.  229,  Contra. 

In  the  cases  above  cited,  as  in  the  principal  case,  the  surety  and  principal  were  co- 
obligors,      u  lieu  tne  surety  and  principal  are  not  co-obligors,  but  are  liable  on  sepa- 
rate akhou^lTco]extensrve  undertakings,  t  he  surety  who  pays,  either  before  or  after  .^ 
judgment,  discharges  at  law  only  his  own  liability.     Accordingly  his  right  of  subroga-         'O ^-~ -jJ 
turn  to  the  creditor's  right  on  the  claim  against  the  principal  is  everywhere  conceded.       '  ' 

Hodgson  v. .Shaw,  3  M.  &  K  183;  In  re  Lord  Churchill,  39  Ch.  D.  174;  Brown"  v. 
Decatur,  4  Cranch,  C.  C.  477 ;  Dodd  v.  Wilson,  4  Del.  Ch.  399  ;  Livingston  v.  Andep 
son,  80  Ga.  175;  Allen  v.  Powell,  108  111.  584;  Downey  v.  Washburn,  79  Ind.  242; 
Davis  v.  Schlemmer  (Indiana,  1S98),  50  N.  E.  R.  373  ;  Tardy  v.  Allen,  3  La.  An.  66; 


378  EX    PARTE   ATKINSON,    BAKER,    AND    DARLING-        [CHAR.  III. 


QUEEN  v.  DOUGHTY. 

In  the  Exchequer,  December  8,  1702. 

[Reported  in  Wightwick  2,  n.  (b.).] 

A  surety  paying  the  Crown's  debt  was  ordered  to  stand  in  the  place 
of  the  Crown,  and  to  have  the  aid  of  the  court  to  recover  the  whole 
against  the  principal  in  the  bond  or  a  moiety  against  the  other  surety.1 


Ex  parte  ATKINSON,   BAKER,  AND  DARLING.  — 

In  re  BRIGHAM. 

In  Chancery,  before  the  Lords  Commissioners,  July  28,  1792. 

[Reported  in  Cooke,  Bankrupt  Laws  [8th  edition),  232.] 

It  appeared  that  the  bankrupt  was  indebted  to  Atkinson  in  the  sum 
of  £400,  and  having  occasion  for  a  further  loan,  prevailed  upon  him  to 
become  security  for  the  sum  he  wanted  to  borrow.  Accordingly  Atkin- 
son, on  the  26th  of  September,  1786,  joined  the  bankrupt  in  a  bond  to 
Darling  to  secure  £200  for  Sarah  Huntingford,  who  lent  the  bankrupt  the 
money.  And  on  the  26th  of  March,  1787,  Atkinson  joined  in  a  bond 
to  Baker  to  secure  £300.     On  the  6th  of  April,  1789,  a  commission 

Bishop  v.  Rowe,  71  Me.  263  ;  Ferguson  v.  Carson,  86  Mo.  673  ;  Townsend  v.  "Whitney, 
75  N.  Y.  425  ;  Gifford  v.  Rising,  12  N.  Y.  Sup.  430  ;  First  Bank  v.  Woolsey,  31  N.  Y. 
Ap.  Div.  61  ;  Keokuk  Co.  v.  Keokuk  Co.  (Oklahoma,  1896),  47  Pac.  R.  489;  Elkinton 
v.  Newman,  20  Fa.  281  :  Enders  v.  Brune,  4  Rand.  438 ;  Robinson  v.  Sherman,  2  Grat. 
178 ;  Leake  v.  Ferguson,  2  Grat.  419 ;  HiU  v.  Manser,  11  Grat.  522  ;  Murray  v.  Meade, 
5  Wash.  693  ;  La  Touche  v.  Pallas,  Hayes,  450.  But  see,  contra,  Morse  v.  Williams, 
22  Me.  17. 

Similarly,  an  indorser  paying  a  hill  or  note  or  a  judgment  thereon  against  himself 
is  subrogated  to  the  holder's  judgment  against  a  prior  party  to  the  instrument.  Lyon 
v.  Boiling,  9  Ala.  463;  Schoonover  c.  Allen,  40  Ark.  132;  Dooley  v.  Lackey,  55  111. 
Ap.  30  ;  Hoffman  v.  Butler,  105  Ind.  371  ;  Schleissman  v.  Kalleuberg,  72  Iowa,  338; 
Des  Moines  Co.  v.  Colfax  Co.,  79  Iowa,  497  ;  Conway  v.  Straney,  24  Miss.  665 ;  Clason 
v.  Morris,  10  Johns.  524;  Eno  v.  Crooke,  10  N.  Y.  60;  Corey  v.  White,  3  Barb.  12; 
Baily  v.  Brownfield,  20  Pa.  41  ;  Old  Dominion  Bank  v.  Allen,  76  Va.  200.  But  see 
contra,  Topp  v.  Branch  Bank,  2  Swan,  184;  Kirtland  v.  Meigs  Co.,  4  Lea,  414,  420 
(semhle).  —  Ed. 

1  Anon.  Sav.  30;  Babb's  Case,  Wightw.  2  n.  (c)  ;  Webber's  Case,  Wightw.  3n(rf); 
King  v.  Clark,  Com.  389,  Bunb.  221,  s.  c.  (semble) ;  King  v.  Bennett,  Wightw.  1,  6 
(semhle) ;  Salkeld  v.  Abbot,  Hayes,  576,  583-4;  Jackson  r.  Davis,  4  Mackey,  194  (co- 
surety) ;  West  v.  Creditors,  3  La.  An.  529  ;  Orem  v.  Wrightson,  51  Md.  34 ;  Champney 
v.  Lyle,  1  Binn.  327 ;   Robertson  v.  Trigg,  32  Grat.  76  (co-surety),  Accord. 

South  Carolina  Bank  v.  Adger,  2  Hill,  Eq.  262  (co-surety)  is  contra,  hut  would 
probably  not  be  followed  in  South  Carolina.  See  cases  cited  in  first  paragraph  of  note 
to  Lidderdale  v.  Robinson,  infra,  p.  38.  —  Ed. 


SECT.  I.]  EX    PARTE    ATKINSON,    BAKER,    AND    DARLING.  379 

issued  against  Brigham.  And  on  the  28th  of  April,  1789,  Darling,  as 
trustee  for  Mrs.  Huntingford  and  Baker,  on  his  own  aceount,  proved 
their  respective  bonds  under  the  commission.  The  same  afternoon, 
but  after  the  proof  made,  Atkinson  paid  Mrs.  Huntingford  the  money. 
Previous  to  Baker  having  made  his  deposition,  Atkinson  had  lodged 
the  amount  of  his  bond  in  the  hands  of  a  banker  in  trust  for  Baker, 
who  under  those  circumstances  hesitated  to  take  the  usual  oath  ;  but 
with  an  intent  to  enable  him  conscientiously  to  do  so,  he  ordered  the 
mone}'  to  be  returned  to  Atkinson,  which  was  done,  and  then  he  proved 
as  before  stated,  and  was  afterwards  paid  the  amount  of  the  bond  by 
Atkinson. 

On  the  13th  of  September,  1791,  a  dividend  was  declared  under  the 
commission,  but  the  assignees  refused  to  pay  an3*  dividends  to  Darling 
and  Baker,  alleging  that  their  debts  had  been  discharged. 

It  was  insisted  for  the  petition  that  the  surety  had  an  equit}*  to  retain 
the  proof  made  by  the  original  creditor  who  became  a  trustee  for  him, 
and  the  suret}T  might  even  file  a  bill,  to  compel  the  original  creditor  to 
prove  the  debt,  if  he  refused  to  do  it,  and  a  case  of  Philips  v.  Smith,  in 
the  Exchequer  was  cited,  where  a  bill  was  filed  by  a  surety  of  a  person 
become  bankrupt  against  the  creditor,  to  sta}-  his  proceedings  at  law 
until  he  went  before  the  commissioners  to  prove  his  debt,  that  he  might 
thereb}*  become  a  trustee  for  the  surety,  which  was  ordered  upon  bring- 
ing the  money  into  court.1 

The  Lords  Commissioners  were  of  opinion  that  the  surety  had  a 
right  to  the  benefit  of  the  proofs  made  by  the  original  creditors,  and  that 
such  proofs  were  well  made,  and  ordered  the  dividend  to  be  paid  to 
Baker  and  Darling,  in  trust  for  Atkinson.2 

1  Bill  by  surety  in  a  bond  against  the  obligee,  who  is  a  mere  trustee,  and  his  cestui 
que  trust,  to  compel  them  to  prove  under  the  commission  against  the  obligor.  Injunc- 
tion for  want  of  an  answer,  and  upon  motion  to  dissolve  it  the  defendants  were  ordered 
to  prove  upon  plaintiff's  bringing  money  into  court.  Beardmore  v.  Cruttenden,  Hil. 
Term,  1791. 

In  accordance  with  Beardmore  v.  Cruttenden,  see  Ex  parte  Houston,  2  Gl.  &  J.  36, 
12-43  ;  Jackson  v.  Magee,  3  Q.  B.  48,  56.  —  En. 

2  Ex  parte  Brook,  2  Rose,  334 ;  Ex  parte  Johnson,  3  D.  M.  &  G.  218  (Accommoda- 
tion accentor) ;  Ex  parte  Came,  3  Ch.  463  (Guarantor),  Accord. 

A  surety  paying  the  creditor  in  full  and  therefore  subrogated  to  the  benefit  of  the 
creditor's  proof  against  the  bankrupt  principal,  cannot  recover  interest  paid  to  the 
creditor  unless  the  creditor  would  have  been  entitled  to  claim  interest  from  the  prin- 
cipal. Ex  parte  Houston,  2  Gl.  &  J.  36 ;  Ex  parte  Wilson,  1  Kose,  137 ;  Ex  parte 
Sanderson,  8  D.  M.  &  G.  849.  —  Ed. 


380  HOTHAM   V.   STONE.  [CHAP.  IIL 

HOTHAM  v.  STONE. 
In  Chancery,  before  Sir  William  Grant,  M.R.,  1809. 

[Reported  in  Turner  Sf  Russell,  226  n.  (c).j 

On  the  12th  of  August,  1774,  John  Pytt  and  John  Piatt  executed  a 
joint  and  several  bond  to  John  Stock,  conditioned  for  the  payment  of 
£1,000  and  interest,  and  by  a  memorandum  in  writing,  bearing  even 
date  with  the  bond,  and  signed  by  Pytt,  it  was  declared  that  the  name 
of  Piatt  was  inserted  in  the  bond  as  a  securit}*  for  Pytt,  and  at  his 
request,  and  that  no  part  of  the  £1,000  was  received  by  Piatt,  and 
Pytt  promised  to  indemnify  Piatt  against  the  bond  and  the  interest 
thereof.  In  the  month  of  August,  1775,  John  Piatt  died,  having  by 
his  will  appointed  the  defendant  Partridge  to  be  his  executor ;  John 
Pytt  died  in  August,  1776,  and  after  his  death  the  principal  and  inter- 
est due  on  the  bond,  amounting  to  £1,485,  was  paid  by  Partridge,  to 
whom  the  bond  was  delivered  up. 

By  the  decree  in  the  cause  it  was  amongst  other  things  ordered,  that 
the  Master  should  inquire  and  state  to  the  court  the  priorities  of  the 
respective  incumbrances,  annuities,  and  specialt}'  debts,  affecting  the 
estates  in  question  in  the  cause. 

The  Master  by  his  report,  dated  the  6th  of  December,  1809,  set 
forth  several  instruments  by  which  John  Pytt  became  seized  in  fee  of 
the  estates  in  question,  and  stated,  that  the  first  incumbrance  on  the 
said  estates  was  an  annuity  of  £200  granted  by  the  said  John  Pytt  to 
the  defendant  Robert  Stone,  and  that  the  second  incumbrance  thereon 
was  a  debt  of  £400  due  to  Richard  Bowsher,  by  virtue  of  the  said  John 
Pytt's  bond,  dated  the  10th  of  October,  1775  ;  and  after  stating  several 
other  incumbrances  affecting  the  said  estates,  the  Master  certified,  that 
a  state  of  facts  had  been  carried  in  by  Partridge,  claiming  to  have  the 
debt  paid  bv  him  allowed  as  the  second  incumbrance  upon  the  estates 
in  question,  but  that  upon  consideration  of  the  claim  he  had  disallowed 
the  same,  inasmuch  as  he  humbly  conceived  that  the  said  debt  was  not 
any  charge  or  incumbrance  upon  the  said  estates. 

The  defendant  Partridge  took  an  exception  to  the  report,  insisting 
that  the  Master  ought  to  have  allowed  the  claim  as  the  second  incum- 
brance  on  the  estates. 

The  decree  declares,  that  the  defendant  Partridge  is  entitled  to  stand 
as  the  second  incumbrancer  upon  the  estates  in  question,  and  directs 
an  account  to  be  taken  of  what  is  due  to  him  for  principal  and  interest 
by  virtue  of  the  bond.1 

i  Ex  parte  Crisp,  1  Atk.  133  (semWe).per  Lord  HakdwiCKE  ;  Robinson  v.  Wilson. 
9  Mad.  464  \&>mble).  Accord  — Ed. 


SECT.  I.J  COPIS^.    MIDDLETON.        Q-  381 

COPIS  v.  MIDDLETON. 
In  Chancery,  before  Lord  Eldon,   C,  July  1,  1823. 

[Reported  in  Turner  Sf  Russell,  224.] 

This  suit  was  instituted  by  creditors  for  the  administration  of  the 
estate  of  John  Knott,  who  died  on  the  28th  of  December,  1792. 

The  Master  by  his  report,  dated  the  20th  of  May,  1815,  certified, 
that  the  specialty  debts  of  the  said  John  Knott  amounted  to  £16,085. 
In  the  schedule  to  his  report  the  Master  included  the  representatives  of 
Newman,  Knott  and  one  John  Martin,  as- specialty  creditors  of  the 
said  John  Knott,  in  respect  of  sums  paid  by  the  said  Newman  Knott 
and  John  Martin  respectively,  in  discharge  of  the  principal  and  interest 
of  certain  bonds  entered  into  by  them  as  sureties  for  the  said  John 
Knott,  and  he  allowed  interest  upon  such  principal  sums. 

The  cause  now  came  on  upon  exceptions  to  the  Master's  report.1 

The  Lord  Chancellor.  The  facts  of  this  case  are  simply  these, 
two  individuals  gave  a  bond,  the  one  as  principal  and  the  other  as 
surety  ;  no  other  assurance  was  executed  at  the  time,  no  mortgage  was 
made  to  secure  the  debt,  no  counterbond  was  given  by  the  principal  to 
the  surety  ;  and  the  question  to  be  decided  is,  whether  the  surety,  hav- 
ing paid  the  bond  after  it  was  due,  is  a  simple  contract  or  a  specialty 
creditor.  I  understand  it  to  have  been  the  opinion  ol"  "the  Mastei^an 
opinion  founded  on  one  or  two  cases  which  have  been  stated,  that  the 
surety  was  to  be  considered  as  a  specialty  creditor  to  stand  in  the  place 
of  the  person  whom  he  paid  ;  that  doctrine  appears  to  me  to  be  con- 
trary to  all  that  has  been  settled  during  the  whole  time  I  have  been  in 
this  court ;  everything  that  was  arranged  in  bankruptcy  before  the  late 
statute  enabling  the  surety  to  prove,  everything  determined  before, 
appears  to  me  to  have  authorized  the  court  to  consider  it  quite  clear, 
that  if  there  was  nothing  in  the  case  beyond  what  I  have  stated,  the 
surety  having  paid  the  bond  could  be  nothing  more  than  a  simple  con 
tract  creditor  in  respect  of  that  payment ;  the  bond  was  not  assigned 
to  anybody  in  consideration  of  a  sum  of  money  paid,  which  was  one 
way  we  used  to  manage  these  things  ;  there  was  no  counterbond  given, 
which  was  another  way  in  which  we  used  to  manage  these  things,  so 
that  if  the  surety  paid  one  bond,  he  became  instantly  a  specialty  credi- 
tor by  virtue  of  the  other  bond.  If  any  suit  was  now  instituted,  I 
apprehend  the  payment  of  the  bond  would  show  that  the  bond  was 
gone.  There  has  been  a  case  cited  where,  upon  the  general  ground 
that  a  surety  is  entitled  to  the  benefit  of  all  securities  which  the  credi- 
tor has  against  the  principal,  it  seems  to  have  been  thought,  that  the 
surety  was  entitled  to  be  as  it  were  a  bond  creditor  by  virtue  of  the 
bond  ;  I  take  it  to  be  exceeding!}'  clear,  if  at  the  time  a  bond  is  given, 
a  mortgage  is  also  made  for  securing  the  debt,  the  surety,  if  he  pays 
1  The  statement  of  facts  is  abridged,  and  the  arguments  are  omitted.  —  Ed. 


\*$ 


Q 


82  COPIS   V.   MIDDLETON.  [CHAP.  III. 


aj 


the  bond,  has  a  right  to  stand  in  the  place  of  the  mortgagee,  and  as 
the  mortgagor  cannot  get  back  his  estate  again  without  a  conveyance, 
that  security  remains  a  valid  and  effectual  security,  notwithstanding 
the  bond  debt  is  paid;  but  if  there  is  nothing  but  the  bond,  my  notion 
is,  that  as  the  law  says  that  bond  is  discharged  by  the  payment  of  what 
was  due  upon  it,  the  bond  is  gone,  and  cannot  be~set  up.  That  is  the 
opinion  which  I  have  formed  of  this  case.  Exceptions  allowed.1 


[Statute  19  §•  20   Victoria,  c.  97,  §  5.] 

"Every  person  who,  being  surety  for  the  debt  or  dut}*  of  another, 
or  being  liable  with  another  for  any  debt  or  duty,  shall  pay  such  debt 
or  perform  such  duty,  shall  be  entitled  to  have  assigned  to  him,  or  to  a 
trustee  for  him,  every  judgment,  specialty,  or  other  security  which  shall 
be  held  by  the  creditor  in  respect  of  such  debt  or  dut}',  whether  such 
judgment,  specialty,  or  other  security  shall  or  shall  not  be  deemed  at 
^aw  to  have  been  satisned  03'  the  payment  of  the  debt,  or  performance 
'  of  the  duty,  and  such  person  shall  be  entitled  to  stand  in  the  place  of 
the  creditor,  and  to  use  all  the  remedies,  and  if  need  be,  and  upon  a 
proper  indemnit}',  to  use  the  name  of  the  creditor  in  airy  action  or 
other  proceeding  at  law  or  in  equit3-,  in  order  to  obtain  from  the  prin- 
cipal debtor,  or  any  co-suret}',  co-contractor,  or  co-debtor,  as  the  case 
ma3T  be,  indemnification  for  the  advances  made,  and  loss  sustained  b3T 
the  person  who  shall  have  so  paid  such  debt,  or  performed  such  dut3-, 
and  such  payment  or  performance  so  made  b3'  such  suret3T  shall  not  be 
pleadable  in  bar  of  aity  such  action  or  other  proceeding  b3'  him  :  Pro- 
vided alwa3's  that  no  co-surety,  co-contractor,  or  co-debtor,  shall  be 
entitled  to  recover  from  any  other  co-suret3*,  co-contractor,  or  co-debtor, 
b3T  the  means  aforesaid,  more  than  the  just  proportion  to  which,  as  be- 
tween those  parties  themselves,  such  last-mentioned  person  shall  be 
justly  liable." 

1  Jones  v.  Davids,  4  Russ.  277  ;  Hodgson  v.  Shaw,  3  M.  &  K.  183  ;  Foster  v.  Trus- 
tees, 3  Ala.  302,  308  (semble)  (but  see  Knighton  v.  Curry,  62  Ala.  404,  410,411; 
Turner  v.  Teague,  73  Ala.  554,  557)  ;  Uzzell  v.  Mack,  4  Humph.  319,  320  (semble)  ; 
Moore  v.  Campbell,  36  Vt.  261  ;  Salkekl  v.  Abbott,  Hayes,  576  (semble),  Accord. 

In  Salkeld  v.  Abbott,  supra,  in  which  case  a  surety  in  a  recognizance  who  had  paid 
the  same  was  subrogated  to  the  creditor's  right  on  the  recognizance  against  a  co-surety, 
because  not  being  satisfied  of  record  it  was  not  extinguished  at  law.  Pennefather,  B., 
said  :  "  If  the  principal  and  surety  join  in  a  bond,  and  that  bond  be  paid  by  the  surety, 
the  action  may  be  pleaded  in  bar  to  an  action  at  law.  So,  if  a  judgment  have  been 
entered  on  the  bond  and  the  amount  of  the  judgment  have  been  paid  off  by  the  surety, 
so  that  the  judgment  is  thereby  satisfied  ;  then,  since  the  Statute  of  6  Ann.,  c.  10,  that 
payment  may  be  pleaded  by  the  principal,  in  bar  of  an  action  brought  against  him 
upon  that  judgment  by  any  person  whatsoever.  In  both  these  instances,  the  surety  is 
but  a  simple  contract  creditor  of  his  principal.  Again,  —  in  the  case  of  a  recognizance, 
—  if  the  money  secured  by  that  recognizance  have  been  levied  under  a  writ  of  execution 
against  the  surety,  so  that,  by  the  levy,  the  recognizance  was  discharged  at  law,  then 
the  surety  cannot  stand  in  the  place  of  the  crown,  in  order  to  reimburse  himself. 


SECT.  I.]  IN    RE    M'MYN.  383 


In  re  M'MYN. 
In  the  Chancery  Division,  August  4,  1886. 

[Reported  in  33  Chancer))  Division,  575.] 

A  further  l  question  arose  under  the  following  circumstances :  — 

The  testatrix  and  her  mother  and  others  had  signed  a  guarantee  to 
certain  bankers  to  secure  an  advance  made  to  a  relative.  Default  in 
payment  having  been  made  by  the  relative,  an  action  was  brought  in 
1877,  and  judgment  was  recovered  b}r  the  bankers  against  the  co- 
guarantors.  The  testatrix's  mother,  Alice  M'Myn,  had  paid  the  judg- 
ment debt  b}'  instalments,  and  accordingly  no  further  proceedings  were 
taken  by  the  bankers.  She  had  not  taken  an  assignment  of  the  judg- 
ment. The  question  was  whether  the  legal  personal  representatives  of 
the  mother  (who  was  now  dead)  were  entitled  to  be  paid  out  of  the  tes- 
tatrix's estate,  in  priority  to  the  other  creditors,  the  amount  of  the  con- 
tribution due  from  the  testatrix. 

Hamilton  Humphreys,  for  the  plaintiff:  — 

Levett,  for  the  representatives  of  Alice  M'Myn  :  — 

We  are  entitled  to  stand  in  the  place  of  the  judgment  creditor.  If 
nothing  had  been  paid  by  the  mother  the  judgment  creditors  would 
have  had  their  whole  debt  paid  out  of  the  testatrix's  estate  in  priority 
to  the  unsecured  creditors.  Our  payment  was  not  intended  for  the 
benefit  of  the  testatrix's  unsecured  creditors,  and  by  §  5  of  the  Mercan- 
tile Amendment  Act,  1856  (19  &  20  Vict.  c.  94),  a  surety  who  pays 
the  debt  is  entitled  to  have  a  judgment  held  b}'  the  creditor  assigned  to 
him.  Our  priority  in  respect  of  the  judgment  is  unaffected  by  the 
Judicature  Act,   1875,  §   10:  In  re  Maggi.2 

Chitty,  J.  The  representatives  of  Alice  M'Myn  have  not  them- 
selves obtained  any  judgment,  and  the  question  is  whether  in  order  to 
gain  priority  they  should  have  obtained  an  assignment  of  the  judgment. 
The  Mercantile  Law  Amendment  Act,  1856,  §  5,  is  as  follows:  [His 
Lordship  referred  to  the  section.]  I  think  effect  should  be  given  to 
the  words  of  the  section,  which  say  that  the  surety  ma\r  stand  in  the 
place  and  use  the  name  of  the  creditor ;  it  follows  that  the  co-surety, 
notwithstanding  that  she  has  neither  brought  an  action  nor  had  an 
assignment  of  the  judgment,  is  entitled  to  obtain  what  she  has  paid  in 
excess  of  her  fair  contribution,  and  to  have  priority  over  the  unsecured 
creditors  of  the  testatrix.  That  puts  the  unsecured  creditors  in  no 
worse  position  than  if  the  judgment  creditors  had  exhausted  their  whole 
claim  by  enforcing  it  against  the  testatrix's  estate.  I  therefore  hold 
that  the  representatives  of  Alice  M'Myn  are  right  in  their  contention.3 

1  Only  what  relates  to  this  question  is  given.  —  Ed. 

2  20  Ch.  D  545. 

3  Re  Cochran's  Estate,  5  Eq.  209,  Accord. — Ed. 


a— 


^384         "V  LIM)ERDALE    27.    ROBINSON.    -_  [CHAP.  III. 


^^  LIDDERDAEtES  Executors  Y.  The  Executor  op.  ROBINSON. 

"In  the  Supreme  Court,   United  Stktes^n January  17,  1F27. 

Mr.  Justice  Johnson  delivered  the  opinion  of  the  court. 

The  question  to  be  decided  in  this  cause  is  certified  to  tins  court  on 
a  division  of  opinion  from  the  judges  of  the  Virginia  district.1 

The  bill  is  filed  to  recover  a  sum  of  money  of  Robinson's  estate ; 
and  the  debts  being  numerous,  and  the  assets  probably  insufficient  to 
satisfy  the  whole,  the  right  of  priority  becomes  a  material  object 
among  the  creditors. 

The  particular  demand  upon  which  this  question  is  certified,  is  that 
of  one  Smith,  who  was  joint  indorser  with  Robinson,  on  a  bill  of  ex- 
change drawn  by  one  Roots,  and  returned  under  protest.  The  bill,  of 
course,  must  have  been  drawn  payable  to  Robinson  and  Smith,  and 
being  taken  up  by  them,  and  the  latter  having  paid  more  than  a  moiety 
in  satisfaction  of  the  debt,  his  administrator  now  claims  of  the  estate 
of  Robinson  the  amount  by  which  Smith's  payments  exceeded  the 
moiety. 

There  is  no  question  on  his  right  to  come  in  for  that  sum  as  a  simple 
contract  creditor;  but  he  claims  precedence,  and  the  rank  of  a  judg- 
ment creditor,  under  a  particular  provision  of  the  laws  of  Virginia  in 
force  at  Robinson's  death,  and  under  an  equitable  principle,  according 
to  which,  he  who  pays  a  debt  of  a  superior  dignity  is  suffered  to  rank 
in  the~a*PpiicHtiOn"Of  aSijeTs~ltccordlng  to  the  dignity  of  the  deBt  satis- 
fied ;  or,  in  other  words,  is  substituted  for  the  creditor  who  held  the 
prior  debt."  ~" 

The  terms  of  the  Virginia  act  are  these,  "  All  bills  of  exchange 
which  are,  or  shall  be  protested,  shall,  after  the  death  of  the  drawer  or 
indorser  thereof,  be  accounted  of  equal  dignity  with  a  judgment;  and 
the  executors  or  administrators  of  every  such  drawer  or  indorser,  shall 
suffer  judgment  to  pass  against  them  for  all  debts  due  upon  protested 
bills  of  exchange  before  any  bond,  bill,  or  other  debt,  of  equal  or 
inferior  dignity,  under  the  penalty  of  being  obliged  to  pay  the  same 
out  of  their  own  proper  goods." 

The  priority,  therefore,  of  the  holder  of  the  bill  of  exchange,  as  well 
against  the  estates  of  the  indorsers,  as  the  drawer,  is  "questionable  ; 
but,  the  other  creditors  insist,  that  as  between  the  co-indorsers,  the 
rights  of  Smith  against  the  estate  of  Robinson,  must  be  determined  by 
the  nature  of  the  action  to  which  he  would  have  been  put  at  law  to 
recover  back  what  he  paid  above  his  moiety,  that  is,  assumpsit  on  sim- 
ple contract.  l)iit  both  on  principle  and  authority  we  are  induced  to 
think  otherwise. 

1  Reported  in  2  Brock.  159.  — Ed. 


>f 


A 


SECT.  I.]  LIDDERDALE    V.    ROBINSON.  385 

What  have  the  creditors  of  Robinson  to  complain  of?  The}'  are 
only  referred  back  to  the  situation  in  which  they  were  before  they  were 
relieved  by  the  application  of  Smith's  funds  to  the  payment  of  the  bill 
of  exchange.  If  the  bill  of  exchange  still  remained  in  the  hands  of 
the  holder  unsatisfied,  his  right  to  a  priority  from  Robinson's  estate 
as  to  the  moiety  of  the  bill,  would  be  unquestionable,  and  if  relieved 
from  that  state  b}-  the  money  of  Smith,  it  is  but  right  that  Smith 
should  have  refunded  to  him  that  sum  which  they,  without  that  pay- 
ment,  would  certainly  have  Deen  obliged  to  relinquish.  This  is  in  per- 
fect analogy  with  that  class  of  cases  in  which  real  assets  have  been 
decreed  to  make  good  to  simple  contract  creditors  sums  that  have 
been  taken  from  personal  assets,  and  applied  to  relieve  the  real  estate, 
8  Vesey,  382,  or  to  satisfy  specialty  creditors,  Gibbs  v.  Onger.1 

That  a  surety  who  discharges  the  debt  of  the  principal,  shall,  in  gen- 
eral, succeed  to  the  rights  of  the  creditor,  as  well  direct  as  incidental,    /rfP^s£~-* 

is  strongly  exemplified jnjhose  cases  in  which  the  surety  is  permitted  r xr 

to  succeed  to  those  rights,  even  against  bail,  who  are  themselves  in 
many  resp~ects  regarded  as  sureties.  2  Vera.  608;  11  Vesey,  22. 
That  such  would  be  the  effect  of  an"  actual  assignment  made  by  the 
creditor  to  the  surety,  or  to  some  third  person  for  his  benefit,  no  one 
can  doubt.  But,  in  the  cases  last  cited,  we  find  the  Court  of  Equity 
lending  its  aid  to  compel  the  creditor  to  assign  the  cause  of  action, 
and  thus  to  make  an  actual  substitution  of  the  sureties,  so  as  to  perfect 
their  claim  at  law.  This  fully  affirms  the  right  to  succeed  to  the  legal 
standing  of  their  principal ;  and,  after  establishing  that  principle,  it  is 
going  but  one  step  farther,  to  consider  that  as  done  which  the  surety 
has  a  right  to  have  done  in  his  favor,  and  thus  to  sustain  the  substitu- 
tion without  an  actual  assignment.  And,  accordingly,  we  find  the 
dictum  expressed  in   Robinson  v.   Wilson,'2  in    pretty  general    terms,  ^     ' 

4t  that  a  surety  who  pays  off  a  specialty  debt  shall  be  considered  as  a   fl**^" 
creditor  by  specialty  of  his  principal."  u 

~TF  the  parties  in  this  cause  be  considered  as  claiming  under  assign- 
ment from  the  holder  of  the  bill,  and  each  as  assignee  of  the  claim 
against  his  co-indorsee,  according  to  the  actual  state  of  their  respective 
interests,  there  can  be  no  doubt  of  the  priority  here  claimed.  This 
subject  has  undergone  a  very  serious  examination  in  the  courts  of  the 
United  States,  and  in  cases  in  which,  as  in  this,  satisfaction  had 
been  made  by  the  surety  without  taking  an  actual  assignment  of 
the  debt.  .   .  .3 

That  this,  then,  is  the  settled  law  of  the  State  in  which  this  contract 
and  this  cause  originated,  cannot  be  doubted.  But  we  feel  no  inclina- 
tion to  place  our  decision  upon  that  restricted  ground,  since  we  are 
well  satisfied  with  its  correctness  on  a  general  principle,  and  on  author- 
ities of  great  respectability  in  other  States. 

1  12  Vesey,  413.  2  2  Madd.  Rep.  434. 

8  The  court  here  discussed  the  cases.  Burrows  v.  McWhann,  1  De  S.  409 ;  Eppes  v 
Randolph,  3  Call,  125,  and  Tinsley  v.  Anderson,  3  Call,  329. —  Ed. 

25 


386  BANK    OF    SALINA    V.   ABBOT.  [CHAP.  IIL 

We  will,  therefore,  order  it  to  be  certified  to  the  Circuit  Court  of 
Virginia  District,  that  John  Smith,  executor  of  John  Smith,  deceased, 
is  entitled  to  satisfaction  from  the  assets  of  the  estate  of  John  Robin- 
son, with  the  priority  of  a  judgment  creditor  of  the  deceased. 

Certificate  accordingly} 


THE   BANK   OF  SALINA  v.  ABBOT  and   Others. 
In  the  Supreme  Court,  New  York,  June,  1846. 

[Reported  in  3  Denio,  181. J 

I.  Harris,  on  behalf  of  Joel  Rathbone,  moved  for  a  perpetual  stay 
of  execution  in  this  cause,  in  the  hands  of  the  sheriff  of  Erie  Count}', 
and  that  the  judgment  be  cancelled  of  record.  The  judgment  was 
rendered  September  3d,  1842,  on  a  note  made  by  Abbot  to  the  order 
of  W.  Hodge,  and  endorsed  b}'  him  and  W.  Hodge,  Jr.,  for  the  accom- 
modation of  the  maker.  P.  Hodge  purchased  the  judgment  of  the 
plaintiffs,  and  took  an  assignment  of  it,  and  afterwards,  W.  Hodge,  Jr., 
one  of  the  defendants  and  the  last  endorser  on  the  note,  purchased  and 
took  an  assignment  of  the  judgment  from  P.  Hodge.  Bathbone  ob- 
tained a  decree  against  W.  Hodge,  the  elder,  on  the  6th  da}-  of  October, 
1842.  The  judgment  and  decree  were  both  docketed  with  the  clerk  of 
P>ie  County,  in  the  same  order  in  which  the}'  were  entered.  W.  Hodge, 
Sr.,  has  real  estate  in  Erie  County,  which  the  sheriff  has  advertised  for 
sale  on  the  execution.  The  counsel  of  Rathbone  maintained  that  the 
judgment  was  extinguished  by  the  assignment  thereof  to  one  of  the 
defendants. 

M.   T.  Reynolds,  for  W.  Hodge,  Jr. 

By  the  Court,  Jewett,  J.  At  law  it  is  well  settled,  that  payment 
of  a  judgment  to  the  plaintiff  or  the  owner,  by  the  defendant,  or  by  one 

1  Subrogation  to  specialty  claim  against  the  principal.  Mott  v.  Maris,  2  Wash.  C.  C. 
196;  Lumpkin  v.  Mills,  4  Ga.  343;  Davis  v.  Smith,  5  Ga.  274  ;  McDougald  v.  Dough 
erty,  14  Ga.  674  (semb/e)  ;  Braught  c.  Griffith,  16  Iowa,  21  ;  Grider  v.  Payne,  9  Dana, 
188  (semble) ;  Schoolfield  v.  Rudd,  9  B.  Mon.  291  ;  Muldoon  v.  Crawford,  14  Bush,  125 
(but  see  Justices  v.  Lee,  1  T.  B.  Mon.  247  and  Buckner  v.  Morris,  2  J.  J.  Marsh.  121, 
contra);  Orem  v.  Wrightson,  51  Md.  34  (semble) ;  Crisfield  v.  State,  55  Md.  192 
(semble) ;  Felton  v.  Bissel,  25  Minn.  15,  19  (semble)  ;  Ferguson  v.  Carson,  86  Mo.  673, 
679  (semble)  ;  Townsend  v.  Whitney,  75  N.  Y.  425  (semble)  ;  Drake  v.  Coltran,  Busbee, 
300;  Howell  v.  Beams,  73  N.  Ca.  391  (but  see  Liles  v.  Rogers,  113  N.  Ca.  196,200-201); 
Lathrop's  App.,  1  Barr,  512,  516  (semble)  ;  Burrows  v.  McWhann,  1  De  S.  409  (co- 
surety) ;  Lenoir  v.  Hunter,  4  De  S.  65  ;  Pride  v.  Boyce,  Rice,  Eq.  275  ;  Shultz  v.  Carter, 
Speers,  Eq.  533;  Thomson  v.  Palmer,  3  Rich.  Eq.'l39;  Ex  parte  Ware,  5  Rich.  Eq. 
473  (Cunningham  ».  Smith,  Harper,  Eq.  90,  contra,  is  virtually  overruled)  ;  Eppes  v. 
Randolph,  2  Call,  125  ;  Tinsley  v.  Anderson,  3  Call,  329  ;  Tinsley  v.  Oliver,  5  Munf. 
419;  Enders  v.  Brune,  4  Rand.  438  (semble) ;  Powell  v.  White,  11  Leigh,  309  (but  see 
Cromer  v.  Cromer,  29  Grat.  280,  285,  limiting  the  rule  in  Virginia  to  cases  of  payment 
by  the  surety  after  the  principal's  death) ;  Mason  v.  Piersou,  63  Wis.  239,  244-245  {sem- 
ble), Accord.  —  Ed. 


SECT.  I.]  BANK   OF   SALINA   V.    ABBOT.  387 

of  several  defendants,  extinguishes  it,  although  sueh  payment  be  made 
by  a  defendant  who  is  a  mere  surety.1  A  court  of  law  cannot  substi- 
tute such  surety  in  the  place  of  the  plaintiff,  and  allow  him  to  take 
execution  upon  such  judgment.2  The  judgment  is  regarded  as  extin- 
guished against  all.  Ontario  Bank  v.  Walker.3  An  assignment  by 
the  plaintiff  or  owner  of  a  judgment  to  one  of  several  defendants  in 
the  judgment,  works  the  same  consequence.  Motion  granted.* 

1  The  doctrine  of  the  principal  case  that  the  statute  permitting  a  plaintiff  to  join  in 
one  action  the  successive  parties  to  a  bill  or  note,  rendered  the  judgment  against  the 
defendants  a  joint  judgment  analogous  to  a  joint  judgment  against  co-obligors  or 
co-makers,  was  overruled  in  Corey  v.  White,  3  Barb.  12.  The  judgment  against  suc- 
cessive parties  to  a  bill  is,  therefore,  to  be  regarded  as  the  union  of  so  many  separate 
judgments.  —  Ed. 

2  Morrison  v.  Marvin,  6  Ala.  797 ;  Chollar  v.  Temple,  39  Ark.  238 ;  Payne  v.  Mc- 
Kinney,  30  Ga.  86;  Bonn  v.  Aiken,  35  Iowa,  534;  Drefahl  v.  Tuttle,  42  Iowa,  177; 
Wilson  v.  Ridgely,  46  Md.  235  ;  McDauiels  v,  Lee,  37  Mo.  204  ;  Hull  v.  Sherwood,  59 
Mo.  172;  Ontario  Bank  v.  Walker,  1  Hill,  652;  Briley  v.  Sugg,  1  Dev.  &  B.  Eq.  366; 
Fort  Worth  Bank  v.  Dougherty,  81  Tex.  301,  Accord. 

But  by  the  aid  of  Equity,  or  in  some  jurisdictions  by  statute,  a  surety  who  has  paid 
a  joint  judgment  against  himself  and  others  is  permitted  to  issue  execution  thereon 
against  the  other  judgment  debtors,  whether  principals  or  sureties.  Fearn  v.  Ward,  80 
Ala.  555;  Newton  v.  Field,  16  Ark.  216  (semble);  Coffee  v.  Tevis,  17  Cal.  239;  Harris 
v.  Wynne,  4  Ga.  521  ;  Davenport  v.  Hardeman,  5  Ga.  580;  Burke  v.  Lee,  59  Ga.  165; 
Thomason  v.  Wade,  72  Ga.  160;  Irby  v.  Livingston,  81  Ga.  281 ;  Ezzard  v.  Bell,  100 
Ga.  150;  Scherer  v.  Schutz,  83  Ind.  543;  Harris  v.  Frank,  29  Kas.  200;  Morris  v. 
Evans,  2  B.  Mon.  84;  Alexander  v.  Lewis,  1  Met.  (Ky.)  407.  (But  see  Veach  v. 
Wickersham,  11  Bush,  261) ;  Sprigg  v.  Beaman,  6  La.  59  ;  Fluker  v.  Bobo,  11  La.  An. 
609;  Counely  v.  Bourg,  16  La.  An.  108;  McKnew  v.  Duvall,  45  Md.  501  (semble); 
Swan  v.  Smith,  57  Miss.  54S  ;  Yates  v.  Mead,  68  Miss.  787  (semble)  ;  Wilson  v.  Burney, 
8  Neb.  39 ;  Edgerly  v.  Emerson,  23  N.  H.  555 ;  Brewer  v.  Franklin  Mills,  42  N.  H. 
292;  Durand  v.  Trusdell,  44  N.  J.  597;  Cuyler  v.  Emsworth,  6  Paige,  32  (semble) ; 
Alden  v.  Clark,  11  How.  Pr.  211;  Townsend  v.  Whitney,  75  N.  Y.  425;  Bank  v. 
Harper,  8  Pa.  249 ;  Richter  v.  Cummings,  60  Pa.  441  ;  Duffield  v.  Cooper,  87  Pa.  443 ; 
Brown  v.  Black,  96  Pa.  482 ;  Floyd  v.  Goodwin,  8  Yerg.  484  ;  McNairy  v.  Eastland,  10 
Yerg.  310.  — Ed. 

8  1  Hill,  652. 

4  Where  judgment  has  been  obtained  against  a  party  to  a  bill  or  note,  a  subsequent 
party  does  not,  by  paying  the  amount  and  taking  an  assignment  of  the  judgment,  ex- 
tinguish it.  Harger  v.  McCnllough,  2  Denio,  119,  122.  So,  it  is  presumed,  if  separate 
judgments  were  recovered  by  the  holder  against  maker  and  endorser,  the  latter  might 
pay  the  judgment  against  himself  and  take  an  assignment  of  that  against  the  maker 
and  enforce  it  by  execution  or  otherwise.  The  principal  case  must  therefore  depend  upor 
the  effect  of  the  joint  judgment,  which  ordinarily  extinguishes  the  precedent  liabilities1 
upon  which  it  was  recovered ;  and  the  provision  in  the  act  authorizing  suits  against 
different  parties  to  a  bill  or  note,  which  looked  to  preserving  the  rights  of  such  parties 
as  between  each  other,  it  seems,  is  not  broad  enough  to  meet  the  case.  See  Stat.  J  839, 
p.  490,  §  7. 


>88  cromer  v.  cromer's  administrators.        [chap,  iil 


CROMER  v.   CROMER'S  ADMINISTRATORS. 

In  the  Court  op  Appeals,  Virginia,  November  8,  1877. 

[Reported  in  29  Grattan,  280.] 

On  the  21st  of  April,  1845,  Martin  Cromer  qualified  as  the  guardian 
of  Josephine  Cromer,  the  daughter  of  Joseph  Cromer,  in  the  count}-  court 
of  Rockingham,  gave  bond  in  the  penalty  of  $6,000,  with  said  Joseph 
Cromer  and  others  as  his  sureties.  Afterwards  the  ward,  Josephine 
Cromer,  intermarried  with  J.  F.  Ritchie,  and  on  the  19th  January,  1869, 
Joseph  Cromer,  her  father,  and  one  of  the  sureties  as  aforesaid,  paid  to 
Ritchie  $4,000  as  a  part  of  the  amount  due  by  the  guardian,  Martin 
Cromer,  to  his  said  ward.  After  the  death  of  said  Joseph  Cromer 
March  26,  1873,  his  administrators  instituted  their  action  of  assumpsit 
to  recover  the  said  $4,000,  with  interest  from  the  day  of  payment, 
from  said  Martin  Cromer.  The  plaintiffs,  in  their  declaration,  include 
several  counts,  and  present  prominently  the  relations  between  the 
parties  and  the  character  in  which  the  sum  of  money  was  paid  by  their 
intestate.  To  this  action  Martin  Cromer  pleaded  in  bar  his  final  dis- 
charge in  bankruptcy  from  the  district  court  of  the  United  States  for 
the  western  district  of  Virginia,  dated  May  14,  1874.  To  which  the 
plaintiffs  replied  "  that  their  intestate,  in  his  lifetime,  paid  said  sum  of 
money  as  surety  for  the  defendant,  Martin  Cromer,  in  a  fiduciary  bond 
due  from  him  as  guardian  of  Josephine  Cromer,  the  wife  of  J.  F.  Ritchie, 
in  the  payment  of  which  the  defendant,  Martin  Cromer,  had  made  de- 
fault, and  that  said  liability  was  excepted  by  the  bankrupt  law  from 
the  operation  of  a  discharge  in  bankruptcy."  To  this  replication  the 
defendant,  Martin  Cromer,  demurred,  but  the  demurrer  was  overruled.1 

Burks,  J.,  delivered  the  opinion  of  the  court. 

There  can  be  no  doubt  that  the  debt  which  the  guardian  owed  to  his 
ward  was  a  fiduciary  debt  within  the  meaning  of  the  act,  and  if  it  had 
been  unpaid  at  the  time  of  the  commencement  of  the  proceedings  in 
bankruptcy  by  the  guardian,  it  would  not  have  been  affected  by  his 
discharge.  But  it  was  not  unpaid  at  that  time.  It  had  been  full}'  paid 
to  the  ward,  and  the  guardian  discharged  from  any  and  all  liability 
to  the  ward  for  it.  True  it  is,  his  surety  paid  it  for  him.  This  matters 
not.  As  soon  as  the  debt  was  paid  to  the  fiduciary  creditor,  the  guar- 
dian ceased  to  be  a  fiduciary  debtor.  He  became  at  once  debtor  by 
simple  contract  to  the  surety  ;  not  debtor  as  guardian,  but  in  his  indi- 
vidual character.  There  is  no  fiduciary  relation  (of  necessity)  between 
principal  and  surety.      Carr,  J.,  in  Blow  v.  Maynard.2 

When  the  surety  becomes  liable  for  the  principal  at  his  request,  there 
\&  an  implied  promise  on  the  part  of  the  latter  to  repay  the  surety  any 

1  The  statement  is  abridged,  and  a  portion  of  the  opinion  is  omitted.  —  Ed. 

2  2  Leigh,  41. 


SECT.  I.]  HILL    V.   KING.  389 

money  which  he  may  be  compelled  to  pay  for  the  principal  on  account 
of  such  liabilit}'.  For  the  recovery  of  the  money  so  paid,  and  when 
paid,  the  surety  has  his  remedy  by  action  at  law,  and  under  some  circum- 
stances, b}-  bill  in  equit}-.  Among  his  equitable  remedies  is  that  of 
subrogation  to  the  securities  of  the  creditor,  to  whom  he  has  paid  the 
debt.  These,  though  extinguished  at  law  by  the  payment  made  by  the 
surety,  are  generally  revived  in  equity  for  the  surety,  and  may  there, 
by  him,  be  enforced  for  his  indemnity.  But  it  is  not  every  security 
which  may  be  thus  revived  and  enforced.  A  bond  on  which  principal 
and  surety  are  both  bound,  once  paid  by  the  surety  in  the  lifetime  of  the 
principal  without  assignment  by  the  creditor,  or  agreement  to  assign, 
is  forever  dead  as  a  security  as  well  in  equity  as  at  law.  There  can  be 
no  subrogation  in  such  a  case.  Powell's  ex'ors  v.  White  and  others;1 
Kendrick  and  al.  v.  Forney.2 

It  is  plain  enough  from  the  pleadings  and  proofs  in  this  case  that 
the  debt  in  suit  was  a  debt  provable  against  the  bankrupt's  estate ; 
was  not  a  debt  created  by  the  bankrupt  "while  acting  in  a  fiduciary 
character,"  and  therefore  not  excepted  from  the  operation  of  the  bank- 
rupt's discharge.  It  follows  that  the  plaintiff's  special  replication  to 
the  defendant's  plea  of  discharge  was  not  sufficient  in  law,  and  the 
court  is  therefore  of  opinion  that  the  circuit  court  erred  in  overruling 
instead  of  sustaining  the  demurrer  of  the  defendant  to  said  replication. 

Judgment  reversed.3 


HILL   v.   KING,    Executor. 
In  the  Supreme  Court,  Ohio,  January  13,  1891. 

[Reported  in  48  Ohio  State  Reports,  75.] 

Minshall,  C.  J.4  Robert  Hill,  the  plaintiff  in  error,  was,  with 
others,  a  surety  upon  certain  bonds  given  by  B.  F.  Stahl  as  admin- 
istrator of  the  estate  of  Henr}7  Deibert,  deceased.  Stahl  becoming 
insolvent,  suit  was  brought  upon  the  bonds  by  the  several  beneficiaries, 
who,  at  the  October  Term,  1881,  of  the  court  of  common  pleas,  recov- 
ered judgments  against  him  and  his  sureties  for  the  several  amounts 
due  them,  amounting  in  all  to  some  $1,200.  Executions  were  at  once 
issued,  but  were  returned  January  11,  1882,  without  levy,  by  reason 
of  the  commencement  of  proceedings   in  error  in  the  district  court. 

1   11  Leigh,  309,  324.  2  22  Gratt.  748. 

3  In  Giddens  v.  Williamson,  65  Ala.  439,  a  surety  said  in  1874  a  joint  judgment 
obtained  in  1866  against  himself  and  his  principal.  By  the  principle  of  subrogatiou 
he  was  enabled  to  obtain  satisfaction  from  the  principal,  which  he  could  not  have 
obtained  if  he  had  proceeded  upon  an  implied  contract  of  the  principal  to  indemnify 
him.  —  Ed. 

4  Only  the  opinion  of  the  court  is  given.  —  Ed. 


390  HILL    V.    KING.  [CHAP.  III. 

The  judgments  having  been  affirmed,  executions  were  again  issued, 
April,  1885,  whereupon  Hill,  to  avoid  the  sale  of  his  own  propert}', 
paid  one  half  of  the  judgments,  $906.03,  Waddle,  a  co-surety,  paying 
the  other  half. 

The  lands  of  Stahl,  owned  b}T  him  at  the  recovery  of  the  judgments 
and  subject  to  their  liens,  were  conveyed  by  him  on  July  29,  1882,  to 
one  Thomas  O'Day,  who  executed  a  mortgage  on  them  to  secure  the 
notes  given  to  Stahl  for  the  purchase-money.  The  mortgage  was  duly 
recorded  at  the  time.  Afterwards  Stahl  sold  and  transferred  the  notes 
and  mortgage  to  one  Hopkins,  who  sold  and  transferred  them  to  Julia 
King.  Julia  King  having  died,  suit  was  brought  hy  her  administrator 
in  1886  to  foreclose  the  mortgage.  To  this  suit  Hill  was  made  a  party  ; 
and  answered,  setting  up  b}T  way  of  cross-petition,  the  recoveiy  of  the 
judgments  against  him  as  before  stated  in  1881,  the  payment  made  by 
him  on  the  judgments  in  April,  1885,  and  claiming  the  right  to  be  sub- 
rogated to  the  liens  of  the  judgments  so  paid  as  against  the  mortgage 
held  by  the  plaintiff's  decedent.  The  case  was  tried  in  the  Circuit 
Court  on  Appeal,  which  found  that,  as  a  matter  of  fact,  King  was  the 
surety  of  Stahl  on  the  bond,  but  that  he  had  not  been  certified  as  such 
in  the  record  of  the  judgments,  and  dismissed  his  answer  and  cross- 
petition. 

The  only  question  in  the  case  is,  whether  the  omission  of  the  fact  of 
his  suretyship  in  the  record  of  the  judgment  deprives  Hill  of  the  right 
to  be  regarded  as  subrogated  to  the  place  of  the  judgment  creditors,  for 
the  amount  paid  by  him  upon  the  judgment  against  him  and  his  prin- 
cipal. And  unless,  as  seems  to  be  claimed,  the  right  of  the  surety  on 
payment  of  the  judgment  to  the  place  and  remedies  of  the  creditor  is, 
by  the  provisions  of  §  5836,  Revised  Statutes,  made  to  depend  upon 
his  being  certified  as  such  in  the  record  of  the  judgment,  there  can  be 
no  doubt  that,  according  to  the  settled  rules  of  equity  and  the  decisions 
of  this  court,  it  does  not.1 

The  rule  is  that  so  soon  as  the  surety  pays  the  debt  of  his  principal 
there  arises  in  his  favor  an  equity  to  be  subrogated  to  all  the  rights, 
remedies,  and  securities  of  the  creditor,  and  he  has  the  right  to  enforce 
them  against  the  principal  for  the  purpose  of  his  indemnification. 
Whilst  payment  by  the  surety  discharges  the  debt  and  extinguishes 
all  the  securities  so  far  as  concerns  the  creditor,  such  is  not  its  effect 
as  between  the  principal  and  the  surety  and  all  who  stand  in  the  shoes 
of  the  former ;  as  to  these,  it  is  in  the  nature  of  a  purchase  b}'  the 
surety  from  the  creditor,  and  operates  as  an  assignment  of  the  debt 
and  securities  to  the  surety.  And,  if  a  question  is  made  whether  the 
acts  of  the  surety  have  been  such  as  to  keep  the  security  on  foot,  the 
court,  in  the  absence  of  evidence  to  the  contrary,  will  presume  that 
they  were  done  with  that  intention  which  is  most  for  the  benefit  of 
the  part}'  doing  them.     Sheldon  on  Subrogation,  §  87  ;  3  Pom.   Eq. 

1  The  court  decided  that  the  remedy  given  by  §  5836,  Revised  Statutes,  was  merely 
cumulative.     The  opinion  on  this  point  is  omitted.  —  Ed. 


SECT.  I.]  HILL    V.    KING.  391 

Juris.,  §  1419  and  note  1  ;  Brandt  on  Suretyship,  §§  270,  273  ;  Burge 
on  Suretyship,  348. 

The  doctrine,  in  its  application  to  the  relation  of  principal  and  surety, 
is  so  equitable  and  just,  that  there  seems  to  be  an  entire  consensus  in 
the  views  of  authors  and  courts  upon  the  subject.  And  in  no  court 
has  it  been  more  fully  recognized  and  applied  than  in  our  own.  Neilson 
v.  Fry  ; 1  Dempsey  v.  Bush  ; 2  Neai  v.  Nash. 

In  Dempsey  v.  Bush,  it  is  announced  in  the  syllabus  that,  "  A  surety 
against  whom  and  his  principal  judgment  has  been  recovered,  has  the 
right,  in  equity,  on  paying  the  amount  due  on  the  judgment,  to  be  sub- 
rogated to  the  rights  of  the  judgment  creditor  in  the  judgment ;  and 
this  right  of  the  surety  will  not  be  defeated  by  the  fact  that  there  was 
no  stipulation  therefor  by  the  surety  at  the  time  of  making  the  pay- 
ment, nor  by  the  fact  that  he  was  at  the  time  ignorant  of  the  existence 
of  such  right."  The  case  is  very  much  like  the  present  one.  The  judg- 
ment to  which  the  sureties  were  subrogated  by  payments  made  in  1864 
and  1865,  was  obtained  against  them  and  their  principal  by  the  execu- 
tors of  Ross  in  1859.  And  the  mortgage,  against  which  they  were 
given  priority  by  subrogation  to  the  rights  of  the  judgment  creditor, 
was  executed  in  1861  ;  that  is,  after  the  recovery  of  the  judgment,  but 
before  its  payment  by  the  sureties.  And  it  is  said  in  the  statement  of 
the  case,  that  the  payments  were  made  without  any  agreement  between 
the  executors  and  the  sureties,  except  that  they  were  in  full  of  the 
judgment ;  and  without  an}'  intent  on  the  part  of  the  sureties  either  to 
assert  or  to  abandon  an}'  supposed  right  of  subrogation,  and  without 
any  knowledge  on  their  part  of  the  existence  of  such  right,  although 
intending  to  assert  all  their  rights  in  the  premises.  Whether  the  sure- 
ties had  been  certified  as  such  in  the  judgment  is  not  stated  ;  it  is  prob- 
able they  were  not ;  but  if  they  were,  no  prominence  was  given  to  the 
fact  in  the  opinion  of  the  court.  The  right  of  the  sureties  to  be  subro- 
gated was  placed  on  the  ground  that  the}-  had  paid  the  judgment. 

Judgment  reversed,  and  judgment  for  Hill  on  his  cross-petition.* 

i  16  Ohio  St.  552.  2  18  Ohio  St.  376. 

3  A  surety  paying  a  joint  judgment  against  himself  and  others,  is  subrogated  in 
equity  to  the  judgment  creditor's  lien  upon  the  land  of  his  co-obligors,  whether  prin- 
cipals or  sureties.  Reber  v.  Gundy,  13  Fed.  Rep.  3.3  (co-surety) ;  Bragg  v.  Pafterson, 
85  Ala.  233  (statutory;  compare  Sanders  v.  Watson,  14  Ala.  198);  Hardcastle  v. 
Coram.  Bank,  1  Harringt.  374  n.  (a)  ;  Chandler  v.  Higgins,  109  111.  602;  Johnston  v. 
Belden,  49  Iowa,  301  ;  Hollingsworth  v.  Pearson,  53  Iowa,  53  ;  Searing  v.  Berry,  58 
Iowa,  20  ;  Furnold  v.  Bank,  44  Mo.  336  (co-surety) ;  Beune  v.  Schnecko,  100  Mo.  250; 
Harper  v.  Rosenberger,  56  Mo.  Ap.  388  ;  Harper  v.  Kemble,  65  Mo.  Ap.  514  ;  Cauthorn 
v.  Berry,  69  Mo.  Ap.  404;  Smith  v.  Rumsey,  33  Mich.  183;  Baily  v.  Brownfield,  20 
Pa.  41  (semble) ;  Scott's  App.,  88  Pa.  173  ;  Ward's  Est.,  100  Pa.  289  ;  Boltz's  Est.,  133 
Pa.  77 ;  King  v.  Aughtry,  3  Strob.  Eq.  149  ;  Mason  v.  Pierron,  63  Wis.  239,  69  Wis. 
585  (semble)  ;    German  Bank  v.  Fritz,  68  Wis.  390  (co-surety). 

The  subrogation  will  prevail  also,  as  in  the  principal  case,  against  a  grantee  of  the 
principal  or  co-surety  by  a  conveyance  subsequent  to  the  judgment,  but  prior  to  its 
payment  by  the  surety.  Perrin  v.  Higgins,  101  Ind.  178  (but  see  Thomas  v.  Stewart, 
117  Ind.  50) ;   Dempsey  v.  Bush,  18  Oh.  St.  376  ;    Garvin  v.  Garvin,  27  S.  Ca.  472 ;  Mo 


SP2  SMITH   ET   ALS.    V.    SWAIN   ET   ALS.  [CHAP.  III. 


J.   SMITH   and   Others    v.    W.    R.    SWAIN   and    Others. 

In  the  Court  of  Appeals,  South  Carolina,  November,  1854. 

[Reported  in  7  Richardson,  Equity  Cases,  112.] 

Dargan,  Cli.1  The  only  remaining  controversy  in  the  case  relates 
to  the  right  of  John  Williams  to  be  admitted  as  a  creditor  of  William 
Swain  in  the  distribution  of  the  fund  in  question.  The  uncontroverted 
facts  are  as  follows  :  Williams  was  the  surety  of  William  Swain  on  a 
single  bill,  payable  to  John  Smith  for  three  hundred  dollars  with  inter- 
est from  the  29th  of  January,  1841.  Swain,  the  principal,  left  South 
Carolina,  and  became  a  resident  in  another  State.  After  his  departure 
the  surety,  John  Williams,  was  sued  upon  the  sealed  note,  and  judg- 
ment was  recovered  against  him.  He  subsequently  paid  the  debt,  and 
this  constitutes  the  basis  of  his  claim.  To  this  claim,  the  other  credi- 
tors of  William  Swain  (the  absent  debtor)  have  set  up  the  plea  of  the 
statute  of  limitations.  This  they  have  a  right  to  do,  as  the}'  now  are 
alone  interested  in  the  fund,  if  the  facts  are  sufficient  to  support  that 
plea.  The  claim  is  certainly  barred,  unless  it  falls  within  some  of  the 
exceptions  of  the  statute,  or  the  evidence  makes  it  a  case  to  which  the 
statute  does  not  apply. 

As  the  original  debt  was  secured  by  a  sealed  instrument  constituting 
it  a  specialty,  the  Chancellor  who  tried  the  cause,  considered  that  the 
surety  who  paid  it,  had  a  right  in  equity  to  be  so  far  subrogated  to  the 
rights  of  the  original  creditor,  as  to  set  it  up  as  a  specialty  against  his 
principal,  —  thus  making  a  case  to  which  the  statute  has  no  applica- 
tion.    In  this  view  of  the  case  I  concur  with  the  Chancellor. 

The  circuit  decree  is  affirmed  and  the  appeal  is  dismissed. 

Johnston  and  Wardlaw,  CC,  concurred. 

Decree  affirmed? 

Clung  v.  Beirne,  10  Leigh,  394;  Buchanan  v.  Clark,  10  Gratt.  164;  and  a  fortiori 
against  an  intermediate  judgment  or  attaching  creditor.  Manford  v.  Firth,  68  Ind. 
83  ;  Goodyear  v.  Watson,  14  Barb.  481  ;  Fleming  v.  Beaver,  2  Rawle,  128  (co-surety) ; 
Watt  v.  Kinney,  3  Leigh,  272.  — Ed. 

1  Only  a  portion  of  the  opinion  is  given.  —  Ed. 

2  Sparks  v.  Childers  (Indian  Territory,  1898),  47  S.  W.  R.  316;  Morrison  v.  Page, 
9  Dana,  428,  433  (but  see  Joyce  v.  Joyce,  1  Bush,  474) ;  Hull  v.  Myers,  90  Ga.  674 
(qualifying  Ware  v.  Bank,  59  Ga.  846);  Partee  v.  Mathews,  53  Miss.  140;  Kinardr. 
Baird,  20  S.  Ca.  377,  Accord.  —  Ed. 


SECT  1.1  HARRAH  V.    JACOBS.  393 


HARRAH   v.   JACOBS. 
In  the  Supreme  Court,  Iova,  May  Term,  1888. 

[Reported  in  75  Iowa  Reports,  72.] 

Rothrook,  J.1  It  appears  from  the  averments  of  the  petition  that 
the  plaintiff  and  the  defendant  executed  a  promissory  note  to  a  corpo- 
ration known  as  the  "  Jasper  Co-operative  Association."  The  note  is 
in  these  words:  ''Newton,  Iowa,  September  4,  1878.  For  value  re- 
ceived, on  or  before  January  1,  1881,  I  promise  to  pa}*  the  Jasper  Co- 
operative Association  two  hundred  dollars,  with  ten  per  cent  interest 
thereon  from  January  1,  1878,  until  paid.  A.  D.  Jacobs,  A.  L. 
Harrah." 

Harrah  executed  the  note  as  surety  for  Jacobs.  On  the  twentieth 
da}*  of  November,  1880,  the  said  corporation  sold  all  its  stock  to  the 
plaintiff.  The  contract  of  sale  was  as  follows  :  "  That  we  agree  to  sell 
our  stock  to  A.  L.  Harrah,  as  shown  on  the  secretary's  book  at  the 
close  of  1879,  and  ten  per  cent  thereon  for  the  year  1880  ;  the  said 
Harrah  to  take  all  debts  to  the  association,  and  to  assume  and  pay  all 
liabilities  of  the  association."  The  corporation  was  dissolved,  anu 
ceased  to  exist  as  a  corporation.  Plaintiff  claims  that  by  purchasing 
the  stock  he  became  the  owner  of  the  note  in  suit ;  that  the  transaction 
was  a  purchase  of  the  note,  and  not  a  payment.  The  action  was  com- 
menced more  than  five  years  after  the  alleged  purchase  of  the  note  from 
the  corporation. 

The  demurrer  was  to  the  effect  that  the  plaintiff  cannot  maintain  an 
action  on  the  note  because  it  was  paid  and  discharged,  and  that,  hav- 
ing paid  and  discharged  the  note  as  surety,  the  right  to  recover  of  the 
defendant  the  money  paid  is  barred  by  the  Statute  of  Limitations.  It 
is  very  clear  that,  if  the  plaintiff  can  recover  at  all,  it  must  be  upon  the 
note.  No  action  can  be  maintained  in  the  usual  form  of  au  action  by 
a  surety  against  his  principal  for  money  paid  in  discharge  of  the  note, 
because  more  than  five  years  elapsed  between  the  time  of  the  payment 
and  the  commencement  of  the  suit.  It  will  be  observed  that  the  rela- 
tion of  principal  and  surety  does  not  appear  from  the  instrument  itself. 
If  the  relation  exists,  it  must  be  established  by  parol  evidence.  The 
light  of  action  would  therefore  be  founded  upon  an  unwritten  con- 
tract, and  under  our  statute  would  be  barred  in  five  years.  Lamb  v. 
Withrow.2 

The  plaintiff  insists  that  his  transaction  with  the  corporation  amounted 
to  a  purchase  of  the  note,  and  not  a  payment.  The  same  theory  was 
claimed  in  the  cases  of  Lamb  v.  Withrow,2  and  Bones  v.  Aiken,8  and 

1  Only  the  opinion  of  the  court  is  given.  —  Ed. 

2  31  Iowa.  164.  3  35  iowa#  534> 


394  XEAL    V.    NASH    ET    AL  [CHAP.  Ill 

Johnston  v.  Belden.1  It  is  true  that  in  all  the  cited  cases  the  obli°-a- 
tions  had  been  reduced  to  judgments.  But  the  principle  involved  is 
the  same.  It  is  that  a  joint  maker  of  a  note,  who  is  in  fact  surety, 
is  not  entitled  to  recover,  by  purchasing  a  note  or  a  judgment  rendered 
upon  it,  either  upon  the  note  or  judgment.  It  makes  no  difference 
whether  he  calls  the  transaction  a  purchase  or  a  payment.  His  action 
is  one  for  indemnity  for  the  money  paid.  It  is  not  an  action  upon  a 
written  contract,  and  is  barred  in  five  years.  Such  appears  to  be  the 
rule  of  the  cases  above  cited.  We  think  the  demurrer  to  the  petition 
was  properly  sustained.  Affirmed* 


HENRY   H.   NEAL   v.    SIMEON   NASH  and  Another. 
In  the  Supreme  Court,  Ohio,  December  Term,  1872. 

[Reported  in  23  Ohio  State  Reports,  483.] 

Day,  J.3  Two  questions  are  presented :  Are  the  facts  stated  in  the 
petition  sufficient  to  constitute  a  cause  of  action  ;  and  if  so,  is  the  ac* 
tion  barred  by  the  Statute  of  Limitations? 

The  case,  in  substance,  is  this  :  Gilman  recovered  a  judgment  against 
Nash  and  Neal,  and  it  was  certified  therein  that  Neal  was  surety.  To 
protect  himself,  Neal  paid  Gilman  the  amount  of  the  judgment,  with 
the  understanding  that  it  should  remain  in  force  and  be  assigned  to 
him,  and  the  assignment  was  made  accordingly. 

It  is  claimed  that  this  transaction  extinguished  the  judgment ;  and 
cases  are  not  wanting  to  sustain  that  view  of  the  case.  But,  however 
it  may  be  as  a  technicality  of  law,  it  is  settled  in  this  State  that  it  may- 
be regarded  as  still  subsisting  in  equity,  and  that  a  surety,  who  has 
paid  a  judgment  under  such  circumstances,  ma}-  sustain  an  action  to  be 
substituted  in  the  judgment,  in  the  place  of  the  creditor,  to  enforce  it 
against  the  principal,  and,  if  dormant,  to  revive  it  also  for  that  pur- 

1  49  Iowa,  301. 

2  Vanderveer  v.  Ware,  65  Ala.  606  (semble)  ;  Junker  v.  Rush,  136  111.  179  ;  Gieseke 
v.  Johnson,  115  Ind.  308,  311  (semble) ;  Kreider  v.  Iseubice,  123  Ind.  10  (see  Hopewell 
v.  Kerr,  9  Ind.  Ap.  11)  ;  Lamb  v.  Withrow,  31  Iowa,  164;  Wilson  v.  Crawford,  47 
Iowa,  469  ;  Johnston  v.  Belden,  49  Iowa,  301  ;  Preston  v.^Jould,  64  Iowa,  44 ;  Dunton 
v.  McCook,  93  Iowa,  258  (semble)  ;  Buckner  v.  Morris,  2  J.  J.  Marsh.  121 ;  Singleton 
v.  Townsend,  45  Mo.  379;  Sherwood  v.  Collier,  3  Dev.  380  (unless  payment  is  by  a 
stranger  who  takes  an  assignment  from  the  creditor  as  trustee  for  the  surety)  ;  Bledsoe 
v.  Nixon,  68  N.  Ca.  521  ;  Rittenhouse  v.  Levering,  6  W.  &  S.  190 ;  Faires  v.  Cockerell, 
88  Tex.  428  (overruling  Sublett  v.  McKiuney,  19  Tex.  438),  Accord. 

In  Illinois,  Mississippi,  and  Pennsylvania,  the  right  of  subrogation  to  the  original 
obligation  is  barred  by  the  same  period  that  bars  an  action  at  law  on  the  collateral 
contract  of  indemnity  or  contribution.  Junker  v.  Rush,  136  111.  179  ;  Simpson  v.  Mc- 
Phail,  17  111.  Ap.  499;  Magee  v.  Leggett,  48  Miss.  139;  Rittenhouse  v.  Levering,  6 
W.  &S.  190. —  Ed. 

3  Only  the  opinion  of  the  court  is  given.  —  Ed. 


SECT.  I.]  NEAL    V.    NASH    ET    AL  395 

pose.     Neilson  v.  Fry  ; 1  Dempsey -v.  Bush.2     The  petition,  then,  makes 
a  good  cause  of  action. 

Is  the  action  barred  by  the  Statute  of  Limitations  ?  It  appears  that 
more  than  six  and  less  than  ten  years  elapsed,  after  the  payment  by 
the  surety  to  the  creditor,  before  the  action  was  brought.  By  the  code, 
actions  on  implied  contracts  are  limited  to  six  years,  and  actions  for 
equitable  relief  to  ten  years.  If  the  case  falls  under  the  former  limita- 
tion it  is  barred,  otherwise  it  is  not.  It  is  claimed  that  the  surety's 
equitable  action,  to  be  subrogated  in  the  judgment  in  the  place  of  the 
creditor,  is  subject  to  the  limitation  applicable  to  an  action  by  him 
against  the  principal,  upon  his  implied  promise  to  refund  money  paid 
for  his  use,  which  is  six  years;  and  this  is  claimed  upon  the  authority 
of  Neilson  v.  Fry.1 

But  in  that  case,  suit  was  brought  by  one  of  several  co-sureties  in  a 
judgment,  paid  by  him,  against  the  other  sureties,  for  contribution  of 
their  proportionate  share  of  the  amount  paid,  and  to  be  subrogated  to 
the  rights  of  the  creditor  in  the  judgment.  The  action  was  essentially 
for  the  recovery  of  money  upon  an  implied  promise  ;  and,  inasmuch  as 
the  judgment  had  been  satisfied,  without  any  ground  of  equitable  relief 
other  than  the  payment  of  the  judgment,  and  such  relief  could  not  be 
invoked  until  facts  were  proved  to  warrant  a  recovery  against  the  co- 
sureties upon  the  implied  promise  arising  between  them  upon  payment 
by  one,  it  was  held  that  the  limitation  of  six  years  applied.  This  was 
mainly  on  the  ground  that  the  action  was  for  a  recovery  against  the  co- 
sureties on  an  implied  promise,  and  not  merely  for  equitable  relief 
against  the  creditor  and  principal  debtor ;  and,  as  that  was  the  nature 
of  the  action,  the  period  of  limitation  was  determined  by  it. 

But  it  was  conceded  in  that  case,  ' '  that  an  action  merely  for  subro- 
gation is  an  action  for  equitable  relief,  and  falls  under  the  limitation  of 
ten  years."  It  was,  moreover,  admitted  that  "  if  the  judgment  had 
been  kept  alive,  either  b}T  voluntary  assignment  of  the  creditor,  or 
b}'  a  decree  in  equity  against  him,  the  case  would  have  been  wholly 
different." 

This  is  an  action  for  equitable  relief  merely,  and  the  judgment  was 
"  kept  alive,"  so  far  as  possible,  bjr  an  agreement  that  it  was  not  to  be 
satisfied,  but  should  remain  in  force,  and  it  was  assigned  by  the  cred- 
itor to  the  surety.  No  doubt  it  would  have  been  kept  alive  had  the 
assignment  been  to  a  trustee  for  the  benefit  of  the  surety.  That,  how- 
ever, would  have  been  a  difference  in  form  rather  than  in  substance. 
In  either  case  the  surety  would,  in  equity,  have  been  the  owner  of  the 
judgment ;  and,  in  either  case,  the  supposition  of  the  extinguishment 
of  the  judgment,  not  its  subsistence,  would  have  been  the  "  fiction." 
Surely  the  position  of  the  principal,  whose  duty  it  is  to  pay  his  own 
debt,  can  derive  no  equitable  aid  because  his  surety  holds  the  assign- 
ment in  his  own  name  instead  of  that  of  a  trustee. 

But  it  is  enough  to  know  that  according  to  the  settled  law  of  this 
1  16  Ohio  St.  552.  2  18  Ohio  St.  376. 


396  NEAL   V.   NASH   ET   AL.  [CHAP.  m. 

State,  the  judgment  was  not  so  extinguished,  in  equity,  as  to  prevent 
the  surety  from  being  subrogated  to  all  the  rights  of  the  creditor  in  the 
judgment  itself.  This  is  all  that  is  invoked.  A  judgment  on  a  con- 
tract, expressed  or  implied,  is  not  sought ;  nor  is  the  relief  sought  based 
on  a  contract  as  the  ground  of  an  original  recovery,  but  it  rests  merely 
on  the  just  right  of  the  surety  to  a  judgment  already  existing.  The 
action  is  grounded  on  the  equitable  right  of  the  surety,  whether  by  as- 
signment of  the  creditor  or  by  subrogation  merely,  to  stand  in  the  shoes 
of  the  creditor  in  the  judgment  against  his  principal,  and  in  the  place 
of  the  creditor,  to  enforce  it  against  him.  The  action  is  brought  to 
assert  this  equitable  ownership  of  the  judgment,  and,  being  dormant, 
to  revive  and  enforce  it  in  favor  of  the  party  justly  entitled  to  it.  The 
action,  therefore,  being  purely  equitable  in  its  character,  and  not  seek- 
ing a  recovery  on  an  implied  contract,  is  not  controlled  by  the  limita- 
tion of  six  years. 

Since  then  the  action  is  not  barred  by  the  Statute  of  Limitations,  and 
may  be  sustained  without  the  aid  of  the  act  of  March  19,  1868  (S.  & 
S.  744),  it  becomes  unnecessary  to  consider  further  the  effect  of  that 
act  in  connection  with  this  case.  At  most  it  is  but  a  statutory  remedy 
for  what  otherwise  could  be  attained  only  by  the  civil  action  of  the 
code,  in  the  nature  of  a  proceeding  in  equity.  The  surety's  remedy  of 
subrogation  and  revivor,  by  action,  is  barred  in  ten  years  ;  whether 
any  of  the  statutory  periods  of  limitation  apply  to  the  remed\*  now  af- 
forded to  the  surety,  by  a  statutory  revivor  of  a  judgment  in  his  favor 
against  the  principal,  is  a  question  not  involved  in  this  case  ;  for  it  may 
be  regarded,  as  before  stated,  as  a  civil  action,  independent  of  the 
statute. 

With  these  views  of  the  case,  we  are  constrained  to  hold  that  the 
Court  of  Common  Pleas  erred  in  sustaining  the  demurrer  to  the  peti- 
tion. The  judgment  must  therefore  be  reversed  and  the  demurrer 
overruled  ;  and,  as  the  demurrant  ma}-  desire  to  answer,  the  cause  will 
be  remanded  to  that  court  for  further  proceedings.1 

1  Peters  v.  McWilliams,  36  Ohio  St.  155,  Accord. 

Junker  v.  Rush,  136  111.  179  ;  Simpson  v.  MePhail,  17  111.  Ap.  499  ;  Fink  v.  Mahaffv, 
8  Watts,  384;  Rittenhouse  v.  Levering,  6  W.  &  S.  190;  Allegheny  Co.  i;.  Dickey,  131 
Pa.  86;  Barnes  u.  Dickey,  25  W.  N.  C.  (Pa.)  168,  Contra. 

See  Bushnell  v.  Bushnell,  77  Wis.  435,  438.  — Ed. 


SECT.  I.]  CARPENTER   V.    MINTER.  397 


J.   C.   CARPENTER  v.  T.  A.  MINTER. 

In  the  Supreme  Court,  Texas,  December  21,  1888. 

[Reported  in  72  Texas  Reports,  370.] 

Appeal  from  Wise.     Tried  below  before  Hon.  E.  F.  Piner. 

The  appellant  (plaintiff  below)  sued  appellee  (defendant  below)  to 
recover  a  sum  of  money  which  the  former  had  paid  as  surety  for  the 
latter.  Plaintiff  alleged  that  on  the  tenth  day  of  August,  1885,  defend- 
ant executed  a  note  to  Henry  Greathouse  for  $306,  due  at  twenty  days, 
bearing  twelve  per  cent  per  annum  from  maturity  ;  that  plaintiff  signed 
the  note  with  defendant  as  principal,  but  was  in  fact  only  a  surety  for 
defendant ;  that  by  the  execution  of  the  note  defendant  and  plaintiff 
became  bound  to  pay  the  principal  and  interest  thereon  at  maturity, 
and  ten  per  cent  attorney  fees  on  the  amount  in  case  the  note  was  not 
paid  at  maturity,  making  a  total  of  $336.60  ;  that  after  the  maturity  of 
the  note  plaintiff  paid  off  and  satisfied  the  note  in  full  to  the  payee. 
It  is  then  alleged  that  defendant  became  liable  to  pay  plaintiff  $336.60, 
being  the  amount  actually  paid  out  for  defendant  b\-  plaintiff,  including 
the  ten  per  cent  attorney  fees  provided  for  in  case  the  note  was  not 
paid  at  maturity,  which  sum  defendant  has  wholly  failed  to  pay,  etc. 

The  note  is  made  an  exhibit  to  the  petition,  it  is  an  ordinary  prom^ 
issory  note  for  $306,  due  in  twenty  days,  bearing  twelve  per  cent  inter- 
est per  annum  from  maturity,  with  the  following  stipulation  :  "In  case 
of  nonpayment  of  the  above  note  at  maturity  we  hereby  authorize  any 
licensed  attorney  at  law  to  appear  for  us  in  court  and  accept  service, 
waive  process,  and  confess  judgment  in  favor  of  the  legal  holder  of 
said  note  against  us  for  the  amount  of  said  note  and  interest,  with  ten 
per  cent  attorney  fees  additional."  The  note  is  signed  by  plaintiff 
and  defendant.  Plaintiff  sued  out  an  attachment,  the  affidavit  for  which 
avers  that  the  amount  due  by  defendant  is  $336.60,  etc. 

Defendant  moved  to  quash  the  attachment  "  because  the  affidavit  for 
attachment  .  .  .  sets  forth  an  indebtedness  of  $336.60,  while  the  peti- 
tion .  .  .  shows  an  indebtedness  of  onl}' $306."  The  court  sustained 
the  motion  to  quash,  to  which  ruling  the  plaintiff  excepted  in  form. 
The  court  rendered  judgment  for  plaintiff  for  $328.95,  and  plaintiff 
appealed  and  assigned  error  in  the  ruling  of  the  court  in  quashing  the 
attachment  proceedings  because  the  petition  claimed  the  same  amount 
as  was  claimed  in  the  affidavit,  and  hence  there  was  no  variance.1 

Collard,  Judge.  This  case  must  be  reversed.  There  was  no  vari- 
ance in  the  affidavit  for  attachment  and  the  petition.  The  affidavit 
claimed  that  $336.60  was  the  amount  justly  due  the  plaintiff.  The 
petition  claimed  by  its  allegations  the  same  amount,  and  the  exhibit 
attached  to  the   petition  did  not  show  that  a  less  amount  was  due. 

1  The  arguments  of  counsels  are  omitted.  —  Ed. 


398  WALDRIP   V.    BLACK.  [CHAP.  Ill 

It  is  true  the  petition  alleged  that  the  attorney  fees  were  to  become 
due  on  maturity  of  the  note,  and  the  note  filed  as  an  exhibit  to  the 
petition  only  allowed  attorney  fees  in  case  of  suit  by  the  payees ;  but 
the  surety  paid  the  note  on  rnaturit}-,  and  then  brought  suit  against  his 
principal,  the  maker.  This  of  course  he  had  the  right  to  do,  and  his 
right  to  sue  was  on  the  note  itself.  The  error  of  the  court  below  was 
in  finding  that  the  surety  could  only  sue  for  the  amount  that  appeared 
to  be  due  on  the  note  at  the  time  it  was  paid  by  the  surety  without  suit 
by  the  payee.  This  was  incorrect.  The  surety  having  paid  the  note 
was  subrogated  to  all  the  rights  of  the  payee,  that  is  to  sue  on  tbe  note 
and  recover  the  same  amount  the  payee  could  have  recovered  by  suit. 
The  right  of  the  surety  after  pa3*ment  of  his  principal's  note  was  not  on 
the  implied  assumpsit  for  the  amount  paid,  but  to  sue  on  the  note  itself. 
The  pa}'ee  by  suit  could  have  recovered  the  principal  and  interest  and 
ten  per  cent  attorney  fees  on  the  amount.  Worsham  v.  Stevens.1  The 
surety  could  by  suit  on  the  note  recover  the  same  judgment.  The 
note  was  not  extinguished  by  the  surety's  payment.  Tutt  v.  Thornton.2 
An  inspection  of  the  petition  and  the  exhibit  does  not  show  that  the 
attorney  fees  were  not  due,  but  that  they  were  due  plaintiff  below. 
There  was  no  variance  between  the  petition  and  the  affidavit  for 
attachment. 

The  cause  should  be  reversed. 

Reversed  and  remanded? 


J.   WALDRIP,    Respondent,  v.   S.   N.  BLACK,   and  Another, 

Appellants. 

In  the   Supreme  Court,  California,  December  23,   1887. 
[Reported  in  74  California  Reports,  409.] 

Foote,  C.4     This  is  an  action  which  was  instituted  for  the  purpose 
of  foreclosing  a  mortgage  against  S.  N.  Black  and  Julia  A.  Black. 

It  appears  from  the  record  that  the  mortgage  was  executed  by  the 
Blacks  in  favor  of  Waldrip,  to  secure  him  harmless  against  having  to* 
pay  a  joint  note  for  three  hundred  dollars,  which  the  two  Blacks  and 
Waldrip  had  signed  as  joint  makers  in  favor  of  one  Logsdon,  or  order, 
due  three  months  after  its  date,  and  bearing  interest  at  one  per  cent  per 
month  until  paid. 

The  Blacks,  for  whom  he  had  become  surety,  were  bound  to  reimburse 

1  66  Texas,  89. 

2  57  Texas,  35  ;  Sheldon  on  Subrogation,  §  86. 

3  Josselyn  v.  Edwards,  57  Lid.  212  ;  Beville  v.  Boyd  (Texas  Civil  Appeals,  1897), 
41  S  W.  R.  670,  42  S.  W.  R.  318,  Accord. 

Gisseke  v.  Johnson,  115  Ind.  308  (semble) ;  Faires  v.  Cockerell,  88  Tex.  428,  434 
(semble) ;  Cleveland  v.  Carr  (Texas  Civil  Appeals,  1897), 40  S.  W.  R.  406,  Contra.  —  Ed. 

4  Only  what  relates  to  the  point  of  interest  is  given,  —  Ed. 


SECT.  I.]  WALDRIP   V.    BLACK.  399 

Waldrip  for  what  he  had  been  obliged  to  pay  on  account  of  their  failure 
to  pay  the  note,  as  they  promised  to  do.  Having  never  been,  in  reality 
as  to  the  Blacks,  a  maker  of  the  note,  but  a  mere  surety,  upon  his  being 
compelled  to  make  payment  to  Logsdon  of  what  was  due  upon  it,  he  be- 
came the  equitable  assignee  of  the  note,  it  being  the  principal  undertak- 
ing, and  entitled  to  enforce  its  payment  according  to  its  tenor  and  effect, 
as  the  holder  thereof,  as  well  as  to  foreclose  the  mortgage,  which  was? 
the  collateral  security.  (3  Fomeroy's  Eq.  Jur.,  sec.  1419,  note  1; 
Cottrell's  Appeal;1  Lidderdale  v.  Robinson  2).  Chief  Justice  Marshall, 
in  the  case  last  mentioned,  tersely  yet  most  forcibly  says  :  "  When  a 
person  has  paid  money  for  which  others  were  responsible,  the  equitable 
claim  which  such  payment  gives  him  on  those  who  were  so  responsible 
shall  be  clothed  with  the  legal  garb  with  which  the  contract  he  has  dis- 
charged was  invested,  and  he  shall  be  substituted,  to  every  equitable 
extent  and  purpose,  in  the  place  of  the  creditor  whose  claim  he  has  dis- 
charged."     (See  also  Ellsworth  v.  Lockwood.3) 

We  are  of  opinion  that  the  mortgage  sought  to  be  foreclosed  was  not 
void  for  uncertainty. 

But  it  does  not  necessarily  follow,  from  the  proposition  of  law  just 
cited  as  authorit}',  that  the  person  who  has  paid  his  mone}'  for  which 
others  are  responsible  should,  in  this  case,  although  "  clothed  witli  the 
legal  garb  with  which  the  contract  he  has  discharged  was  invested," 
be  allowed  to  be  reimbursed  to  any  greater  extent  than  the  amount, 
principal,  and  interest  he  has  been  obliged  to  pay  out,  together  with 
legal  interest  upon  the  gross  sum  so  paid  out  from  the  date  of  its 
payment.  In  other  words,  it  does  not  follow,  in  this  case,  that  because 
the  surety  can  recover,  according  to  the  terms  of  the  note,  the  principal 
and  interest  he  actually  paid  out,  that  he  can  also  recover,  from  and 
after  the  time  of  his  payment  of  that  sum,  one  per  cent  per  month 
interest  as  provided  in  the  note  ;  he  is  simply  entitled  to  recover  the 
legal  rate  of  interest  upon  the  whole  sum  of  money  he  has  paid  out  from 
the  date  of  that  payment. 

It  would  appear,  therefore,  that  the  judgment  should  be  so  modified 
as  that  it  be  reduced  by  the  sum  of  $17.13,  which  is  the  excess  of  interest 
allowed  by  the  court  over  and  above  what  was  legally  due  on  the  thirty- 
first  day  of  December,  1886,  the  date  of  the  rendition  of  that  judgment. 
In  all  other  respects  the  judgment  and  order  should  be  affirmed. 

Hayne,  C,  and  Belcher,  C.C.,  concurred.4 

i  23  Pa.  294.  2  2  Brock.  159. 

8  42  N.  Y.  93,  middle  of  page,  and  numerous  cases  there  cited. 

4  Smith  v.  Johnson,  23  Cal.  63 :  Stanley  v.  McElrath,  86  Cal.  449  (accommodation, 
indorser  vs.  maker) ;  Bushong  v.  Taylor,  82  Mo.  660  :  Frevert  v.  Henry,  14  Nev.  191 ; 
Faires  v.  Cockerell,  88  Tex.  428,  437  (semble) ;  Bushnell  v.  Bushnell,  77  Wis.  435 
{sei?ible).  Accord. 

Goodwin  v.  Davis,  15  Indiana  Ap.  120;  Pickett  v.  Bates,  3  La.  An.  627,  Contra. 
—  Ed. 


400  PRAY   V.   MAINE.  [CHAP.  III. 


JOSHUA  PRAY  v.  SEBEUS  C.  MAINE. 

In  the  Supreme   Judicial  Court,  Massachusetts,  March 

Term,   1851. 

[Reported  in  7  dishing,  253.] 

This  was  an  action  of  assumpsit.  The  defendant  filed  in  set-off  a 
promissory  note  for  $100,  payable  to  Chandler  &  Maine,  or  their  order, 
signed  by  the  plaintiff,  and  indorsed  "  Chandler  &  Maine  to  Wingate," 
underneath  which  indorsement  appeared  the  name  of  "  Andrew  T.  Win- 
gate,"  erased. 

At  the  trial  in  the  Court  of  Common  Pleas,  before  Perkins,  J.,  it 
appeared  that  the  signature  of  Andrew  T.  Wingate,  mentioned  in  the 
indorsement,  was  put  on  the  note  for  a  good  consideration,  at  the  time 
that  the  note  was  signed  by  Pray,  and  before  it  was  delivered  to  Chand- 
ler &  Maine  ;  to  whom  it  was  given  for  the  purpose  of  securing  the  pay- 
ment of  expenses  incurred  and  services  performed  by  them  as  attorneys 
in  relation  to  the  proceedings  upon  an  application  for  the  benefit  of  the 
insolvent  laws,  which  Pray  was  about  to  make.  Wingate  afterwards 
paid  $81  in  full  of  said  services  and  expenses,  and  Chandler  &  Maine 
thereupon  surrendered  the  note  to  him.  and  made  the  indorsement  above 
mentioned.  At  the  time  the  note  was  made,  Wingate  owed  Pray  $100, 
$50  of  which  he  had  since  paid  ;  so  that  after  he  had  paid  the  $81  to 
Chandler  &  Maine,  Pray  owed  Wingate  $31.  Wingate  then  sold  and 
delivered  the  note  to  Maine  for  $31,  without  indorsing  it. 

The  judge,  at  the  request  of  the  plaintiff,  ruled  that  the  defendant 
could  not  avail  himself  of  this  note  in  set-off  to  the  plaintiff's  demand, 
to  which  ruling  the  defendant  excepted. 

Joel  P.  Bishop,  for  the  defendant. 

F.  W.  Sawyer,  for  the  plaintiff. 

Shaw,  C.  J.  No  title  is  shown  b}-  the  defendant  to  the  note  relied 
upon  as  a  set-off.  Wingate,  though  he  put  his  name  on  the  back  of  the 
note,  was  still  a  promisor  to  Chandler  &  Maine,  as  settled  in  Hunt  v. 
Adams.1  The  note  was  therefore  extinguished,  by  payment  by  a  prom- 
isor, who  could  not  again  put  it  in  circulation  as  against  a  co-promisor. 
The  only  right  that  Wingate  derived,  or  could  derive,  from  the  payment 
thus  made  by  him  as  surety  and  co-promisor,  was  to  claim  the  amount 
of  Pray  for  money  paid  at  his  request,  and  for  his  use,  and  that  right 
was  not  negotiable.  Exceptions  overruled* 


& 


i  5  Mass.  358,  and  6  Mass.  519. 

2  Fitch  v.  Hammer,  17  Colo.  591  (surety  not  entitled  to  attachment  which  creditor 
would  have  had  as  holder  of  note—  note  assigned  to  surety)  ;  Swem  v.  Newell,  19  Colo. 
397  (note  assigned  by  holder  to  surety)  ;  Chappell  v.  McKeough,  21  Colo.  275  (semble, 
note  assigned  to  surety) ;  Crisfield  v.  State,  55  Md.  192  (uo  action  at  law,  but  in  equity) . 
Dillenbach  v.  Dygert,  97  N.  Y.  303  (surety  co-maker  pays  payee  and  transfers  to  A. 
A  cannot  sue  co-surety  on  note,  but  only  as  assignee  to  enforce  assignor's  right  of 


SECT.  I.J  WRIGHT   V.    GROVER   AND    BAKER    S.    M.  CO.  401 


WRIGHT  v.  GROVER  &  BAKER  S.  M.  CO.,  to  use  op  SMITH. 
In  the  Supreme  Coukt,  Pennsylvania,  May  9,  1876. 

[Reported  in  82  Pennsylvania  Reports,  80. j 

R.  H.  Wright  as  principal,  and  Samuel  Smith  and  Charles  Wright 
as  sureties,  executed  three  notes  in  the  following  form :  — 

"  $275.00.  New  Bloomfield,  February  27th,  1873. 

"Six  months  after  date,  for  value  received,  we  or  either  of  us  promise 
to  pay  to  Grover  &  Baker  S.  M.  Co.,  two  hundred  and  seventy-five 
dollars,  with  interest  and  without  defalcation  or  stay  of  execution. 
And  we  do  hereby  confess  judgment  for  the  above  sum  with  interest 
and  costs  of  suit,  a  release  of  all  errors,  and  waiver  of  all  rights  to 
inquisition  and  appeal,  and  to  the  benefit  of  all  laws  exempting  real  or 
personal  property  from  levy  or  sale. 

R.  H.  Wright,        [seal.] 

"Witness,  H.  W.  Teckmeyer.  Samuel  Smith,        [seal.] 

Charles  Wright,  [seal.]" 

On  the  first  note  Smith  claimed  $137.50  as  due  from  Wright  as 
co-surety;  on  the  second  $54  ;  and  on  the  third  $12.37,  respectively. 
Smith  had  paid  the  balances  left  due,  and  unpaid  by  the  principal, 
R.  H.  Wright,  had  lifted  the  notes,  and  himself  caused  judgments  to 
be  entered  in  the  Court  of  Common  Pleas  of  Perry  County,  to  Nos. 
219,  220,  and  221,  October  Term,  1874,  using  the  name  of  the  payee 
as  the  legal  plaintiff  for  the  use  of  him,  the  said  Samuel  Smith,  and 
against  R.  H.  Wright,  Samuel  Smith,  and  Charles  Wright,  as  defend- 
ants, and  directed  executions  to  be  issued  thereon,  upon  which  levy 
was  made  upon  the  goods  of  Charles  Wright. 

Charles  Wright  presented  his  petition,  upon  which  a  rule  was  granted 
on  Smith  to  show  cause  why  the  judgments  should  not  be  stricken  f^m 
the  record,  and  the  executions  were  sta3'ed. 

The  court  below,  Junkin,  P.  J.,  afterwards  dissolved  the  injunctions 
staying  the  executions,  refused  to  strike  off  the  judgments,  and  dis- 
charged the  rules. 

The  court  below  held,  that  a  co-surety,  before  judgment  was  entered, 
could  pay  off  the  whole,  and  then  use  the  obligation  in  the  same  man- 
ner, and  just  as  the  obligee  could  have  done  before  the  payments. 

It  was  assigned  for  error,  that  the  court  dissolved  the  injunctions, 
staying  the  executions,  refusing  to  strike  off  the  judgments,  and  dis- 
charging the  rules.1 

contribution) ;  Tiddy  v.  Harris,  101  N.  Ca.  589  (unless  the  obligation  is  assigned  to  a 
trustee  for  the  surety.  See  also  Fully  v.  Pass  North  Carolina,  1898,  31  S.  E.  R. 
478) ;  Holliman  v.  Rogers,  6  Tex.  91 ;  Faires  v.  Cockerell,  88  Tex.  428  (overruling 
Sublett  v.  McKinney,  19  Tex.  438,  and  Tutt  v.  Thornton,  57  Tex.  35,  and  reinstating 
Holliman  v.  Rogers,  supra),  Accord. —  Ed. 

1  The  case  is  slightly  abridged  and  the  arguments  are  omitted.  —  Ed. 

26 


402  WRIGHT    V.    GROVER   AND    BAKER    S.    M.    CO.        [CHAP.  IIL 

Mr.  Justice  Mercdr  delivered  the  opinion  of  the  court,  May  29th, 
187G. 

This  case  involves  a  consideration  of  two  questions.  One,  the  rights 
of  a  surety,  who  has  paid  the  debt,  against  his  co-surety  ;  the  other,  the 
manner  in  which  he  ma}'  enforce  them. 

1.  The  general  rule  is  well  settled  that  if  a  suret}'  has  paid  a  debt, 
he  is  entitled  to  all  the  securities  the  creditor  had  against  the  principal 
debtor.  If  the  claim  be  in  judgment,  he  is  entitled  to  be  subrogated  of 
record.  Even  if  the  judgment  has  been  marked  satisfied  on  the  record, 
the  surety  paying  is  entitled  to  be  subrogated  as  against  all  but  inter- 
vening creditors.  He  is  not  only  entitled  to  the  creditor's  judgment 
against  the  principal,  but  also  to  his  claim  against  a  subsequent  surety 
who  has  become  bail  for  the  principal,  for  a  stay  of  execution  on  the 
judgment.  Burns  v.  The  Huntingdon  Bank  ;:  Greiner's  Appeal  ;2  Kelch- 
ner  v.  Forney  ;3  Pott  o.  Nathans.4  Although  actual  payment  discharges 
a  bond,  judgment  or  other  encumbrance  at  law,  it  does  not  in  equity, 
when  justice  requires  that  it  be  kept  afoot  for  the  safety  of  the  paying 
surety  :  Kuhn  v.  North  ;5  Fleming  y.  Beaver  ;6  Mehaffy  v.  Share  ;7  Mor- 
ris v.  Oakford.8  It  is  true,  a  payment  by  a  surety  with  intent  to  dis- 
charge the  security,  extinguishes  it  in  equit}*  as  well  as  at  law.  Kuhn 
v.  North.5  But  when  the  amount  of  the  debt  is  advanced  to  procure 
control  of  it,  equity  keeps  it  afoot  to  answer  the  intent  of  the  advance- 
ment :  Id. 

2.  If  a  paying  surety  is  entitled  to  all  the  securities  of  the  creditor, 
it  would  reasonably  follow  that  he  should  also  have  all  the  remedies. 
Hence,  it  was  held,  in  Himes  v.  Keller,9  that  he  is  entitled  to  a  cession 
of  the  debt,  and  substitution  or  subrogation  to  all  the  rights  and  actions 
of  the  creditor  against  the  debtor  ;  and  the  security  is  treated  as  be- 
tween the  surety  and  debtor,  as  still  subsisting  and  unextinguished. 
This  principle  is  recognized  in  numerous  cases,  among  which  ma}'  be 
cited  Rittenhouse  v.  Levering  ; 10  Cottrell's  Appeal ;  Springer's  Adm'r 
v.  Springer.11  An  intent  to  prevent  the  extinguishment  of  the  debt  will 
be  presumed  whenever  it  is  the  interest  of  the  paying  suret}'  that  it  be 
kept  alive.  Richards  v.  Ayres;12  Duncan  v.  Drury  ;13  Morris  v.  Oak- 
ford;14  Gossin  v.  Brown.15 

It  is  contended,  however,  that  the  rule  of  subrogation  or  contribution 
applies,  as  between  surety  and  principal  debtor  onby,  and  not  as  between 
co-sureties.  Lidderdale's  Ex'rs  v.  Robinson's  Adm'r,16  arose  under  a 
Virginia  statute,  which  declared  "all  bills  of  exchange  which  are  or 
shall  be  protested,  shall,  after  the  death  of  the  drawer  or  endorsers 
thereof,  be  accounted  of  equal  dignity  with  a  judgment."     The  claim 

1  1  Penn.  R.  395.  2  2  Watts,  414.  3  5  Casey,  47. 

*  1  W.  &  S.  155.  6  10  S.  &  R.  399.  6  2  Rawle,  128 

»  2  Penn.  R.  378.  8  9  Rarr.  500.  9  3  W.  &  S.  404. 

10  6  W.  &  S.  190.  "  7  Wright,  518.  M  1  W.  &  S.  485. 

w  9  Barr,  332.  «  Id.  498.  15  1  Jones  527. 

u  2  Broekenbrough,  160. 


SECT.  I]  WEIGHT   V.    GROVER    AND    BAKER   S.    M.    CO.  403 

was  upon  four  protested  bills  of  exchange,  on  which  there  were  two 
joint  sureties.  They  were  both  dead.  One  of  them  had  paid  more 
than  his  proportion  of  the  bill,  and  his  administrator  churned  a  pri- 
ority over  other  creditors,  as  well  against  the  estate  of  the  co-en- 
dorser as  against  the  drawer.  He  claimed  as  a  judgment  creditor 
against  his  co-suretj*,  by  virtue  of  the  legal  character  given  to  the  bill. 
The  other  creditors  contended  that  between  co-endorsers,  one  paying 
an  excess  over  the  other  must  resort  to  his  action  at  law  to  recover  it, 
and  this  defeated  his  preference  ;  but  it  was  held  by  Chief  Justice  Mar- 
shall, that  the  representatives  of  the  surety  who  had  overpaid,  were  en- 
titled to  rank  according  to  the  dignity  of  the  claims  on  which  such  excess 
was  paid  ;  that  the  principle  of  substitution  applied  equally  to  cases 
arising  between  co-sureties,  as  to  those  between  a  surety  and  his  prin- 
cipal. On  a  division  of  opinion  the  case  was  certified  to  the  Supreme 
Court  of  the  United  States,  and  this  view  was  affirmed  in  12  Wheaton, 
594.  The  application  of  this  rule  as  between  co-sureties  has  been  fre- 
quently recognized  in  this  State :  Fleming  v.  Beaver,1  Croft  v.  Moore,2 
Lathrop  and  Dale's  Appeal,3  Gossin  v.  Brown,4  Springer's  Adm'r  v. 
Springer,  et  al.,b  Mosier's  Appeal.6  In  Hess's  Estate,7  it  is  expressly 
held  that  a  surety  who  pays  his  principal's  debt  is  entitled  to  be  sub- 
rogated to  all  the  rights  and  remedies  of  the  creditor,  against  his  co- 
surety, in  the  same  manner  as  against  the  principal. 

An  actual  assignment  is  unnecessary.  The  right  of  substitution  i/ 
the  substantial  thing ;  the  actual  substitution  is  unimportant.  The 
right  of  substitution  being  shown  and  the  suret}'  having  paid  the  debt, 
he  succeeds  by  operation  of  law  to  the  rights  of  the  creditor.  Flem- 
ing v.  Beaver.1  It  is  contended  that  the  original  obligation  is  extin- 
guished, inasmuch  as  the  word  "paid"  was  written  on  its  face.  We 
answer,  it  had  to  be  paid  to  the  original  creditor  before  the  right  of 
substitution  could  arise.  We  have  shown  that  the  satisfaction  on  the 
record  of  a  judgment  paid  by  a  surety  does  not  extinguish  it  as  to 
the  paying  surety.  The  same  reason  applies  to  the  note  in  this 
case,  and  prevents  its  extinguishment  to  the  prejudice  of  the  surety. 
Hence,  we  see  no  error  in  the  learned  judge  holding  that  judgment 
might  be  entered  on  the  note  in  the  names  of  the  original  obligees  fot 
the  use  of  the  surety  who  had  paid  it.  The  amount  to  be  collected  of 
the  co-surety  is  subject  to  the  equitable  power  of  the  court :  that  power 
was  properly  exercised  in  this  case.  Judgment  affirmed.* 

1  2  Rawle,  128.  2  9  Watts,  451.  3  1  Barr,  512. 

4  1  Jones,  527.  5  7  Wright,  518.  6  6  P.  F.  Smith,  76. 

7  19  P.  F.  Smith,  272. 

8  The  right  of  a  surety  to  sue  the  principal  or  a  co-surety  upon  the  ohligation  signed 
by  both  as  co-obligors,  but  paid  by  himself,  was  recognized  in  the  following  cases : 
U.  S.  v.  Bunker,  4  Wash.  C.  C.  446  ;  Blackman  v.  Joiner,  81  Ala.  344  (statutory  action 
on  judgment,  if  assigned  to  surety  in  writing)  ;  Howland  v.  White,  48  HI.  Ap.  236 ; 
Braught  v.  Griffith,  16  Iowa,  26,  35;  Smith  v.  Latiner,  15  B.  Mon.  75;  Stratton  v. 
Henser  (Kentucky,  1897),  42  S.  W.  R.  1133  ;  Martindale  v.  Brock,  41  Md.  571  (statu- 
tory) ;  Carroll  v.  Bowie,  7  Gill,  34 ;   Kimmel  v.  Lowe,  28  Minn.  265  ;   Eaton  v.  Lam- 


404  s,  JDREW    V.    LOCKEXI [CHAP.  III. 

-   ^C~~2>  ^  2.  o  t>  #<?.  V     ^^c   77  *^~7  ^^^ 


» /f  '^X  In  Chancery,  before  Sir  John  Romilly,  M.  R.,  May  28,  1863.  ^ 

""^-^ic    ^  O  Z>  7>       reported  in  32  Ewvan,V&\    ^v^-9  ^r^c^2.  ■*£! 

At  the  close  of  the  year  1852,  the  plaintiff,  who  was  then  Miss  Odell, 
and  residing  with  her  stepfather,  the  defendant  Lockett,  was  entitled 
to  two  undivided  fifth  parts  in  certain  freehold  and  copyhold  heredita- 
ments, a  part  of  which  were  in  question  in  this  suit.     Her  stepfather, 
,  Mr.  Lockett,  was  entitled  to  two  other  undivided  fifth  parts  in  the  same 
'  hereditaments,  and  his  daughter,  Miss  Lockett,  now  Mrs.  Ayres,  was 
fr^P~  ^L^/  entitled  to  the   remaining  one  fifth.     In  January,  1853,  Mr.  Lockett 
,  was  desirous  of  borrowing  some  money  on  the  security  of  his  share  in 
~J    *■  ■*■  u -H*the  property,  to  facilitate  which  the  plaintiff  consented  to  join  with  him 


_^a    — ;j£_     and  to  make  her  share  of  the  property  also  liable  for  the  sum  advanced. 

!"«*      ,     ••>.  Accordingly,    on  21st  January,  1853,   an  indenture  of  mortgage  was 

,  S~f*+*+*v  executed,  whereby  Mr.  Lockett  mortgaged  his  undivided  two  fifth  parts 

y    ^      to  Mr.  Evans  to  secure  the  sum  of  £2,000,  and  the  plaintiff  also  mort- 

^c       cl     gaged  and  charged  her  undivided  two  fifths  in  the  same  hereditaments 

"~^rr-<i  unto  Richard  Evans  for  further  securing  to  him  the  sum  of  £2,000, 

which  had  been  advanced  by  Evans  to  Lockett  on  the  security  of  the 

' ^^^/st/    two   fifths  belonging  to  Mr.   Lockett  in  the  hereditaments.      It  was 

proved  that  Miss  Odell  joined  with  Mr.  Lockett  in  the  execution  of_this 

£.   '4*%*+wiQj-  indenture  as  a  surety  only.     Subsequently  to  this,  Mr.  Lockett  made  a 

further  mortgage  of  his"  interest  by  deeds  of  26th  of  August,  1853,  in 

t.  *S    ~^^»  favor  of  Miss  Charsley,  which  was  now  vested  in  the  defendant  Thomas 

Sworder,  under  an  indenture  of  transfer  of  the  24th  of  June,  1858. 

In  1855,  Evans  being  desirous  of  realizing  his  mortgage  security,  a 
portion  of  the  hereditaments  included  in  his  mortgage  was  sold  to  Mr. 
Abel  Smith,  and  was  conveyed  to  him  by  an  indenture  executed  by  all 
the  persons  interested  in  the  property.     The  amount  of  the  purchase- 
money,  after  certain  deductions,  was  £4,385.     The  amount  of  the  share 
^^i^_j  -    of  the  purchase-money  belonging  to  the  defendant  Lockett  in  respect  of 
his  two  fifths,  and  also  of  the  plaintiff's  share  of  the  purchase-money  in  re- 
*$*£.   ^*e  spect  of  her  two  fifths  in  the  property  sold  was  each  the  sum  of  £1,754  ; 
but  Mr.   Evans,  the  mortgagee,  required  to  be  paid  in  full  the  total 
spSfi'    0*     amount  due  to  him,  which  the  two  fifths  of  the  purchase-money  belong- 
Ok/  ing  to  Mr.  Lockett  would  not  discharge.     The  consequence  was,  that 

~~ X^VtL £394  3s.  8cZ.  had  to  be  taken  from  the  two  fifths  of  plaintiff's  share  of 
the  purchase-money,  and  this  was  done  and  paid  to  Evans  accordingly, 
for  the  purpose  of  paying  him,  in  full,  all  that  was  due  to  him  for  prim 


bert,  1  Neb.  339 ;  Rochester  Bank  v.  Gowdy,  21  N.  H.  127  (cited) ;  Low  v.  Blodgett, 
21  N.  H.  121  (semble)  ;  Rockingham  Bank  v.  Claggett,  29  N.  H.  292  (but  see  Hopkins 
v.  Farwell,  32  N.  H.  425)  ;  Rice  v.  Hearn,  109  N.  Ca.  150  (if  the  claim  is  assigned  by 
sHJtty.  the  creditor  to  a  trustee  for  the  surety) ;  Peebles  v.  Gay,  115  N.  Ca.  38  (claim  assigned 
to  trustee  for  surety) ;  Cochran  v.  Shields,  2  Grant  (Pa.),  437,  Accord.  —  Ed. 


SECT.  I.]  DREW   V.   LOCKETT.  405 

cipal  and  interest.  Accordingly,  he  was  then  fully  paid  off;  and  as 
regarded  the  remainder  of  the  property  included  in  his  mortgage,  he 
was  a  trustee  for  the  rightful  owners. 

By  an  indenture  of  even  date,  to  which  the  plaintiff  was  not  a  party, 
Evans,  the  mortgagee,  03-  the  desire  of  Lockett,  conveyed  to  Miss 
Charsley  the  legal  estate  in  these  hereditaments,  which  was  afterwards 
vested  by  assignment  in  the  defendant  Sworder.  The  question  the 
court  had  to  determine  was,  whether  the  plaintiff  was  entitled,  by  virtue 
of  her  having  been  a  surety  only  to  secure  the  sum  of  £2,000  lent  to 
Lockett,  to  stand  in  the  place  of  Evans,  the  mortgagee,  as  against  the 
two  fifths  of  Lockett  in  the  remaining  property  not  included  in  the  sale 
to  Smith,  and  so  conveyed  to  Miss  Charsley,  as  before  stated,  by  the 
deed  of  even  date,  and  whether  the  plaintiff  was  entitled  to  have,  as 
against  this  remaining  unsold  portion  of  the  mortgaged  property,  the 
same  rights  and  securities  as  Evans  had,  in  order  to  enforce  payment 
of  the  £394  3s.  8d.,  being  the  balance  of  the  purchase-money  of  her 
undivided  two  fifths  share  in  the  said  property  which  were  sold,  and 
which  balance  was  retained  for  the  purpose  of  paying  the  mortgage 
debt  due  to  Evans.1 

The  Master  of  the  Rolls.  The  question  is,  whether  the  plaintiff 
and  the  parties  claiming  under  the  settlement  of  the  26th  of  April, 
1853,  have  a  right  to  be  paid  the  £394  3s.  8d.  out  of  Lockett's  share, 
in  priority  of  Sworder,  the  transferee  of  the  second  mortgage  of  the 
36th  of  August,  1852. 

The  general  right  of  a  surety  to  stand  in  the  place  of  the  creditor, 
who  has  been  paid  off,  is  not  disputed.  Lancaster  v.  Evors  2  and  many 
other  cases  establish  it,  and  the  general  right  is  not  questioned.  But, 
on  behalf  of  the  defendant  Sworder,  it  is  insisted  that  this  right  is  con- 
fined to  the  right"  as  between  the  original  creditor  and  the  principal 
cTebTdr,  and  that  it  does  not  extend  to  the  case  where  subsequent  Jn- 
cum I) ranees  have  been  made  by  the  principal,  so  as  to  deprive  such 
subsequent  incumbrancers  of  their  security,  and  that  as,  iii_ this  case, 
ori  tue  2t>tn  August,  1803,  Lockett  mortgaged  his  undivided  two  fifths, 
subject  to  the  mortgage  to  Evans,  to  Miss  Charsley,  to  secure  a  sum 
of  £728,  which  mortgage  is  vested  in  the  defendant,  Mr.  Sworder,  who 
acted  as  solicitor  for  the  lady  in  that  transaction,  he  is  entitled  to  have 
that  paid  out  of  the  two  fifths  belonging  to  Lockett,  against  all  persons 
except  the  mortgagee  Evans,  and  the  authorities  which  are  relied  on 
for  this  purpose  are  Williams  v.  Owen  ;  Bowker  v.  Bull ; 3  and  Fare- 
brother  v.  Wodehouse,4  before  me. 

But  I  am  of  opinion  that  none  of  these  cases  establish  the  proposi- 
tion that  would  be  necessar}*  in  order  to  maintain  the  contention  of  the 
defendant.  In  the  first  place,  all  question  of  absence  of  notice  of  the 
first  incumbrance  and  any  right  which  might  flow  from  being  a  pur- 

1  The  statement  has  been  slightly  abridged,  and  only  a  part  of  tbe  opinion  is 
given.  —  Ed. 

2  10  Beav.  154.  3  1  Sim.  (N.  S.)  29.  4  23  Beav.  18. 


406  DREW   V.    LOCKETT.  [CHAP.  III. 

chaser  for  value  without  notice  ma}-  be  disregarded  in  the  present  case. 
No  such  questions  arise  here,  the  prior  mortgage  to  Evans  was  well 
known  to  the  subsequent  mortgagees,  and  it  was  subject  to  that  charge 
that  the  subsequent  mortgages  were  created.  The  utmost  that  anj-  of 
those  cases  have  gone  appears  to  me  to  be  this  :  —  that  as  the  surety 
knew  that  if  the  mortgagee,  the  payment  of  whose  debt  he  guaranteed, 
advanced  any  further  mone}-  to  the  mortgagor  on  the  security  of  the 
same  property,  he  would  be  entitled  to  tack  the  second  mortgage  to 
the  former,  and  that  he  could  not  be  compelled  to  reconvey  the  propert}' 
until  both  mortgages  were  satisfied,  so  the  surety  cannot  insist  on  inter- 
posing between  the  two  securities,  and  put  himself  in  a  better  situation 
than  the  person  for  whom  he  became  surety.  That  he  cannot  insist  on 
being  a  first  mortgagee  before  the  second  mortgagee,  if  he  tender  the 
mone}r  sufficient  to  pay  off  the  first  mortgage,  and  thus  endeavor  to 
exclude  the  second  charge  created  in  favor  of  the  original  creditor. 
The  validity  of  these  decisions  is  not  now  the  question  before  me,  but 
they  stand  on  a  separate  ground,  and  it  is  to  be  observed  that  this  right 
of  a  first  mortgagee  to  tack  further  advances  is  a  matter  which  the 
surety  might  prevent  by  a  stipulation  in  his  original  contract,  that  his 
suretyship  for  the  first  charge  should  cease  and  determine  in  case  he, 
the  mortgagee,  should  advance  further  sums  on  the  secur^'  of  the  same 
property  without  the  consent  of  the  surety.  But  even  this  exception 
from  the  rule  can  onlv  apply  in  cases  where  the  first  mortgagee  has 
made  his  subsequent  advance  in  ignorance  of  any  other  charge  having 
been  made  by  the  mortgagor  on  the  same  property  in  favor  of  any  other 
person.  In  other  words,  it  is  only  in  cases  where  the  first  mortgagee 
could  tack  hissubsequent  advance  to  his  first  mortgage  that  he  could 


apply  this  exception  to  the  doctrine.  But  if,  after  the  mortgage,  for 
the  payment  ot  which  the  surety  is  bound,  the  mortgagor  should  obtain 
money  from  another  person  on  the  security  of  the  first  mortgaged  here- 
ditaments, and  if  notice  of  that  second  mortgage  should  be  given  to  the 
first  mortgagee,  then  no  further  advance  made  by  him  to  the  mortgagor 
could  be  tacked  on  to  his  first  mortgage,  nor  could  the  right  of  the 
suret}T  to  stand  in  the  place  of  the  first  mortgagee,  in  respect  of  his  first 
mortgage  when  paid  off,  be  contested,  in  case  the  surety  advanced  any 
mone}r  for  that  purpose,  unless,  in  the  solitaiy  case  where  the  first 
mortgagee  advanced  further  money  on  the  same  security,  without 
knowledge  or  notice  of  any  charge  prior  to  his  second  advance. 

I  am  of  opinion  that  a  suret}'  who  pays  off  the  debt  for  which  he  be- 
'       came  suret}T  must  be  entitled  to  all  the  equities  which  the  creditor. 
)$AJ>A/*~1    whose  debts  he  paid  off,  could  have  enforced,   not  merely  against  the 
/T    principal  debtor,  but  also  as  against  all  persons  claiming  under  him. 
\J       It  is  to  be  observed  that  the  second  and  any  subsequent  mortgageels 
in  no  respect  prejudiced  by  the  enforcement  of  this  equity  ;  when  he 
advances  his  money  he  knows  perfectly  well  that  there  is  a  prior  charge 
on  the  property,  and  if  he  thinks  fit  to  advance  his  money  on  such  se- 
curity, it  is   his   own  affair,  and  he   cannot   afterwards  with  justice 


SECT.  I.]  DREW   V.   LOCKETT.  407 

complain.  The  amount  being  limited,  it  is  a  matter  of  indifference  to 
him  whether  the  firsFmortgagee  or  the  surety  is  the  prior  claimant  for  C^J 
that  amount,  and  it  would  be,  in  my  opinion,  a  violation  of  all  prin- 
ciple if,  when  the  surety  pays  oil'  the  debt,  he  were  not  to  be  entitled, 
as  against  the  principal  debtor  and  those  who  claim  under  him,  to  be 
paid  the  full  amount  due  to  him.  " 

In  this  case  both  Miss  Chafsley  and  the  defendant  Sworder  knew  that 
the  two  fifths  of  Lockett's  were  mortgaged  for  £2,000  and  interest ;  it 
was  subject  to  that  charge  that  they  advanced  this  money ;  but  now 
the  defendant  Sworder  seeks  to  make  out  that  the  charge  is  £394  less 
than  that  sum  ;  nay  more,  for  the  defendant,  who  is  consistent  and 
logical  in  his  contention,  accordingly  insists  that  the  plaintiff  ought  to 
contribute  one  half  of  the  first  mortgage  debt  as  if  she  had  originally 
received  one  half  of  the  monej-  advanced  b}-  Evans.  In  this  case 
suppose  the  plaintiff  to  have  paid  off  Evans  and  to  have  taken  a  trans- 
fer of  his  mortgage  securities,  it  is  plain  that  no  conveyance  or  release 
could  have  been  obtained  from  her  until  she  was  repaid  the  full  amount 
of  the  debt  due  to  her  in  respect  of  Evans'  mortgage.  The  legal  estate 
vested  in  Sworder  in  the  unsold  portion  of  the  mortgaged  hereditaments 
cannot,  in  my  opinion,  avail  mm  ;  tie  cannot  thereby  convert  his  "mort- 
gage, which  was  subject  to  the  £2,000  and  interest  included  in  the  first 
charge,  into  a  charge  having  priority  over  that  £"J,,6(.)0,  either  as  against 
Evans  or  as  against  an}7  person  entitled  to  stand  in  his  place.  IF  he 
cannot  as  to  the  whole,  so  neither  call  he  do  so  as  to"  any  portion 
thereof,  and  that  is  what  he  now  seeks  to  do  by  his  present  contention. 
The  case  of  Willoughb}'  v.  Willoughb}',1  to  which  I  frequently  have  oc- 
casion to  refer,2  determines  that,  in  such  circumstances,  the  legal  estate  ^ 

does  not  put  the  person  "who  gets  it  in  any  better  situation  than  he  stood        <^j      ^1 
in  before.     As  regards  all  incumbrancers,  of  which  he  had  notice  before       -^ 
he  advanced  his  money,  they  have  priority  over  him,  whether  heJias  or 
has  not  got  in  the  legal  estate.8 

1  1  Term.  Rep.  763.  2  See  Sharpies  v.  Adams,  32  Beav.  213. 

3  Knighton  v.  Curry,  62  Ala.  404;  Turner  v.  Teague,  73  Ala.  554;  Schuessler  v. 
Dudley,  80  Ala.  547;  Cummings  v.  May,  110  Ala.  479;  Richeson  v.  Crawford,  94 
111.  165;  Hook  v.  Richeson,  115  111.  431;  Colgrove  v.  Cox,  22  Ind.  43;  Fence  v. 
Armstrong,  95  Ind.  191  ;  Fields  v.  Sherrill,  18  Kas.  365  ;  Burk  v.  Chrisman,  3  B.  Mon. 
50;  Magruder  v.  Peter,  11  Gill  &  J.  217;  Yates  v.  Mead,  68  Miss.  787;  Smithy. 
Schneider,  23  Mo.  447  ;  Lynch  v.  Hancock,  14  S.  Ca.  66  ;  Uzzell  v.  Mack,  4  Humph. 
319;  Taul  v.  Epperson,  38*  Tex.  492;  Leake  v.  Ferguson,  2  Grat.  419;  In  re  Hamit 
ton's  Trusts,  10  Manitoba,  573,  Accord.  —  Ed. 


-             u/408  cottrell's  appeal.                      [chap,  iil 

«p^  COTTRELL'S   APPEAL  —  BO WERS'   ESTATE. 

^ccZy  Ud  "3  <~>*+Ss~^^ir>^~    ^^  ^-  ^>  ^d  *=**. 

,    _  „        . In«ihe  Supreme  Court,  Pennsylvania.  1854.        ^^* 


.     _   _  IN  .THE    SUPREME    UOURT,    PENNSYLVANIA^    1«S4.  ^  ' 

'  Appeal  by  J.*W".  Cottrell  from  the  decree' of  th^  Common  Pleas  of 
--^jUl  Lancaster  County,   directing  distribution  of  proceeds  of  sale  of  real 


b£ 


estate  of  A.  Bowers. 

Ephraim  Hershey  had  a  judgment  v.  Bowers,  entered  to  January 


^__Term,  1850  ;  and  Cottrell  had  a  judgment  against  the  same  defendant 
"to  January  Term,  1852.     In  December,  1852,  the  property  of  Bowers 
--^   J&.    was  advertised  for  sale  under  execution  issued  on  Hershey's  judgment ; 
ff  and  Hershey  agreed  to  stop  the  sale  if  Bowers  gave  him  security  for 

■***«•*?  .  the  amount  of  his  judgment.  Bowers  proposed  Isaac  Pusey  as  "  secur- 
ity." Bowers,  in  that  month,  gave  to  Hershey  a  negotiable  note 
which  was  indorsed  by  Isaac  Pusey.  It  was  payable  at  sixty  days, 
and  was  for  an  amount  exceeding  $700.  Hershey  stated  his  impres- 
sion to  be  that  on  receiving  the  note  he  handed  to  Bowers  the  single 
billon  which  his  judgment  was  founded.  On  inquiry  of  Bowers  as  to 
entering  satisfaction  of  the  judgment,  the  latter  suggested  that  it  re- 
main as  it  was.  Hershey  stated  that  he  took  the  note  as  a  payment  of 
his  claim.  Nothing  was  said  at  the  time  about  his  transferring  the 
judgment  to  Pusey.  The  note  was  discounted  at  bank,  and  the 
proceeds  received  by  Hershe}'.  The  note  not  being  paid  was  pro- 
tested, but  was  subsequently  paid  by  Puse}'.  Afterwards,  viz.  on  the 
19th  of  May,  1853,  Pusey  procured  from  Hershey  an  assignment  of 
the  judgment,  and  claimed  payment  out  of  the  proceeds  of  sale  of 
Bowers'  real  estate.  This  was  opposed  by  Cottrell.  The  auditor 
appointed  reported  in  favor  of  Pusey,  and  exception  being  taken,  the 
report  was  confirmed. 

It  was  excepted  that  the  court  erred  in  treating  the  judgment  of 
Hershey  as  a  valid  judgment  after  it  had  been  paid ;  and  in  not  direct- 
ing the  payment  of  Cottrell's  judgment.1 
The  opinion  of  the  court  was  delivered  by 

Woodward,  J.  Subrogation  is  founded  on  principles  of  equity  and 
benevolence,  and  may  be  decreed  where  no  contract  or  privity  of  any 
kind  exists  between  the  parties.  Wherever  one  not  a  mere  volunteer 
discharges  the  debt  of  another,  he  is  entitled  to  all  the  remedies  which 
the  creditor  possessed  against  the  debtor.  Actual  payment  discharges 
a  judgment  or  other  encumbrance  at  law,  but  where  justice  requires  it 
we  keep  it  afoot  in  equity  ior  tiie  satety  of  the  paying  surety.  These" 
principles,  settled  in  numerous  cases,  whicETwill  be  founcT  collected  in 
2  Wharton's  Digest,  612,  are  decisive  against  this  appellant. 
There  is  nothing  in  the  argument  that  Hershey's  judgment  had  been 

1  The  arguments  of  counsel  are  omitted.  —  Ed. 


SECT.  I.]  WILLIAMS    V.    OWEN.  409 

extinguished.  It  was  paid  to  bo  sure,  and  this  was  necessary  to  entitle 
the  surety  to  subrogation,  for  substitution  of  a  surety  is  never  allowed 
where  anything  remains  clue  to  the  principal;  Iveyner  v.  Keyner;1 
Bank  of  Pennsylvania  v.  Potius  ;  '2  but  it  was  not  satisfied  on  record, 
and  was  finally  assigned  voluntarily  by  Hershey  to  Pusey,  who  ac- 
quired, thus,  a  legal  title  as  well  as  an  equitable  right  to  it  as  a  means 
of  indemnit}'. 

We  are  of  opinion  the  court  were  right  in  confirming  the  distribution 
made  by  the  auditor,  and  the  decree  is  accordingly  affirmed.8 


^^t  -?~^<~i^M<Q-  "^2.  ^^_ 


-x. 


'   —  ^^/wlLLIAMS   v.    OWEN. 

In  Chancery,  -*efore  Sir  Lancelot  Shadwell,  V.  C,  Novem-  ^^^ 

/  ^*~*s*-^3  •  [Reported  in  13  Simotis,  597. J      ' 

Robert  Roberts  mortgaged  leasehold  property  to  David  Evans,  to 
secure  £300  and  interest,  and,  by  the  same  deed,  joined  with  three 
persons,  his  sureties,  in  covenanting  to  pay  the  principal  and  interest 
to  Evans.     Evans  took  a  further  charge  on  the  property  for  securing   x 
£100  and  interest,   and  afterwards  recovered  the  money  due  on  the  ^    *-^7    ^_ 
mortgage  from  the  sureties. 

The  suit  was  instituted  by  the  sureties  ;  and  the  question  was  whether 
they  were  bound  to  pay  off  the  £100  and  interest,  in  order  to  entitle  '     /? 
themselves  to  have  the  mortgage  assigned  to  them. 

Mr.  Purvis  and  Mr.  Heathfield,  for  the  plaintiffs,  said  that,  if  a  surety  '^^T? 
paid  the  debt  of  his  principal,  he  was  entitled  to  the  benefit  of  the 
Securities  held  by  the  creditor,  and  that  the  creditor  had  no  power  to 
prejudice  the  rights  of  the  surety  by  engaging  in  another  transaction 
with  the  principal  to  which  the  surety  was  not  privy ;  and,  therefore, 
Evans  was  not  entitled  to  tack  his  further  charge  to  his  mortgage. 
Copis  v.  Middleton. 

Mr.  Stuart  and  Mr.  Piggott,  for  Evans.4 

i  6  Watts,  221.  2  10  Watts,  148. 

3  Allen  v.  Powell,  108  111.  584  (reversing  s.  c.  Ill  11.  Ap.  129)  ;  Pence  v.  Armstrong, 
95  Ind.  191  ;  Rodgers  v.  M'Cluer,  4  Grat.  81,  Accord. 

Patterson  v.  Pope,   5  Dana,  241  ;  Bank  v.  Rudy,  2  Bush,  326 ;  Farmers'  Bank  v.      , 
Shirley,  12  Bush,  304  ;  Fishback  v.  Bodman,  14  Bush,  117  ;  Armstrong's  App.,  5  Watts 
&  S.  352,  Contra. 

Compare  Swan  v.  Patterson,  7  Md.  164. 

The  cases  contra  to  the  principal  case  proceeded  upon  the  theory  that  subrogation 
of  a  surety  to  the  rights  oi  the  first  incumbrancer  should  not  be  allowed  to  the  preju- 
dice  of  a  second  incumbrancer  unless  the  suretyship  undertaking  in  favor  of  the  first 


incumbrancer  preceded  the  creation  of  the  second  incumbrance. —  Ed. 
*  The  argument  tor  Evans  is  omitted.  —  Ed. 


410  FORBES   V.    JACKSON.  [CHAP.  Ill 

The  Vice-Chancellok.  The  equity  of  redemption  was  reserved  to 
the  mortgagor,  and  not  to  the  sureties.  Their  suretyship  was  created 
by  the  covenant  at  the  end  of  the  deed,  and  there  was  no  stipulation 
in  it  that  prevented  the  mortgagee  from  making  the  further  advance. 
Therefore  there  was  nothing  to  prevent  the  mortgagee  from  lending 
a  further  sum  of  money  to  the  mortgagor.  And,  that  being  so,  the 
right  of  the  sureties  to  stand  in  the  place  of  the  mortgagee  was  subject 
to  the  right  of  tlie  mortgagee  10  make  a  farther  loan  to  the  mortgagor, 
and  to  take  a  further  charge  on  the  propert}',  for  securing  it.  tinder 
these  circumstances  my  opinion  is  that  the  sureties  must~pay  off  the 
£100  and  interest,  as  well  as  the  £300  and  interest,  in  order  to  entitle 
themselves  to  have  the  mortgage  assigned  to  them.1 


*.©  0^/^-$  C2   +~*~-  —^  cZZZ-^ S^—^. 


7/u-  \^       ^*^^-j2_:^k?0RBES-j;*  JACKS0N- 


In  Chancery,  before  Sir  Charles  Hall,  V7  CTJvy anuary  16,  1882. 


T""^*-4- 


-ti.    ->w~-o 


T 


[R  CHARLES    MALL, 

ed  in  19  (fliancerv  Divi. 


[Reported  in  19  (fliancery  Division,  615.] 

yJUJ  f) '.    Special  Case.      By  an  indenture  of  mortgage  dated  the  28th  of 

\f    V  December,  1854,  made  between  William  Spenee,  of  the  first  part,  the 

— v  —"ZL      plaintiff  J.  S.  Forbes,  of  the  second  part,  and  A.  Weir,  of  the  third  part, 

jfcr  William  Spenee  assigned  the  same  premises  unto  A.  Weir,  his  execu- 

A  *  ^^T.ors,  &c,  to  secure  the  repayment  of  a  sum  of  £200  and  interest  at 

/  5  per  cent. 

The  plaintiff  joined  in  the  mortgage  as  surety  for  William  Spenee. 
Subsequently  to  the  28th  of  December,  1854,  i.  e.  in  Ma}',  1856, 
August,  1863,  August,  1864,  and  May,  1866,  William  Spenee  borrowed 
sums  of  money  amounting  to  £530  from  A.  Weir,  and  by  four  indentures 
charged  the  same  premises  with  the  payment  thereof  and  interest. 
The  plaintiff  had  no  knowledge  of  these  advances  having  been_made 
until  the  6th  of  November,  .1875. 

A.  Weir  died  in  September,  1878,  having  appointed  the  defendants 
his  executors.  Spenee  having  failed  to  pay  the  interest,  the  plaintiff 
offered  to  pay  principal  and  interest,  and  requested  a  transfer  of  the 
mortgaged  premises.  The  defendants  claimed  the  right  to  retain  their 
premises  as  security  for  the  further  sums  advanced.2 

Hall,  V.  C.  The  arguments  which  have  been  submitted  on  behalf  of 
the  executors  do  not  affect  the  conclusion  which  I,  in  the  course  of  them, 


1  Approved  in  Farebrother  v.  Wodehouse,  23  Beav.  18.     In  this  case  the  defendant 
I  y^Ut'  ***         held  two  mortgages  given  at  one  time  by  his  debtor,  one  for  £3,000  and  one  for  £2,000. 
/^r^j^^"       The  plaintiff  was  surety  on  the  £2,000  debt,  but  not  on  the  other.     Although  the  plain- 
tiff paid  the  £2,000  debt,  it  was  adjudged  that  he  could  not  have  the  mortgage  securing 
^  J* '  C~  tnat  debt  until  he  paid  the  other  debt  also.  —  Ed. 

a  The  statement  is  abridged,  and  the  arguments  are  omitted.  —  Ed. 


SECT.  I.]  FORBES   V.   JACKSON.  411 

intimated  that  I  had  come  to  ;  nor  do  they  affect  the  principle  laid  down 
in  the  case  of  Newton  v.  Chorlton,1  to  which  I  referred  on  Thursday  last. 
I  consider  that  the  decision  in  that  case  is  perfectly  good  law,  subject  to 
this  observation  that  Vice-Chancellor  Sir  W.  Page  Wood  expressed  an 
opinion  that  where  an  additional  security  is  taken  by  the  creditor  after  the 
original  security  was  given,  and  the  contract  of  suretyship  entered  into, 
the  right  of  the  surety  as  regards  the  securities  given  to  the  principal 
creditor  did  not  extend  to  the  additional  securities.  The  Vice-Chancellor 
did  not  think  that  the  cases  went  so  far  as  to  give  a  surety  the  benefit  of 
the  security  subsequently  taken  by  the  creditor.  But  that  is  a  view 
which  never  commended  itself  to  me,  and  it  was  certainly  not  adopted  by 
Lord  Justice  Knight  Bruce  and  Lord  Justice  Turner  in  a  case  before 
them  of  Lake  v.  Brutton,2  and  I  may  observe  that  Vice-Chancellor  Sir 
W.  Pase  Wood  himself,  in  a  case  afterwards  before  him  of  Pledge  v. 
Buss,  stated  that  his  judgment  in  that  case  had  been  disapproved  of  by 
those  Lord  Justices,  although  not  absolutely  overruled.  The  Vice- 
Chancellor  added:  "I  am  as  much  bound  to  submit  to  their  opinion 
as  if  the  decision  had  been  reversed  on  appeal  before  them."  The 
Vice-Chancellor  did  not  mention  the  names  of  the  cases  to  which  he 
referred,  but  I  may  state  that  some  twenty  years  ago  in  my  cop}'  of 
Mr.  Johnson's  reports  I  noted  against  Pledge  v.  Buss  the  case  of  Lake 
v.  Brutton  as  being  the  one  which  the  Vice-Chancellor  had  in  his  mind, 
and  there  is  also  another  case  of  Pearl  v.  Deacon,3  which  I  thought  was 
referred  to  by  him.  That  was  an  appeal  from  a  decision  of  the  late 
Master  of  the  Rolls  (Sir  John  Romilly).  It  was  the  case  of  a  subsequent 
security  ;  but  it  is  not  material  for  my  purpose  to  consider  the  general 
question  whether  there  has  been  a  release,  or  what  is  the  effect  of  taking 
an  additional  security,  and  then  whether  that  additional  security  should 
be  held  available  for  the  benefit  of  the  suret}'.  There  has  never  been, 
so  far  as  I  know,  any  disapproval  of  the  general  principle  which  was  laid 
down  by  the  Vice-Chancellor  in  Newton  v.  Chorlton,  except  so  far,  if  at 
all,  as  the  Master  of  the  Rolls  may  have  dealt  with  it  in  Farebrother  v. 
Wodehouse,4  where  he  seems  to  have  followed  the  case  relied  upon 
here  of  Williams  v.  Owen,  which  certainly,  if  it  were  law,  would  be  an 
authorit}'  in  favor  of  the  executors.  In  the  case  of  Newton  v.  Chorlton, 
the  principle  laid  down  by  Vice-Chancellor  Sir  W.  Page  Wood  wn.s_th at 
a  surety  was  to  have  the  benefit  of  all  securities,  "whether  by  way  of 
suret3Tship  or  mortgage,"  and  he  afterwards  added 5 :  "  The  surety  has 
a  right  at  any  moment  to  eveiy  security  held  by  the  creditor  at  the  date 
of  the  contract  —  it  has  never  yet  gone  bej'ond  that ;  and  he  has  further 
a  right  to  say,  you  must  always  hold  yourself  in  a  position  to  be  put  in 
motion,  at  my  request,  against  the  principal  debtor."  I  consider  that  the 
decision  in  Newton  v.  Chorlton  was  carried  higher  by  the  decision  of 
the  Lord  Justices  in  Lake  v.  Brutton,2  which,  as  I  have  said,  the  Vice- 
Chancellor  himself  recognized  in  Pledge  v.  Buss,6  and  I  consider  the 

1  10  Hare,  646.  2  8  D.  N.  &  G.  441.  3  1  De  G.  &  J.  461. 

4  23  Beav.  18.  5  10  Hare,  652.  6  j0h.  663,  668. 


412  FOKBES  V.   JACKSON.  [CHAP.  III. 

decision  must  be  applicable  to  securities  taken  subsequently  to  the 
original  mortgage.  The  Master  of  the  Rolls  in  Farebrother  v.  Wode- 
house *  appears  to  have  followed  Williams  v.  Owen,  as  it  applies  to  a 
subsequent  security  taken  by  the  original  creditor  —  that  he  could  make 
advances  to  the  debtor,  and  that  they  would  prevail  over  the  right  of 
the  surety.  That  principle  is  entirely  at  variance  with  the  decision  in 
Newton  v.  Chorlton,  and  it  is  a  singular  circumstance  that  in  a  subse- 
quent case  of  Drew  v.  Lockett  before  him,  although  he  had  followed 
Williams  v.  Owen,  Lord  Romilly  said  :  "  I  am  of  opinion  that  a  surety 
who  pays  off  the  debt  for  which  he  became  surety  must  be  entitled  to 
all  the  equities  which  the  creditor  whose  debts  he  paid  off,  could  have 
enforced,  not  merely  against  the  principal  debtor,  but  also  as  against 
all  persons  claiming  under  him."  It  was  odd  that  Lord  Romilly  should 
agree  with  the  principle  laid  down  in  Newton  v.  Chorlton,  and  yet  come 
to  a  conclusion  in  Farebrother  v.  Wodehouse  which  seems  to  be  at  vari- 
ance with  it.  The  principle  on  which  Vice-Chancellor  Sir  W.  Page 
Wood  proceeded  was  the  same  as  laid  down  by  Lord  Eldon  in  the  case 
of  Mayhew  v.  Crickett,2  which  I  consider  a  leading  authority,  and  also 
laid  down  in  earlier  cases,  —  that  the  surety  is  entitled  to  have  all  the 
securities  preserved  for  him,  which  were  taken  at  the  time  of  the  surety- 
ship, or,  as  I  think  it  is  nowsettled,  subsequently.  Nor  does  it  matter  at 
allin  principle,  whether  trie  creditor  takes  aTurther  security  for  further 
advances  made  prior  to  the  time  when  the  surety  makes  payment  of  the 
debt.  They  have  nothing  to  do  with  the  surety.  He  is  entitled  to  the 
benefit  of  the  securities,  though  his  payment  be  not  made  until_after  the 
time  when  the  further  advances  were  made  by  the  creditor.  The  p~rin- 
ciple  is  that  the  surety  in  effect  bargains  that  the  securities  which  the 
creditor  takes  shall  be  for  him,  if  and  when  he  shall  be  called  upon  to 
make  any  payment,  and  it  is  the  duty  of  the  creditor  to  keep  the  securi- 
ties  intact ;  not  to  give  them  up  or  to  burthen  them  with  further  advances. 
The  same  principle  was  enunciated  in  the  case  of  Duncan,  Fox,  "3c  Co.  v. 
North  and  South  Wales  Bank,3  where  the  Master  of  the  Rolls  on  the 
hearing  upon  appeal  from  the  judgment  of  Vice-Chancellor  Little, 
said  :  "It  cannot  be  said  that  in  ever}r  instance  a  surety  is  entitled  to 
stand  in  the  place  of  the  principal  creditor  as  regards  other  securities. 
That  is  true  as  regards  securities  given  by  the  debtor,  but  is  not  true  as 
regards  securities  given  by  co-sureties."  But  here  I  have  nothing  to  do 
with  the  question  which  was  decided  in  that  case  —  a  question  between 
persons  alleged  to  be  co-sureties.  That  case  was  carried  to  the  House  of 
Lords,  and  is  reported  in  6  App.  Cas.  1.  The  House  of  Lords,  though 
they  reversed  the  judgment  of  the  Court  of  Appeal,  did  not  say  any- 
thing which  affected  the  principle  referred  to  by  the  Master  of  the 
Rolls,  and  which  is  all  that  I  desire  to  notice.  I  consider  that  the  prin- 
ciple laid  down  in  that  case  is  perfectly  plain  and  right ;  and  also  that 
the  decision  in  Williams  v.  Owen  is  not  law  now,  and  cannot  after  the 
cases  to  which  I  have  referred  be  followed.  I  decline  to  recognize  it. 
1  23  Beav.  18.  2  2  Sw.  185.  3  if  Ch.  D.  88. 


A^ 


SECT 


tTl}*  **t^>^  'G&fTBBst 


St.    ^wO-T^J) 


There  is  another  case  to  which  I  desire  to  refers  that  of  Green  v.  Wynn,1 
in  which  there  was  a  surety,  and  Lord  IIatiierley  said,'2  "but  where 
there  is  a  mortgage,  of  course  any  person  under  a  liability  to  pay  the  (*- 
interest  would  be  at  liberty  to  redeem."  I  am  of  opinion,  therefore, 
that  the  plaintiff  was  right  in  his  offer  to  pay  off  the  debt,  and  that  he 
is  entitled  to  have  the  securities,  and  to  say  that  the  further  charges  for 
the  sums  subsequently  advanced  are  inoperative  as  against  him.  The 
defendants,  the  executors,  having  refused  the  offer  made,  and  being 
wrong  in  insisting  on  retaining  the  securities  for  the  subsequent  ad- 
vances, must  pay  the  costs  of  the  action. 

The  declaration  will  be  that  on  payment  to  the  executors  of  what  shall 
be  found  due  for  principal,  interests,  and  costs  in  respect  of  the  mortgage 
of  the  28th  of  December,  1854,  the  plaintiff  is  entitled  to  have  the 
securities  comprised  in  the  deed  transferred  to  him,  and  to  hold  them  as 
securities  for  the  repayment  to  him  of  the  sums  which  may  be  paid  to 
the  executors  by  him.  The  costs  of  the  plaintiff  will  be  deducted  from 
the  sum  which  he  may  be  required  to  pay,  as  in  Wheaton  v.  Graham  ; 3 
but  the  interest  will  not  be  stopped  as  from  the  date  when  the  offer  of 
payment  was  made.4  -  ■—_      •?         .    *     r\ 

Term,  1879. 


•^        In^the  Cqurx  of  Appeals,  Virginia,  July  Tei 
r^>*~4Z-   C^S-^2-     ^SL^^Wt 


W*   ^UL. 


JZ-    ^=- 


On  the  5th  of  May,  1874,  Frank  S.  Grubb  sold  to  George  W.  Wysor, 
Jr.,  a  tract  of  land  for  $3,199,  paj'able  in  three  equal  annual  instalments. 
For  the  first  instalment  Wysor,  Jr.,  executed  a  negotiable  note,  with 
his  father,  George  W.  Wysor,  Sr.,  as  surety,  payable  twelve  months 
after  date,  and  for  the  other  two  instalments  executed  his  own  bonds, 
pa}"able  at  two  and  three  years  ;  the  title  to  the  whole  land  was  retained 
by  the  vendor  to  secure  the  purchase-money.  The  note  for  the  first 
payment  was  assigned  by  the  payee,  Grubb,  before  maturity,  to  E. 
McCormick,  and  by  him  indorsed  to  Hurst,  Purnell,  &  Co.,  and,  after 
protest  at  maturity,  paid  to  the  holder  by  W}*sor,  Sr.,  the  surety.  ^*-^t-  ^/ 
Wysor,  Sr.,  then  filed  his  bill  in  the  Circuit  Court  of  Carroll  County 
against  Wysor,  Jr.,  and  Grubb,  claiming  that  having  paid  said  note 
for  the  first  instalment  of  the  purchase-money  of  said  land  as  surety 
for  his  son,  Wysor,  Jr.,  who  has  no  other  property  than  his  interest  in 
said  land,  he  is  entitled  to  be  subrogated  to  the  lien  rights  of  Grubb, 
She  vendor,  and  to  be  paid  out  of  the  proceeds  of  the  sale  of  said  land 


^f 


2  Law  Rep.  4  Ch.  207.  3  24  Beav.  483. 

r.  s.  29 ;  Re  Kirkwood's  Estate,  L.  R.  1  Ir.  108  ;  City 


1  Law  Rep.  4  Ch.  204. 

4  Bowker  v.  Bull,  1   Sim. 
Bank  v.  Dudgeon,  65  111.  J  ;   Pence  v.  Armstrong,  95  Ind.  191 ;  Nat.  Bank  v.  Silliman, 
65  N.  Y.  475,  Accord.  —  Ed. 


Av*i/- 


^c 


^-CA-O 


414  GRTJBBS   V.   WYSOR.  [CHAP.  III. 

before  Grubb  should  be  paid  the  balance  of  the  purchase-money,  and 
asking  that  a  sale  of  said  land  should  be  directed  for  this  purpose.  A 
decree  to  effect  this  having  been  rendered  by  the  Circuit  Court  of  Car- 
roll County,  Grubb  appealed  therefrom  to  the  Court  of  Appeals. 

Crockett  &  Blair,  for  the  appellant. 

Walker,  for  the  appellee. 

Burks,  J.,  delivered  the  opinion  of  the  Court. 

That  the  negotiable  note  of  June  1,  1874,  was  given  for  the  first  in- 
stalment of  purchase-money  for  the  tract  of  land  sold  by  the  appellant, 
Grubb,  to  the  appellee,  George  W.  Wysor,  Jr. ;  that  the  appellee, 
George  W.  Wysor,  Sr.,  was  surety  for  the  latter  on  said  note ;  that 
the  note  was  assigned  by  Grubb,  the  payee,  to  McCormick,  and  by  the 
latter  indorsed  to  Hurst,  Purnell,  &  Co. ,  and  after  protest  at  maturity 
for  non-payment,  was  paid  to  the  holder  by  the  surety,  are  facts  not 
questioned  in  this  case. 

The  averments  in  Grubb's  answer  to  the  bill,  that  the  note  was  paid 
by  the  complainant,  not  as  surety,  but  on  his  own  account,  or,  if  paid 
by  him  as  suret}',  that  he  had  received  satisfaction  from  his  principal 
for  the  amount  so  paid,  are  affirmative  statements  and  not  supported 
by  the  proofs.  So  that  the  only  question  left  for  decision  by  this  court 
is,  whether  the  surety  is  entitled  to  the  substitution  and  priority  granted 
him  bv  the  decree  of  October  12,  1877. 

The  subrogation  of  the  surety,  for  indemnit}',  on  pa}rment  of  the 
debt  of  his  principal,  to  all  the  rights,  remedies,  and  securities  of  the 
creditor  against  the  principal  for  the  debt,  is  a  familiar  doctrine  of 
courts  of  chancery  everywhere.  It  is  founded,  it  is  said,  not  upon 
contract,  but  upon  a  principle  of  natufaTequit}'  and  justice.  "It  is  a 
mode,"  observes  Judge  Strong,  "which  equity  adopts  to  compel  the 
ultimate  discharge  of  the  debt  by  him  who  in  good  conscience  ought  to 
pay  it,  and  to  relieve  him  whom  none  but  the  creditor  could  ask  to  pay. 
To  effect  this,  the  latter  is  allowed  to  take  the  place  of  the  creditor, 
and  make  use  of  all  the  creditor's  securities  as  if  they  were  his  own." 
McCormick  v.  Irwin.1 

But  this  principle  has  no  application  where  its  enforcement  would  be 
unjust  and  inequitable.  It  may  be  invoked  for  indemnitj",  and  some- 
times, and  on  certain  conditions,  for  exoneration,  by  a  surety  against 
his  principal,  but  not  in  a  case  where  it  would  operate  to  the  prejudice 
of  the  creditor.  For  instance,  it  has  been  held  by  one,  whose  judg- 
ments  always  command,  as  they  deserve,  the  highest  respect,  that  the 
surety,  upon  paying  the  debt,  is  entitled  to  all  the  securities  held  by 
the  creditor,  "provided  the  creditor  has  no  lien  upon  them  or  right  to 
make  them  available  against  the  principal  debtor,  to  enforce  the  pa}r- 
ment  of  a  debt  different  from  that  which  the  surety  has  paid.  But_if 
the  creditor  has  such  a  right,  and  one  arising  out  of  the  transaction 
itself,  of  which  the  suretyship  forms  a  part,  then  the  right  of  the  surety 
to  the  benefit  of  the  securities  is  subordinate  to  the  right  of  the  creditor 


o" 


1  11  Casey,  111,  117. 


SECT.  I.]  GRUBBS   V.   WYSOR.  415 

to  nuike  them  available  for  the  payment  of  his  other  claims,  and  can 
only  be  made  available  after  the  paramount  right  is  satisfied."  Sir  John 
Rom  illy,  M.  R.,  in  Farebrother  v.  Wodehouse.1 

The  principle  here  enunciated  would  apply,  as  it  seems  to  us,  with 
equal  if  not  greater  force,  to  a  case  where  the  creditor  has  a  security 
for  an  entire  debt,  payable  in  instalments,  for  one  only  of  which  the 
surety  is  personally  bound.  To  allow  the  surety,  on  payment  of  this 
instalment,  to  have  the  benefit  of  the  security,  which  was  provided  for 
the  entire  debt,  and  postpone  the  creditor  until  the  surety  is  indemni- 
fied, would  be,  in  effect,  in  a  case  where  the  security  is  insufficient  to 
pay  the  whole  debt,  to  require  the  creditor  to  indemnify,  instead  of  the 
principal  debtor  ;  for,  in  the  case  supposed,  the  creditor  has  the  prior, 
subsisting  paramount  right  to  resort  to  the  security  until  his  entire  debt 
is  satisfied. 

Such  is  the  case  in  judgment.  Grubb,  by  written  contract,  stipu- 
lated to  sell  his  tract  of  land  to  Wysor  (the  younger)  at  the  price  of 
$3,199,  payable  in  three  equal  annual  interest-bearing  instalments,  and 
expressly  retained  the  title  until  all  the  purchase-money  should  be  paid. 
One  month  thereafter,  the  negotiable  note  was  taken  for  the  instalment 
first  to  be  paid.  The  land,  no  doubt,  was  deemed  inadequate  security 
for  the  payment  of  the  price  agreed  upon,  and  the  object  of  the  note 
was  to  strengthen  the  security.  The  land  stood  as  security  for  the  en- 
tire purchase-money,  and  the  note  as  additional  security  for  one  instal- 
ment. If  the  view  of  the  Circuit  Court  prevails,  what  was  intended  as 
further  security  amounts  practically  to  no  securit}'  whatever ;  for,  by 
substitution,  as  applied  in  the  first  decree,  and  the  priority  therein  given 
to  the  suret}r,  and  by  the  sale  under  that  decree,  the  whole  tract  of 
land  has  been  taken  to  indemnify  the  surety  for  the  payment  of  the 
note,  and  the  creditor  is  left  without  any  securit}"  for  the  two  thirds  of 
the  purchase-money  due  him  and  unpaid.  This  cannot  be  equity.  The 
surety  will  be  permitted  to  occupy  the  place  of  the  creditor,  when  the  Vj  *  ' 
latter  has  no  longer  occasion  to  hold  it  for  his  own  protection,  but  eauitv  6^*"^ 
will  never  displace  him,  to  his  prejudice,  merely  to  give  the  surety  a  /f 

better  footing. ,r~  Decree  reversed? 

1  23  Beav.  K.  18,  cited  in  Brandt  on  Suretyship,  §  279. 

2  A  portion  of  the  opinion  is  omitted.  —  Ed. 

8  Zook  v.  Clemmer,  44  Ind.  15;  Vert  v.  Voss,  74  Ind.  565;  Rice  v.  Morris,  82  Ind. 
204 ;  Welch  v.  Parran,  2  Gill,  320;  Parker  v.  Mercer,  7  Miss.  320;  Mathews  v.  Switz- 
ler,  46  Mo.  301  (compare  Allison  v.  Sutterlin,  50  Mo.  274),  Accord. 

Greber  v.  Sharp,  72  Ind.  553,  Contra. 

One  who  is  surety  for  several  notes  secured  by  mortgage  by  paying  one  is  not  enti- 
tled to  subrogation  at  the  expense  of  the  holders  of  the  others.  Carithers  v.  Stuart, 
87  Ind.  424;  Massie  v.  Mann,  17  Iowa,  131.  But  see  contra,  Lynch  v.  Hancock,  14 
S.  Ca.  66. 

In  Ellis  v.  Roscoe,  4  Baxter,  418,  three  notes  secured  by  a  vendor's  lien  were  trans- 
ferred to  three  heirs.  One  heir  sued  the  maker.  A  became  surety  to  stay  judgment, 
and  afterwards  paid  the  judgment.  This  was  held  to  subrogate  A  to  one  third  of  the 
lien. 

In  Dick  v.  Moon,  26  Minn.  309,  A,  the  holder  of  four  notes  secured  by  one  mort« 


416  EX   PARTE   MARSHAL.  [CHAP.  IIL 


Ex  parte   MARSHAL. 
In  Chancery,  before  Lord  Hardwicke,  C,  December  21,  1752. 

[Reported  in  1  Atkyns,  129.] 

Mr.  Garway  of  Worcester  drew  a  great  number  of  bills,  payable  to 
Vere  and  Asgill,  upon  Hatton,  who  had  no  effects  of  Garway's  in  his 
hands,  but,  however,  accepted  the  bills  for  the  honor  of  the  drawer. 

Garway  becomes  a  bankrupt,  and  Hatton,  by  means  of  the  great 
sums  he  paid  on  account  of  such  acceptance  as  before  mentioned, 
becomes  a  bankrupt  likewise. 

The  bill-holders  prove  under  both  commissions,  and  receive  dividends, 
but  not  sufficient  to  pay  20s.  in  the  pound  ;  and  in  April  last  upon  a 
former  day  of  petitions,  Marshal,  &c,  the  assignees  of  Hatton,  preferred 
a  petition  to  Lord  Chancellor,  and  prayed  to  stand  in  the  place  of  the 
bill-holders  pro  tcmto,  as  they  had  received  under  Hatton's  commission 
against  the  estate  of  Garway;  Hatton,  as  was  insisted  by  the  peti- 
tioner's counsel,  being  to  be  considered  as  a  surety  for  the  debt,  and 
Garway  a  principal ;  and  Lord  Chancellor  at  the  former  hearing  made 
an  order  accordingly  ;  but  it  being  strongly  objected  by  the  counsel 
for  Garway's  creditors,  that  this  would  be  charging  Garway's  estate 
doubly,  directed  the  petition  to  stand  over  ;  and  on  its  coming  on  again 
this  day,  his  lordship  ordered,  that  the  petitioners,  as  assignees  of  Hat- 
ton, should  stand  in  the  place  of  the  bill-holders  pro  tanto,  as  Hatton's 
estate  had  paid  on  account  of  his  acceptance  of  the  said  bills,  but 
should  not  be  entitled  to  any  dividend  from  Garway's  estate,  till  the 
bill-holders  had  received  a  full  satisfaction  for  their  debts  ;  and  if  the 
surplus  of  Garway's  estate,  after  the  bill-holders  were  fully  satisfied, 
should  not  be  sufficient  to  answer  what  Hatton  had  paid  as  the  acceptor 
of  Garway's  bills,  then  his  Lordship  declared  that  nothing  in  this  order 
should  prejudice  an}'  right  the  petitioners  might  have  by  action  against 
the  person  of  Garway  for  the  residue  of  their  demand,  notwithstanding 
Garway  has  had  his  certificate  ;  for  his  Lordship  said,  it  seemed  to 
him  as  if  Hatton's  demand  did  not  property  arise  till  after  the  issuing 
of  the  commission  against  Garway  ;  because,  though  there  is  an  im- 
plied contract  between  drawer  and  acceptor,  yet  there  is  no  breach  on 
the  part  of  drawer  till  after  his  bankruptcy,  and  consequently  Hatton 
is  not  a  creditor  under  the  commission,  because  his  debt  is  subsequent 
to  it ;  nor  does  he  fall  linger  the  description  of  persons  in  the  7  Geo.  L, 
who  may  sue  out  commissions,  though  their  debts  are  payable  at  a 
future  da}-.     There  debitum  in  yrcesenti  solvendum  infuturo,  but  here 

gage  on  the  maker's  land,  assigned  the  notes  and  mortgage  to  B,  and  also  mortgaged 
laud  of  his  own  to  secure  two  of  the  four  notes.  A's  land  was  sold  under  this  last 
mortgage  for  enough  to  pay  the  two  notes  secured  by  it.  Whether  A  could  be  sub- 
ogated  to  one  half  of  the  mortgage  on  the  maker's  land  was  left  an  open  question. 
—  Ed. 


BE(yr.  LJ  EX    PARTE    MOOD.  417 

it  was  contingent  whether  it  would  ever  be  a  debt,  as  Garway  might 

not  have  failed. 

The  counsel  for  the  petitioners  mentioned  the  case  Ex  parte  Walton, 
Dec.  23,  1743,  in  the  matter  of  Winsmore's  bankruptcy,  where,  as  he 
stated  it,  Lord  Chancellor  made  an  order,  that  the  assignees  under  the 
commission  against  the  acceptor  should  come  under  the  commission 
against  Winsmore  the  drawer  pro  tanto,  as  the  acceptor  had  paid  on 
account  of  such  bills,  and  to  receive  a  dividend  ratably  with  the  rest 
of  the  creditors. 

Lord  Chancellor  said,  that  the  order  alluded  to  in  Winsmore's  bank- 
ruptcy was  not  as  stated,  nor  was  it  applicable  to  this  case,  but  that 
supposing  the  two  cases  to  be  something  similar,  he  thought  the  direc- 
tions he  had  now  given  under  the  present  petition  were  the  justice  of 
the  case  ;  and  therefore  had  ordered  accordingly.1 


Ex    PARTE    WOOD. 

In  Chancery,  before  Lord  Thurlow,  C,  December  12,  1791. 

[Reported  in  10  Veseij,  415,  cited.'] 

The  case  arose  upon  a  joint  and  several  bond,  executed  by  Cox  and 
Jameson.  Cox's  estate  paid  a  great  part  of  the  debt  by  dividends  under 
a  Commission  against  him.  He  was  surety.  Afterwards  Jameson,  the 
principal,  became  a  bankrupt.  The  bondholders  proved  only  the  re- 
mainder of  their  debt  under  his  Commission.  Cox's  assignees  proved 
the  amount  of  the  dividends  they  had  paid.  The  bondholders  pre- 
sented the  petition  ;  insisting  that  the  assignees  of  Cox  should  not 
receive  dividends  to  their  prejudice  ;  and  should  hold  dividends,  that 
had  been  received,  in  trust  for  the  petitioners.  Lord  Thurlow  dis- 
missed that  petition  ;  holding,  that,  though  Jameson's  assignees  would 
have  to  pay  dividends  to  those  bondholders,  yet  in  respect  of  what 
had  been  paid  by  Cox's  assignees  previously  to  the  bankruptcy  of 
Jameson,  they  should  have  liberty  to  prove  so  much ;  and  the  divi- 
dends paid  to  Cox's  assignees  according  to  that  would  be  part  of  Cox's 
estate,  and  divisible  among  all  his  creditors ;  and  Lord  Thurlow 
thought,  the  distinction  was,  that  in  Ex  parte  Marshal  the  paj'ment 
was  after  the  bankruptcy,  and  in  the  other  case  it  was  previous  to  the 
bankruptcy  ;  and  he  could  not  go  into  farther  nicety. 

1  Ex  parte  Coplestone  Mont.  &  Ch.  262,  Accord.  —  Ed. 


418  EX    PARTE   RUSHFORTH.  [CHAP.  IIL 


Ex  parte  TURNER. 
In  Chancery,  before  Lord  Loughborough,  July  28,  1796. 

[Reported  in  3  Vesey,  243.] 

The  petitioner  had  lent  his  name  by  acceptance  and  indorsement  for 
the  accommodation  of  the  bankrupt,  who  discounted  the  bills  so  accepted 
or  indorsed  with  Snaith  and  Co.  After  the  bankruptcy  upon  the  appli- 
cation of  Snaith  and  Co,  the  petitioner  paid  the  full  value  of  those  bills, 
amounting  to  £815  15s.  to  them.  They  were  creditors  of  the  bankrupt 
to  a  much  larger  amount,  and  they  proved  their  whole  demand,  includ- 
ing the  amount  of  the  bills  received  from  the  petitioner.  The  petitioner 
prayed,  that  Snaith  and  Co.  might  assign  to  the  petitioner  the  dividends 
due  upon  the  proofs  in  respect  of  the  bills  he  had  paid. 

Ex  parte  Marshal  was  cited. 

Lord  Chancellor  [Loughborough]  observing,  that  Snaith  and  Co. 
could  not  be  turned  into  trustees  to  the  prejudice  of  any  right  they 
might  have,  made  the  order  that  Snaith  and  Co.  shall  take  out  of  the 
dividend  upon  the  £815  15s.  so  much  as  would  make  up  the  propor- 
tion, which  they  would  have  received  upon  the  residue  of  the  debt 
proved  beyond  the  £815  15s.,  if  that  debt  of  £815  15s.  had  been  ex- 
punged;  and  the  rest  of  the  dividend  upon  the  £815  15s.  be  paid  to 
the  petitioner ;  and  that  the  dividend  shall  remain  in  the  hands  of  the 
assignees,  till  it  shall  appear,  what  proportion  Snaith  and  Co.  are 
entitled  to. 


Ex  parte  RUSHFORTH. 

In  Chancery,  before  Lord  Eldon,  C,  March  16,  1804, 

February  5,  1805. 

[Reported  in  10  Vesey,  409.] 

A  joint  and  several  bond  dated  the  7th  of  June,  1800,  was  executed 
by  Benjamin  and  William  Rushforth,  carrying  on  business  in  partner- 
ship, and  their  brother  Richard  Rushforth,  the  petitioner,  to  Seaton  and 
Co.  in  the  penal  sum  of  £20.000  :  with  condition  to  be  void,  if  they  or 
any  of  them,  their  or  any  of  their  heirs,  executors,  or  administrators, 
should  from  time  to  time  and  at  all  times  thereafter,  within  the  space 
of  two  calendar  months  next  after  notice  in  writing,  pa}'  Seaton  and 
Co.,  their  heirs,  executors,  &c.  all  and  every  such  sum  and  sums  of 
money,  which  shall  and  may  at  any  time  or  times  hereafter  be  paid  or 
advanced  by  Seaton  and  Co.  on  account  of  Benjamin  and  William 


SECT.  I.]  EX  PABTE  KUSHFOKTH.  419 

Rushforth,  by  payment  or  discounting  of  drafts,  bills,  &c. ;  with  interest 
and  commission. 

On  the  23d  of  June  a  Commission  of  Bankruptcy  issued  against  Ben- 
jamin and  William  Rushforth.  Seaton  and  Co.  proved  under  the  Com- 
mission a  debt  of  £20,000  upon  the  balance  of  their  banking  account. 
After  that  proof  they  called  upon  the  petitioner  to  pay  £10,000  under 
the  bond,  as  surety.  Having  paid  £4,270  in  part,  he  presented  the  peti- 
tion ;  praying  that  upon  his  paying  £10,000  to  Seaton  and  Co.  they  may 
be  ordered  to  assign  to  him  the  benefit  of  the  dividends  on  the  sum  of 
$10,000,  or  so  much  of  such  dividends  as  would  remain  after  satisfying 
Seaton  and  Co.  the  proportion  they  would  be  entitled  to  out  of  such 
dividends  upon  the  residue  of  their  debt,  if  £10,000,  part  of  their  said 
debt,  were  expunged  from  the  proceedings.1 

The  Lord  Chancellor  [Eldon].  I  have  had  great  doubt  upon  this 
case.  It  is  clear,  where  a  pei'son  has  a  demand  upon  a  bill  or  bond 
against  several  persons,  and  no  part  of  that  demand  has  been  paid  be- 
fore the  bankruptcy  by  any  of  them,  he  may  prove  against  each  ;  and 
the  circumstance,  that  one  is  a  surety,  the  other  the  principal,  or  a  co- 
surety, as  between  themselves,  does  not  give  a  right  to  stop  the  holder 
receiving  dividends,  until  he  has  received  20s.  in  the  pound.2  That  is 
well  settled  in  Ex  parte  Marshal  and  Ex  parte  Wyldmau  ;  and  it  ap- 
plies to  joint  and  several  demands,  either  by  bill  or  bond.  In  Ex  parte 
Marshal  it  happened,  that  the  person  was  acceptor  without  effects  ; 
therefore,  for  the  accommodation  of  the  drawer;  and,  being  so,  if  he 

1  The  statement  of  facts  is  abridged,  the  arguments  of  counsel  and  a  portion  of  Lord 
Eldon's  opinion  are  omitted.  —  Ed. 

2  Payment  by  a  principal,  or  by  a  prior  party  to  a  bill  or  note  after  proof  in  the 
bankruptcy  of  the  surety  or  subsequent  party  to  the  bill  or  note  will  not  diminish  the 
amount  to  be  proved  against  the  surety  or  subsequent  party.  Ex  parte  Wyldmau,  1  Ves. 
Sr.  115,  1  Atk.  109,  s.  c.  In  re  Weeks,  13  N.  B.  R.  263;  Re  Pulsifer,  9  Biss.  487,  14 
Fed.  Rep.  247,  s.  c. ;  Re  Hicks,  19  N.  B.  R.  299  ;  Re  Meyer.  78  Wis.  615. 

But  see  contra,  Ex  parte  Lefebvre,  2  P.  Wms.  407  ;  In  re  Howard,  4  N.  B.  R.  571 ; 
In  re  Pulsifer,  9  N.  B.  R.  487 ;  Lowell  v.  French,  54  Vt.  193. 

Similarly  if  a  surety  or  a  subsequent  party  to  a  bill  or  note  makes  a  general  assign- 
ment in  trust  for  creditors,  a  provable  claim  against  his  estate  will  not  be  reduced  by  a 
subsequent  payment  to  the  creditor  by  the  principal  or  prior  party.  Williams  v.  Im- 
porters Bank,  44  111.  Ap.  295  ;  Citizens  Bank  v.  Patterson,  78  Ky.  291  ;  Southern  Bank 
v.  Byhs,  67  Mich.  296 ;  Third  Bank  v.  Haug,  82  Mich.  607  ;  Brown  v.  Merchants  Bank, 
79  N.  Ca.  244;  Miller's  Est.,  82  Pa.  113  ;  Ragsdale  v.  Bank,  45  S.  Ca.  575;  Citizen's 
Bank  v.  Kendrick,  92  Tenn.  437;  First  Bank  v.  Williamson  (Tennessee,  1895),  3£ 
S.  W.  R.  573  (semble). 

On  the  other  hand  a  payment  by  a  principal  or  by  a  prior  party  to  a  bill  or  note  be- 
fore proof  made  in  the  bankruptcy  of  a  surety  or  a  subsequent  party  to  a  bill  or  note, 
or  before  the  execution  of  a  general  assignment  in  trust  for  the  creditors  of  a  surety  of 
subsequent  party  to  a  bill  or  note  will  reduce  pro  tanto  the  amount  of  the  claim  prov- 
able by  the  creditor  in  the  bankruptcy  or  under  the  general  assignment.  Ex  parte 
Ryswick,  2  P.  Wms.  89  ;  Ex  parte  Wyldman,  2  Ves.  Sr.  115,  1  Atk.  109,  s.  c. ;  Ex 
parte  Royal  Bank,  2  Rose,  197  ;  Re  Blakeley,  9  Morrell,  173  •  In  re  Weeks,  13  N.  B.  R. 
263;  In  re  Hicks,  19  N.  B.  R.  299  (semble);  Re  Cram,  I  Hask.  89;  In  re  Hamilton, 
1  Fed.  Rep.  800  ;  Sohier  v.  Loring,  6  Cush.  537 ;  Blake  v.  Ames,  8  All.  318  ;  Nat.  Bank 
p  Porter,  122  Mass.  308  ;  Bank  v.  Alexander,  85  N.  Ca.  352.  —  Ed. 


420  EX   PARTE    EUSHFOKTa  [CHAP.  III. 

had  paid  the  bill  in  full,  he  had  a  right  to  insist,  that  they  should  hold 
the  proof  for  his  benefit.  If  the  securit}*  carries  interest,  is  that  equity 
to  be  extended  to  the  prejudice  of  the  creditor's  claim  of  interest?  In 
the  case  of  Cox  and  Jameson  the  money,  paid  by  Cox's  assignees,  was 
paid  and  advanced  for  Jameson,  and  the  bondholders  insisted  Cox's 
assignees  should  not  prove  against  Jameson's  estate  ;  for  though  it  was 
true  the  bondholders  could  only  prove  the  residue  of  the  debt,  yet 
Cox's  estate  was  also  debtor  to  them  for  that  residue ;  and  Cox's 
assignees  should  not  draw,  in  respect  of  what  they  paid  before  the 
bankruptcy,  out  of  a  fund,  also  liable  with  them  to  the  residue  of  that 
debt.  Suppose  there  had  been  no  one  else  to  prove,"  that  Cox's  as- 
signee had  paid  £5,000  ;  and  that  was  one  half  of  the  debt :  it  is  sin- 
gular ;  but  Lord  Thurlow's  opinion  was,  that,  if  there  was  no  one 
to  enter  into  competition  but  those  two  parties,  Cox's  assignees  should 
take  out  of  the  estate  of  Jameson  £2,500,  for  instance ;  the  bond- 
holders taking  the  other  £2,500  :  the  sum  taken  by  Cox's  assignees 
to  be  divided  among  all  his  creditors.  The  consequence  would  be, 
that  he,  a  co-obligor  with  Jameson,  would  take  one  half  of  what 
was  in  the  hands  of  Jameson.  That  does  not  appear  very  equitable  : 
but  Lord  Thurlow,  regarding  the  rule  of  Law,  thought  it  would  create 
too  much  nicet}',  if,  because  so  strong  a  case  as  that  might  be  put, 
he  was  to  run  through  all  the  minutiae  of  all  these  cross  and  subtle 
equities. 

Lord  Rosslyn,  in  Ex  parte  Turner,  laid  down  a  different  rule:  a  case 
certainly  constituted  of  different  circumstances  :  the  former  being  one 
bond,  covering  the  whole  debt ;  and  yet  the  relief  was  refused  to  the 
creditor:  the  latter  case  furnishing  more  objection  to  such  relief:  the 
demand  being  upon  a  great  variety  of  securities,  upon  which  a  great 
number  of  persons  were  answerable,  getting  into  the  hands  of  the 
creditor,  as  security  for  a  cash  balance.  The  first  question  does  not 
seem  clearly  decided,  whether  the  petitioner  could  under  the  circum- 
stances be  entitled  to  stand  in  the  place  of  the  creditor  at  all :  the  pur- 
pose of  the  deposit  not  being  fully  answered.  Lord  Rosslyn,  however, 
thought  the  petitioner  entitled  to  some  benefit;  and  then  came  the 
question,  in  what  shape?  If  that  case  is  rightly  determined,  it  leads 
to  extreme  nicety  ;  the  proof  being  considered  both  as  expunged,  and 
as  not  expunged  ;  and,  to  ascertain  that  equity,  an  account  must  in 
every  case  be  taken,  what  is  the  amount  of  the  debts  at  the  time  ;  what 
is  to  be  the  proportion  of  the  dividend,  if  that  arrangement  is  to  be 
made ;  and  what,  if  it  is  not  to  be  made.  I  am  therefore  not  without 
hesitation,  whether  I  ought  to  follow  that  Order. 

The  Lord  Chancellor.  Upon  the  part  of  the  petitioner  it  was 
contended,  that  he  states  nothing  more  than  the  common  equity  of  a 
surety;  and  it  is  clear,  that  if  the  debt  had  been  only  £10,000,  this 
equity  would  have  resulted  ;  and  he  could  have  compelled  the  bankers 
to  prove  for  his  benefit,  and  make  over  their  securities.  A  surety  is 
entitled  to  all  the  securities  the  principal  has.     But  it  is  said-  here  the 


SECT.  I.]  EX    PARTE   EUSIIFOETH.  421 

debt  is  £20,000  ;  and  the}'  are  entitled  to  hold  the  whole  proof  against 
the  surety ;  and  the  assignees,  on  the  other  hand,  contend,  that,  when 
they  have  received  £10,000  that  ought  to  be  struck  off  from  their 
proof.  With  reference  to  that,  the  question  comes  round  to  this  ; 
whether,  according  to  the  true  nature  of  such  an  engagement  between 
all  the  parties  in  this  bond  and  mortgage,  it  was  competent  to  these 
bankers  to  go  on  without  giving  notice  to  the  surety ;  for  this  is  a  case 
in  which  they  contracted  to  give  him  notice  before  forfeiture  of  the 
bond  ;  whether  they  were  at  liberty  to  swell  the  demand  to  his  preju- 
dice beyond  the  sum  of  £10,000.  The  agreement  was  to  advance  all 
such  sums  as  should  be  required ;  but  it  is  limited  by  an  express  con- 
tract for  an  obligation  to  secure  all  those  sums ;  and  the  question  is 
whether  that  limitation  in  the  extent  of  the  obligation  is  not  a  sufficient 
ground  for  the  inference,  that  those  sums  were  not  to  be  extended  be- 
yond £10,000,  to  the  destruction  of  every  right  of  the  surety.  Take 
the  case  of  two  sureties,  each  for  the  separate  sum  of  £10,000; 
each,  paying  the  principal  creditor,  would  be  entitled  to  stand  in  his 
place  for  the  sum  paid.  It  would  be  very  strong  to  hold,  that,  as  they 
have  taken  but  one  suret}-,  he  shall  be  in  a  worse  situation.  I  think 
the  bankers  are  not  entitled  in  equity  to  say,  as  against  the  surety, 
that  their  demand  is  more  than  £10,000,  the  amount  of  the  bond  he  has 
given  ;  upon  which  he  would  be  prima  facie  entitled  to  stand  in  their 
place  :  as  to  the  residue  of  their  debt,  they  ought  to  be  considered,  if  I 
may  so  express  it,  as  their  own  insurers. 

As  this  is  perfectly  a  new  case,  I  make  the  Order,  with  liberty  to  file 
a  bill.1 

The  order  was  made  with  the  qualification  in  Ex  parte  Turner. 

1  Paley  v.  Field,  12  Ves.  435,  Accord. 

But  in  Queen  v.  O'Callaghan,  1  Ir.  Eq.  439,  the  Court  declined  to  apply  the  doctrine 
of  the  principal  case  to  the  prejudice  of  the  Crown.  —  Ed. 


422  EX    PARTE    TURQUAND.  [CHAP.  Ill 


Ex  parte  TURQUAND.     In  re  FOTHERGILL. 
In  the  Court  of  Appeal,  May  26,  1876. 

[Reported  in  3  Chancery  Division,  445.] 

This  was  an  appeal  from  an  order  made  by  Mr.  Registrar  Brougham, 
sitting  as  Chief  Judge  in  Bankruptcy,  in  the  liquidation  of  Messrs.  R. 
Fothergill  and  E.  T.  Hankey. 

Among  the  joint  creditors  of  Fothergill  &  Hanke}T  was  Mr.  E.  Corry, 
a  metal  merchant,  who  had  accepted  for  their  accommodation  bills  to 
the  amount  of  more  than  £160,000.  He  filed  a  liquidation  petition  on 
the  4th  of  June,  1875,  and  on  the  10th  of  August  his  creditors  agreed 
to  a  composition  of  4s.  in  the  pound.  The  holders  of  the  bills  accepted 
by  him  proved  in  his  liquidation,  and  he  paid  composition  to  them  to 
the  amount  of  about  £32,350. 

The  bill-holders  also  proved  in  the  liquidation  of  Fothergill  &  Han- 
key, the  drawers  of  the  bills,  and  applied  for  B  debentures  correspond- 
ing with  their  proofs.1  Of  these  bill-holders,  some,  namely,  the  Lon- 
don and  Westminster  Bank,  the  Union  Bank  of  London,  the  London 
Joint  Stock  Bank,  Messrs.  Richardson,  Messrs.  Gl}-n,  Mills,  &  Co., 
the  Alliance  Bank,  and  the  National  Bank  of  Scotland,  had  received 
nothing  under  Cony's  composition  before  making  their  proof,  and 
therefore  proved  for  their  whole  debt ;  while  others,  namely,  the  West 
of  England  and  South  Wales  Discount  Bank,  the  City  Bank,  Messrs. 
Gurney  &  Co.,  and  the  National  Discount  Compan}-,  had  received  4s. 
in  the  pound  upon  their  proof,  and  therefore  proved  for  16s.  in  the 
pound  on  the  amount  of  their  debts. 

Cony  now  claimed  to  be  entitled  to  stand  in  the  place  of  the  bill- 
holders  to  the  extent  of  4s.  in  the  pound,  and  to  receive  B  debentures 
to  that  amount  in  their  stead.  Mr.  Registrar  Brougham  sitting  for 
the  Chief  Judge,  made  an  order  that  Cony  should  be  at  liberty  to 
prove  against  the  estate  of  Fothergill  &  Hankey  for  £9,825,  the  amount 
of  the  composition  paid  to  the  West  of  England  and  the  other  firms 
who  had  proved  for  16s.  in  the  pound,  and  that,  with  respect  to  the 
proofs  by  the  London  and  Westminster  Bank  and  other  firms  who  had 
proved  for  the  whole  amount  of  their  debts,  Corry  was  entitled  to 
stand  in  the  place  £»f  the  said  several  creditors  to  the  extent  of  4s.  in 
the  pound  on  the  amount  of  their  several  debts,  and  to  receive  B 
debentures  to  the  amount  of  the  said  composition  of  4s.  in  the  pound, 
being  about  £22,525. 

From  this  decision  the  bill-holders,  in  the  name  of  the  trustee  in  the 
liquidation,  appealed. 

During  the  progress  of  the  argument  it  was  conceded  by  the  appel- 
lants that  Mr.  Corry  should   be  permitted  to  prove  for  £9,825,  being 

1  By  an  arrangement  with  the  creditors  the  dividends  on  claims  proved  were  to  he 
paid  in  debentures.  —  nil. 


SECT.  I.J  EX  PARTE  TURQUAND.  423 

the  amount  of  composition  paid  by  him  to  bill-holders  before  tendering 
their  proof,  and  the  decision  was  therefore  confined  to  the  remaining 
sum  of£22,525.x 

Mkllish,  L.  J.  I  am  of  the  same  opinion.  It  is  perfectly  clear 
that  if  bills  are  discounted  in  the  market  which  are  drawn  by  one  firm 
upon  another  firm,  and  then  both  those  firms  become  bankrupt  or  go 
into  liquidation  by  arrangement,  or  agree  to  a  composition,  the  bill- 
holder  is  entitled  to  prove  against  both  estates  and  to  receive  all  the 
dividends  or  composition  he  can  get  from  both  estates  until  he  has 
received  20s.  in  the  pound,  and  whether  it  ma}'  turn  out  that  the 
drawer  is  surety  for  the  acceptor  or  the  acceptor  is  surety  for  the 
drawer,  yet  the  surety  has  no  right  to  receive  anything  until  the  bill- 
holder  has  received  20s.  in  the  pound.  Therefore  it  is  perfectly  clear 
that  if  Fothergill  &  Hankey's  estate  had  been  wound  up  in  bankruptcy, 
or  liquidation  or  composition,  and  20s.  in  the  pound  had  not  been  real- 
ized, the  holders  of  the  bills  would  have  been  entitled  to  have  kept  the 
4s.  in  the  pound  they  had  got  from  Corry  as  well  as  the  amount  of  the 
dividend  or  composition  they  got  from  Fothergill  &  Hanke}'.  Then 
the  sections  of  the  Bankruptcy  Act  which  have  been  referred  to  allow 
creditors  to  make,  even  after  a  liquidation,  either  a  composition  with 
the  debtor,  or  to  make  what  is  described  as  an  arrangement  of  the 
affairs  of  the  debtor.  Supposing  they  choose  to  make  an  arrangement 
of  the  affairs  of  the  debtor,  and  the  majorit}'  bind  the  minority  to  enter 
into  that  arrangement,  then,  in  m}'  opinion,  the  equity  of  the  suret}*  in 
an  arrangement  which  will  probably  produce  more  than  20s.  in  the 
pound  to  the  principal  creditor  is  this,  —  he  may  make  up  20s.  in  the 
pound  to  the  creditors,  and  take  the  arrangement  in  the  place  of 
the  principal  creditor.  In  that  case  he  gets  the  debentures,  and  in  my 
opinion  that  secures  him  against  any  injustice.  Let  me  suppose  in  this 
instance  that  Cony,  instead  of  paying  4s.,  paid  18s.  in  the  pound,  so 
that  he  had  a  substantial  interest  in  these  debentures,  then  he  could 
have  said,  "There  is  your  remaining  2s.  in  the  pound;  give  me  the 
debentures."  Or  possibly  he  might  say,  "  Your  right  is  only  to  get 
20s.  in  the  pound.  These  debentures  are  now  salable  for  5s.  in  the 
pound  in  the  market ;  go  and  sell  them,  and  take  2s.  in  the  pound  to 
make  20s.,  and  give  me  3s."  In  that  way  he  would  get  perfect  justice  ; 
therefore  there  is  no  difficulty  in  seeing  that  perfect  justice  is  done  to 
the  surety.  In  point  of  fact,  this  estate  is  so  insolvent  that  it  is  plain 
he  could  never  get  anything  if  it  is  wound  up  in  the  ordinal  way.2 

1  The  statement  of  facts  is  abridged,  and  the  arguments  of  counsel,  and  concurring 
opinions  of  James  and  Baggallay,  L.  JJ.,  are  omitted.  —  Ed. 

2  Compare  Ex  -parte  Watson,  42  L.  T.  Rep.  516,  in  which  case  the  proceeds  of  a 
surety's  property,  placed  to  a  suspense  account  by  the  creditor,  was  not  treated  as  a 
payment  by  the  surety,  and  therefore  did  not  diminish  the  amount  for  which  the 
creditor  might  prove  against  the  principal. —  Ed. 


424  IN    EE    BAXTER   AND    RALSTON.  [CHAP.  IIL 


In  re  A.  BAXTER  and  D.  C.  RALSTON. 

In  the  United  States  District  Court,  Southern  District  of  New 

York,  July  3,   1878. 

[Reported  in  18  National  Bankruptcy  Register,  497.] 

The  facts  appear  sufficiently  in  the  opinion. 

Abbott  Bros.,  for  assignee. 

Hedfield  &  Hill,  for  creditor. 

Choate,  J.     Re-examination  of  proof  of  debt. 

The  Canadian  Bank  of  Commerce  became  the  holder  for  value  before 
maturity  of  two  drafts  drawn  by  the  bankrupts  on  their  correspondents 
in  Liverpool,  who  accepted  the  same. 

Since  the  dishonor  of  the  draft,  the  bank  has  received  from  the  ac- 
ceptors fifty  per  cent  of  the  amount  due  on  them,  without  prejudice  to 
the  rights  of  the  bank  against  other  parties. 

The  drafts  were  drawn  against  consignments  of  merchandise,  which 
the  drawers  undertook  to  make,  but  which  they  failed  to  make. 

It  is  claimed  that  the  acceptor  has  released  the  drawer  from  all  de- 
mands. It  is  now  insisted  b}'  the  trustee  of  the  bankrupt  that  the 
holder  of  the  draft  can  only  prove  for  the  amount  thereof,  after  deduct- 
ing the  payment  made  by  the  acceptor,  but  the  register  allowed  the 
proof  for  the  whole  amount. 

The  bankrupt  is  in  this  case  the  principal  debtor,  and  the  acceptor 
is  the  surety. 

It  is  conceded  that  but  for  the  release  of  the  drawer  b}'  the  acceptor, 
the  creditor  would  have  the  right  to  prove  for  the  whole  amount. 
Downing  v.  Traders'  Bank.1 

But  it  is  insisted  that  in  this  case,  as  the  acceptor  has  released  all 
his  claims  against  the  drawer,  the  creditor  cannot  prove  for  the  whole, 
because  the  acceptor  has  no  claim  on  the  surplus  after  the  creditors 
shall  be  paid  in  full. 

There  is  no  merit  in  this  position. 

If  the  dividend  which  the  creditor  shall  be  entitled  to  shall,  with 
the  sum  received  from  the  surety,  exceed  the  whole  amount  of  the 
drafts,  that  ma}'  be  a  proper  case  for  an  application  to  the  court  to 
have  this  surplus  disposed  of,  according  to  the  equities  of  the  parties, 
if  the  acceptor  is  then  properly  before  the  court ;  meanwhile,  to  reduce 
the  amount  for  which  the  creditor  is  to  prove  would  certainly  prejudice 
his  rights,  contrary  to  the  conditions  under  which  he  accepted  the  money 
from  the  surety. 

He  is  entitled  to  prove  for  the  whole  amount,  and  if  there  shall  be  a 
surplus  it  can  then  be  determined  to  whom  it  belongs. 

The  entry  of  a  judgment  does  not  affect  the  right  to  prove  the  debt. 

Petition  dismissed. 
1  11  N.  B.  R.  137. 


SECT.  I.]  IN   KE    BAXTER    AND   RALSTON.  425 

Further  argument  having  been  granted,  the  following  opinion  was 
rendered  Aug.  10,  1878  : 

Choate,  J.  This  case  was  submitted  on  briefs  of  counsel,  and  a 
further  oral  argument  has  been  granted  on  application  of  the  assignee, 
on  account  of  the  very  large  amount  involved  in  the  decision.  After  a 
careful  reconsideration  of  the  matter,  I  am  still  of  opinion  that  the 
bank  has  a  right  to  prove  against  the  bankrupts  for  the  whole  amount 
of  the  drafts  held  by  it. 

The  receipt  by  the  bank  from  the  acceptors  of  the  drafts,  who,  on 
the  facts  shown,  stood  in  the  relation  of  sureties  for  the  bankrupts,  of 
fifty  per  cent  in  release  of  all  claims  on  them,  did  not  operate  to  dis- 
charge any  part  of  the  debt  of  the  bankrupts  to  the  holder  of  the  drafts. 
It  was  not  accepted  as  paj'ment  in  part  of  their  debt  to  the  holder,  nor 
was  the  sum  so  paid  indorsed  on  the  drafts  as  part  payment,  nor  was 
there  any  agreement  to  that  effect.  On  the  contrary,  it  was  agreed  to 
be  received  without  prejudice  to  the  rights  of  the  holder  as  against 
other  parties  on  the  drafts.  The.  rights  thus  expressly  reserved  cer- 
tainly included  the  right  to  present  their  claim  against  the  bankrupt 
for  its  full  amount. 

There  is  no  question  that  the  holder  of  commercial  paper  may  prove 
for  the  full  amount  against  all  the  parties  liable,  as  he  may  maintain 
actions  against  them  all. 

The  holder  was  not  bound  to  receive  this  dividend  from  the  suret}T. 
He  might  have  rested  on  his  right  to  sue  him,  which  would  not  in  any 
way  have  prejudiced  his  right  to  prove  the  debt  for  the  full  amount 
against  the  bankrupt,  unless  and  until  the  surety  should  have  paid  the 
drafts  in  full,  in  which  case,  by  the  terms  of  the  Bankrupt  Law,  the 
surety  would  have  been  subrogated  to  the  rights  of  the  holder. 

Instead  of  suing  the  surety,  the  holder  accepted  fifty  cents  in  full  as 
against  him  without  prejudice  to  his  rights  against  the  bankrupt.  Even 
without  this  reservation,  the  surety,  having  paid  part  of  the  debt  only, 
would  have  no  right  to  prove  for  that  part  against  the  bankrupt  unless 
the  holder  should  fail  to  prove  the  debt ;  but  the  right  of  the  holder 
would  still  remain  to  prove  for  the  whole  debt,  partly  for  himself  and 
partly  as  trustee  for  the  suretj'  (Section  5070).  Now,  the  reservation 
of  rights  agreed  upon  in  this  case  had  no  meaning,  it  seems  to  me,  if 
it  did  not  save  the  existing  right  of  the  holder  to  prove,  for  his  own 
benefit,  on  the  whole  debt,  until  he  received,  with  the  payment  made 
b}T  the  surety,  full  satisfaction  of  the  debt.1 

Such  being  the  rights  of  the  parties  at  the  time  the  dividend  was 
received  from  the  suret}-,  the  subsequent  release  b}'  the  surety  of  all 
claims  against  the  bankrupt  cannot  possibly  affect  the  rights  of  the 
holder,  who  was  no  party  to  that  release,  except  so  far  as  those  rights 

1  Downing  v.  Traders'  Bank,  2  Dill  136,  Accord. 

In  re  Howard,  4  N.  B.  R.  571 ;  In  re  Sterling,  4  Hughes,  453  (semble),  Contra. 
In  the  two  cases  cited  in  the  preceding  paragraph,  the  amount  paid  by  the  surety 
it  was  recognized,  might  be  proved  l>y  him  against  the  creditor.  —  Ed. 


426  IN    RE    SOUTHER.  [CHAP.  Ill 

are  held  by  him,  not  for  his  own  use  and  benefit,  but  for  the  benefit  of 
the  surety. 

The  surplus  that  the  holder  may  receive  from  the  bankrupt,  upon 
proof  of  the  debt  in  full,  after  full  satisfaction  of  the  debt,  would  in- 
deed, but  for  the  release,  belong  to  the  surety  ;  and  this  surplus  the 
surety  might,  as  against  the  holder,  deal  with  as  he  chose  ;  but  the 
surety  is  not  a  party  to  this  proceeding,  and  therefore  what  may  be 
the  effect  of  the  dealings  between  the  surety  and  the  bankrupt  on  the 
right  to  this  surplus  may  and  should  be  left  till  it  appears  that  there 
will  be  such  a  surplus. 

As  it  is  conceded  in  this  case  that  there  will  be  none,  the  point  is 
not  material ;  but  the  proper  order  to  make  in  the  matter  is,  that  the 
holder  be  allowed  to  prove  for  the  whole  amount  of  the  drafts,  reserv- 
ing all  questions  that  ma}r  arise  in  case  he  should  be  entitled  upon  such 
proof  to  dividends,  which,  together  with  the  sum  received  from  the 
suret3',  will  exceed  the  whole  amount  of  the  drafts  and  interest. 


In  re  SOUTHER.     Ex  parte  TALCOTT. 

In  the  United  States  District  Court,  District  of  Massachusetts, 

March,  1874. 

[Reported  in  2  Loivell,  320.] 

Proof  of  Debt.  —  Payment  by  Surety.  —  This  was  a  question 
upon  evidence  certified  by  the  register,  concerning  the  debt  offered  for 
proof  by  Frederic  Talcott,  and  called  for  a  decision  whether  the 
amount  paid  by  an  indorser  of  a  note,  after  the  bankruptcy  of  the 
maker,  and  after  an  affidavit  in  due  form  had  been  made  by  Talcott  for 
proving  the  debt,  but  before  the  first  meeting  of  the  creditors,  and  there- 
fore before  the  debt  could  be  admitted  to  proof,  should  be  deducted 
from  the  debt  as  a  payment  pro  tanto.     The  case  was  not  argued. 

Lowell,  J.  The  general  rule  undoubtedly  is  that  the  holder  of  a 
note  may  prove  against  all  the  parties  for  the  full  amount,  and  receive 
dividends  from  all  until  he  has  obtained  the  whole  of  his  debt  with 
interest.  It  is  likewise  the  general  rule,  that  what  he  has  received 
from  one  party,  or  from  dividends  in  bankruptc}7  of  one  party  to  the 
note,  are  payments  which  he  must  give  credit  for,  if  he  afterwards 
proves  against  others.  Sohier  v.  Loring,1  Ex  parte  Wyldman,2  Ex 
parte  The  Royal  Bank  of  Scotland,3  Ex  parte  Tayler.4  I  am  of  opin- 
ion that  this  latter  rule  must  be  confined  to  cases  in  which  the  payment 
has  been  made  by  the  person  primarily  liable  on  the  note  or  bill.  The 
two  cases  last  above  cited  cover  the  whole  ground  of  this  inquiry.     In 

1  6  Cush.  537.  2  2  Rose,  197. 

»  1  Atk.  109.  4  1  DeG.  &  J.  302. 


SECT.  I.]  IN    RE    SOUTHER.  427 

the  former,  it  was  held  that  such  credit  must  be  given  for  dividends 
received  after  a  claim  had  been  made  in  bankruptcy,  but  before  the 
debt  was  actuall}'  and  formally  proved  ;  and,  in  the  latter,  that  when 
such  payments  had  been  made  by  the  drawer  of  a  bill  of  exchange 
and  the  proof  was  offered  against  the  acceptor,  still  the  credits  must 
be  given.  One  of  the  learned  justices,  however,  in  giving  judgment, 
reserved  his  opinion  whether  the  rule  would  apply  if  the  holder  offered 
his  proof  as  a  trustee  for  the  drawer,  or  for  the  estate  of  the  drawer. 
The  theory  of  this  decision  is  that  no  creditor  can  prove  for  more  than 
his  actual  debt,  as  it  exists  at  the  time  of  proof,  without  obtaining  an 
undue  advantage  over  other  creditors.  The  answer  attempted  to  be 
maintained  by  the  creditor  in  that  case  was  that  a  holder  ma}'  sue  for 
the  whole  debt  at  law  against  the  party  primarily  liable,  and  hold  the 
money  for  whom  it  may  concern.  For  this  position,  he  cited  Jones  v. 
Broadhurst,1  then  recently  decided.  The  court  of  appeal  in  bankruptcy 
expressed  doubts  whether  Jones  v.  Broadhurst  stated  the  true  rule  at 
law,2  and  decided  that  the  rule  in  bankruptcy,  at  all  events,  was  well 
settled  against  it,  unless,  perhaps,  the  holder  proved  that  he  was  act- 
ing as  trustee  for  some  one  whose  liability  was  subsequent  to  that  of 
the  bankrupt. 

It  seems  to  me,  however,  that  the  argument  in  favor  of  the  proof  in 
full  was  sound.  The  better  opinion  at  common  law  is  that  pa3'ment 
by  a  drawer  or  indorser  does  not  exonerate  the  acceptor  or  maker, 
unless  the  promise  of  the  latter  was  for  the  accommodation  of  the 
former,  or  there  is  some  other  equity  which  makes  the  note  or  bill  the 
debt  of  the  part}*  who  has  made  the  paj'ment,  or  unless  he  has  made 
it  at  the  request  or  for  the  benefit  of  the  acceptor  or  maker.  Byles  on 
Bills  (10th  ed.),  221,  and  cases  there  cited.  If  this  be  not  the  rule 
at  law,  still  I  consider  it  to  be  so  in  bankruptcy.  The  statute,  section 
19,  adopting  the  equities  of  the  case,  declares  that  if  a  surety,  or  other 
person  liable  for  a  bankrupt  (and  this  undoubtedly  includes  indorsers), 
pays  or  satisfies  the  debt,  or  if  he  remains  liable  for  the  whole  or  any 
part  of  it,  he  ma}'  prove  it  in  bankruptcy,  or  require  the  creditor  to 
prove  it,  in  order  that  he  may  have  the  benefit  of  the  dividends.  This 
law  does  not  expressly  meet  the  present  case,  because  the  indorsers 

i  9  C.  B.  173. 

2.  There  is  no  foundation  for  this  doubt.  The  cases  uniformly  support  the  doctrine 
of  Jones  v.  Broadhurst.  Randall  v.  Moore,  12  C.  B.  261  ;  Williams  v.  James,  19  L.  J. 
Q.  B.  445  ;  Agra  Bank  v.  Leighton,  L.  R.  2  Eq.  56  ;  Woodward  v.  Pell,  L.  R.  4  Q.  B. 
55  ;  Thornton  v.  Maynard,  L.  R.  10  C.  P.  695  ;  Andrews  v.  Toronto  Bank,  15  Ont.  Ap. 
648 ;  Bird  v.  La.  Bank,  93  U.  S.  96  (St.  of  L.  not  a  bar)  ;  Davis  v.  McConnell,  3  McL. 
391;  Granite  Bank  v.  Fitch,  145  Mass.  567;  Mechanics'  Bank  v.  Hazen,  13  Johns. 
353;  Madison  Bank  v.  Pierce,  137  N.  Y.  444  ;  Concord  Bank  v.  French,  65  How.  Pr. 
317  ;  Logan  v.  Cassell,  88  Pa.  288;  Bank  of  Amiens  v.  Senior,  11  R.  I.  376. 

If  the  indorser  has  paid  a  part  of  the  amount  due  on  bill  or  note  the  holder  may 
collect  in  full,  and  hold  as  a  trustee  for  the  indorser  pro  tanto.  Johnson  v.  Reunion, 
2  Wils.  262  ;  Walwyn  v.  St.  Quiutin,  1  B.  &  P.  652  ;  Reid  v.  Furnival,  1  Cr.  &  M.  538 ; 
North  Bank  v.  Hamlin,  125  Mass.  506  ;  Madison  Bank  v.  Pierce,  137  N.  Y.  444  ;  Ward 
v.  Tyler,  52  Pa.  393.  —  Ed. 


428  BAKDWELL   V.    LYDALL.  [CHAP.  III. 

here  have  neither  satisfied  the  debt,  nor  do  they  remain  liable  to  pay 
it,  but  they  have  taken  an  intermediate  course,  by  paying  a  part  for  a 
full  release  of  their  own  liability.  Under  these  circumstances,  in  the 
absence  of  an}'  stipulation  one  wa}T  or  another  about  the  maker  of  the 
note,  who  was  already  a  bankrupt,  the  law  will  imply  that  the  holder 
is  to  prove  the  whole  debt ;  and,  if  the  dividends  are  more  than  enough 
to  pay  him  in  full,  after  crediting  to  the  surety  what  he  has  received 
from  him,  the  creditor  will  hold  the  surplus  for  the  benefit  of  the 
surety.  This,  though  not  within  the  exact  language  of  section  19,  is 
fully  within  its  spirit.  It  is  not,  however,  as  a  construction  of  that 
section  that  I  find  the  law,  but  merely  that  the  section  recognizes  a 
familiar  equity,  and  takes  for  granted  that  a  creditor  ma}T  prove  the 
debt,  notwithstanding  payment  in  whole  or  in  part  b}r  a  surety,  because 
he  in  fact  proves  as  the  trustee  of  the  surety.  The  payment  made  by 
the  indorser  after  the  maker  of  the  note  was  a  bankrupt  cannot  be 
proved  by  the  surety  as  mone}"  paid,  unless  it  comes  precisely  within 
section  19,  because  it  had  not  been  paid  at  the  time  of  the  bankruptcy. 
It  must  either  be  provable  as  part  of  the  note  in  the  hands  of  the 
holder,  and  for  the  benefit  of  the  indorser,  or  not  provable  at  all,  and 
in  the  latter  case  it  would  not  be  barred  by  the  discharge.  This  was 
one  of  the  motives  for  the  enactment  that  the  surety  may  compel  the 
creditor  to  prove ;  and  it  takes  for  granted,  as  I  have  said,  that  the 
creditor  might  prove  voluntarily.  The  case  of  Jones  v.  Broadhurst, 
and  those  which  follow  it  on  the  one  side,  or  differ  from  it  on  the 
other,  deal  merely  with  the  fact,  or  the  presumption,  whether  or  not 
the  payment  is  intended  to  discharge  the  debt  of  the  principal  debtor ; 
if  not,  the  right  of  action  remains  good.  The  fact  in  this  case  is  that 
the  surety  gave  a  certain  sum  for  what  is  equivalent  to  a  covenant  not 
to  sue  him,  and  it  is  not  for  the  bankrupt  to  say  that  his  debt  is  thereby 
paid,  when  he  has  not  furnished  the  means  to  pa\r  it. 

Proof  admitted  in  full} 


BARDWELL   and   Others   v.   LYDALL. 
In  the  Common  Pleas,  Mat  3,  1831. 

[Reported  in  7  Bingham,  489.] 

Tindall,  C.J.2  This  was  an  action  upon  a  guaranty,  contained  in 
a  letter  addressed  by  the  defendant  to  the  plaintiffs  in  these  terms, — 

1  Ex  parte  De  Tastet,  1  Rose,  10  ;  In  re  Ellerhorst,  5  N.  B.  R.  144;  Ex  parte 
Harris,  2  Lowell,  568;  Re  Pulsifer,  9  Biss.  487,  490,  14  Fed.  Rep.  247  s.  c.  (semble) ; 
Dearth  v.  Hide  Bank,  100  Mass.  540  (semble) ;  Ames  v.  Huse,  55  Mo.  Ap.  422,  Accord. 

Cooper  v.  Pepys,  1  Atk.  106;  Ex  parte  Leers,  6  Ves.  644;  Ex  parte  Worrall,  1 
Cox,  309 ;  Ex  parte  Tayler,  1  De  G.  &  J.  302 ;  In  re  Oriental  Bank,  6  Eq.  582 ;  Re 
Blackburne,  9  Morrell,  249,  252  (semble),  Contra.  —  Ed. 

2  Only  the  opinion  of  the  court  is  given.  —  Ed. 


SECT.  I.]  BARDWELL    V.    LYDALL.  429 

"  In  consideration  of  your  giving  credit  in  the  way  of  }'Our  trade  to 
Lionel  Maybew,  I  guarantee  to  you  the  payment  of  any  debt  which 
he  may  contract  with  you  from  time  to  time  as  a  running  balance  of 
account,  to  any  amount  not  exceeding  £400." 

It  appeared  at  the  trial  tbat  the  plaintiffs,  on  the  faith  of  this  guar- 
anty, had  furnished  Mayhew  with  goods  to  an  amount  far  exceeding 
the  £400  ,•  and  that  Mayhew  becoming  embarrassed,  assigned  his 
effects  to  trustees  for  the  pa}-ment  of  his  creditors,  2^ro  rata,  when 
the  plaintiffs  claimed  a  debt  of  £625  against  his  estate,  and  received 
from  the  trustees,  in  common  with  the  rest  of  his  creditors,  a  dividend 
of  8s.  Id.  in  the  pound  on  the  whole  debt. 

The  present  action  was  brought  to  recover  the  difference  between 
the  dividend  and  the  whole  debt,  being  a  sum  less  than  the  £400 
secured  by  the  guaranty. 

On  the  part  of  the  defendant  it  was  contended,  that  the  plaintiffs 
had  no  right  to  deduct  the  whole  sum  received  as  a  dividend  from  the 
gross  amount  of  the  debt,  and  to  hold  the  defendant  liable  on  the  guar- 
anty for  the  residue  of  the  demand,  up  to  the  extent  of  the  guaranty ; 
but  that  the  dividend  received  by  the  plaintiffs  was  to  be  applied  rat- 
ably to  the  whole  debt,  as  well  the  part  covered  by  the  guaranty  as 
the  part  which  was  left  uncovered,  and  consequently  a  ratable  deduc- 
tion was  to  be  made  for  the  sum  covered  by  the  guaranty.  The  defend- 
ant had  paid  into  court  the  sum  of  £118,  and  the  jury  found  a  verdict 
for  the  plaintiffs,  with  £238  18s.  damages,  being  the  full  amount  of  the 
debt  remaining  due  to  them  ;  leave  being  reserved  to  the  defendant  to 
move  to  reduce  the  damages,  if  the  court  should  be  of  opinion  that 
the  ratable  deduction  was  to  be  made  on  the  principle  contended  for 
by  him. 

And  upon  consideration,  we  are  of  opinion  that  such  deduction  ought 
to  be  made.  If  the  whole  amount  of  the  debt  from  Mayhew  had  not 
exceeded  the  £400,  it  is  clear  that  the  defendant  would  have  received 
the  full  benefit  of  the  dividend  of  8s.  Id.  in  the  pound,  as  he  could  not 
have  been  answerable  under  the  guaranty  for  more  than  the  remainder, 
after  the  deduction  of  such  dividend  ;  and  although  the  amount  of  the 
debt  does  in  this  case  exceed  the  £400,  and  thereby  the  position  of  the 
creditor  is  so  far  altered,  that  one  part  of  his  debt,  viz.  to  the  extent 
of  £400,  is  guaranteed,  and  the  remainder  not,  still  there  seems  no  rea- 
son why  the  application  of  a  payment  of  so  much  in  the  pound  upon 
the  whole  debt  should  in  any  way  be  affected  by  the  collateral  circum- 
stance of  the  guaranty  ;  or  why  such  payment  should  not  be  applicable 
as  well  to  the  £400  guaranteed  as  to  the  part  uncovered  by  the  guar- 
anty. For,  suppose  the  sum  which  exceeds  the  £400  had  been  cover- 
ered  by  the  guaranty  of  another  person,  could  it  be  contended  that  the 
plaintiffs  might  have  applied  the  whole  of  the  dividends  to  either  part 
of  the  demand  at  their  own  election,  and  thus  have  varied,  at  their  own 
pleasure,  the  extent  of  the  responsibility  of  the  two  sureties?  In  the 
case  supposed,  we  think  each  of  the  sureties  might  have  claimed  a 


430  BAKDWELL    V.    LYDALL.  [CHAr.  Ill 

ratable  deduction,  out  of  each  pound  of  the  amount  of  debt  to  which 
their  respective  guaranties  extended.  And  if  so,  the  same  result  ap- 
pears to  us  to  follow,  whether  the  excess  beyond  the  £400  is  covered 
by  the  guaranty  of  a  stranger,  or  the  creditor  is  contented  to  become 
his  own  surety  for  the  residue,  &c,  and  to  look  for  payment  of  it  to 
the  principal  debtor  alone. 

Again,  suppose  in  the  principal  case  the  defendant  had  paid  the  £400 
to  the  plaintiffs  before  the  plaintiffs  had  made  their  claim  against  May- 
hew's  estate.  There  could  be  no  doubt,  in  that  case,  that  if  they  proved 
the  whole  demand,  they  would  have  been  trustees  for  the  defendant  for 
the  dividend  on  the  £400  ;  or,  if  the}-  had  declined  to  prove,  that  the 
defendant  might  have  received  the  dividend  on  that  sum,  if  the  trust- 
deed  admitted  of  such  an  arrangement.  And  what  difference  can  it 
make  in  the  equitable  rights  of  the  defendant,  whether  such  payment 
is  made  before,  or  is  sought  to  be  enforced  against  him  after,  the  pay- 
ment pro  rata  out  of  the  estate  of  the  principal? 

Indeed,  the  case  seems  to  be  decided  as  to  the  right  of  the  suretv 
to  claim  the  benefit  of  the  deduction  now  contended  for,  in  a  court  of 
equity,  by  the  case  of  Pale}-  v.  Field,1  which  is  in  substance  and  effect 
the  same  as  the  present.  The  Court  there  held,  that  the  dividend  was 
received  on  each  portion  of  the  debt,  and  that  as  to  the  portion  of  the 
debt  covered  by  the  guaranty,  the  creditor  was  a  trustee  for  the  surety. 
The  Master  of  the  Rolls  there  observing,  "  that  unless  this  were  so,  it 
would  follow  that  the  guaranty  would  operate  to  compel  the  surety  to 
contribute,  in  effect,  to  indemnify  Field  against  a  loss,  against  which  it 
was  expressly  provided  that  he  should  not  be  indemnified,  viz.,  a  loss 
occasioned  by  his  advancing  more  than  the  sum  of  £1,500,"  the  extent 
of  the  guaranty  limited  by  the  bond. 

The  argument  on  the  part  of  the  plaintiffs  proceeds  on  the  ground, 
that  the}-  may  treat  the  payment  as  a  payment  in  gross  of  part  of  the 
debt ;  and,  consequently,  have  the  right  to  deduct  it,  and  to  claim  the 
remainder  under  the  guaranty.  And,  further,  it  is  urged,  that  what- 
ever may  be  the  decision  or  doctrine  of  a  court  of  equity,  this  is  a  ques- 
tion in  a  court  of  law,  and  the  deduction  cannot  be  supported  upon 
any  legal  ground. 

It  appears  to  us,  however,  that  both  these  objections  are  answered 
by  adverting  to  the  evidence  given  in  the  cause.  The  payment  was 
not  a  payment  in  gross,  but  a  payment  specifically  made  by  the  trus- 
tees, and  specifically  received  by  the  plaintiffs,  as  so  much  in  each  and 
every  pound  of  the  whole  amount  of  the  debt;  so  that  there  is  a  speci- 
fied appropriation  of  payment  to  each  and  every  part  of  the  demand, 
which  appears  to  us,  in  law,  to  operate  as  a  part-payment  of  the  £400, 
as  well  as  a  part-payment  of  the  residue. 

Upon  this  short  ground,  we  think,  in  the  present  case,  the  same 
deduction  may  be  made  in  law,  to  which  the  defendants  appear  en- 

1  12  Ves.  435. 


SECT.  I.]  GEAY   V.    SECKHAM.  431 

titled  in  reason  and  good  sense,  without  compelling  them  to  have 
recourse  to  a  court  of  equity,  and  accordingly,  we  think  the  present 
rule  should  be  made  absolute.  Bide  absolute.1 


GRAY  v.    SECKHAM. 

In  Chancery,  before  Sir  G.  Mellish  and  Sir  W.  M.  James,  L.  JJ.. 

June  19,  1872. 

[Reported  in  Latv  Reports,  7  Chancery  Appeals,  680.] 

At  the  time  of  making  the  promissory  note  mentioned  below,  the 
London  and  County  Banking  Company  were  the  bankers  of  the  Gelynog 
Llantwit  Colliery  Company,  Limited. 

On  the  10th  of  May,  1865,  S.  L.  Seckham  and  three  other  directors 
of  the  Colliery  Company  made  a  promissory  note,  by  which  they 
promised  to  pay  to  another  director,  H.  Strong  (who  was  manager  of 
a  branch  of  the  bank),  or  order,  the  sum  of  £2,000. 

This  note  was  made  for  the  accommodation  of  the  Colliery  Company, 
and  for  the  purpose  of  being  transferred  to  the  bank  as  a  security  for 
any  balance  which  might  be  due  from  the  Colliery  Company  to  the 
bank  ;  and  the  note  was  accordingly  indorsed  by  Strong  to  the  bank. 

On  the  20th  of  July,  1866,  an  order  was  made  for  winding  up  the 
Colliery  Company,  and  £3,659  was  on  the  7th  of  December,  1867, 
found  in  the  winding  up  to  be  the  balance  due  by  the  Colliery  Company 
to  the  bank.  On  this  sum  of  £3,659  a  dividend  of  £1,051  became  pay- 
able to  the  bank  in  the  winding  up. 

In  1868  an  action  on  the  note  was  brought  by  the  bank  against 
Seckham,  in  which  action  judgment  was  obtained  ;  and  in  1870  Seck- 
ham paid  the  bank  £2,067,  principal  and  interest  due  on  the  note. 

Seckham  then  claimed  so  much  of  the  dividend  of  £1,051  as  was  due 
in  respect  of  £2,067.  The  bank,  on  the  other  hand,  claimed  all  the 
dividends  coming  to  them  in  the  winding  up  until  they  had  received 
full  payment  of  the  sum  due  to  them. 

The  question  was  brought  before  the  court  on  a  special  case  ;  and  the 
Vice-Chancellor  Bacon,  on  the  26th  of  January,  1872,  decided  that 
Seckham  was  entitled  to  a  part  of  the  dividend  received,  the  bank 
taking  thereout  so  much  as  would  make  up  the  proportion  which  they 
would  have  received  upon  the  residue  of  the  debt  proved  beyond  the 
£2,067  if  that  £2,067  had  been  expunged,  and  Seckham  taking  the 
remainder. 

The  bank  appealed. 

1  Raikes  v.  Todd,  8  A.  &  E.  846  ;  Thornton  v.  McKewan,  1  H.  &  M.  525 ;  Goodwin 
v.  Gray,  22  W.  R. 312;  Gee  v.  Pack,  33  L.  J.  Q.  B.  49;  Hobson  v.  Bass,  6  Ch.  792, 
Accord.  —  Ed. 


432  GRAY   V.    SECKHAM.  [CHAP.  ITI 

Mr.  Amphktt,  Q.  C,  and  Mr.  Benjamin,  for  the  appellants.1 

Mr.  Kay,  Q.  C,  and  Mr.  R.  E.  Turner,  for  Mr.  Seckbam,  were 
not  called  upon. 

Sir  G.  Mellish,  L.  J.  This  is  an  appeal  from  a  decision  of  the 
Vice-Chancellor  Bacon  on  a  special  case.  [His  Lordship  then  stated 
the  questions  asked  by  the  special  case.]  The  Vice-Chancellor  has  de- 
cided that  Mr.  Seckham  is  entitled  to  a  portion  of  the  dividend  on  the 
£3,659,  and  I  am  of  opinion  that  his  decision  is  correct. 

We  have  to  consider  two  questions  —  first,  whether  evidence  can 
properly  be  given  that  this  contract  by  the  directors  was  realby  a  con- 
tract of  suretyship  ;  and  secondly,  if  it  was  a  contract  of  suretyship, 
then,  whether  from  the  form  of  contract  or  from  the  circumstances 
stated  in  the  special  case,  we  can  infer  that  Mr.  Seckham  agreed  that, 
on  the  Collier}'  Company  being  wound  up,  any  dividend  he  might  other- 
wise be  entitled  to  should  go  to  the  bank  until  the  bank  had  received 
20s.  in  the  pound  on  the  debt  which  might  be  due  from  the  company  to 
the  bank. 

Now,  as  to  the  facts  of  the  ca,se,  it  appears  to  me  beyond  all  question 
that  this  is  simply  the  ordinary  case  of  a  customer  proposing  to  over- 
draw his  account  at  a  bank,  and  offering  as  security  the  promissory 
note  of  third  persons.  I  am  of  opinion  that  it  makes  no  difference  at 
all  that  the  company  are  not  themselves  parties  to  the  note.  I  am 
also  of  opinion  that  the  form  of  the  note  makes  no  difference,  for  the 
agreement  was  in  substance  that  the  directors  were  to  give  this  as  a 
security  for  the  payment  of  the  balance  due. 

Then  comes  the  question  whether  that  was  a  security  for  a  part  of 
the  debt.  It  seems  to  be  admitted  that,  if  it  was  only  a  security  for 
part  of  the  debt,  then,  if  one  of  the  makers  of  the  note  has  paid  the 
amount,  he  is  entitled  to  the  benefit  of  the  dividend  quoad  that  part. 
Yet  it  was  argued,  in  the  first  place,  that  this  was  not  a  security  for 
a  part  of  the  whole  debt  of  £3,659,  but  was  simply  a  security  for  the 
balance  which  might  remain  unpaid. 

I  am  of  opinion  that  it  was  really  a  security  for  a  part.  The  ques- 
tion, if  it  arose  in  a  court  of  common  law,  would  simply  be,  what  was 
the  consideration  for  this  note?  It  is  quite  plain  that  there  was  no 
consideration  at  all  as  between  the  four  directors  who  signed  the  note 
and  Captain  Strong,  nor  between  Captain  Strong  and  the  bank.  The 
bank  never  advanced  any  money  or  gave  an}'  consideration  to  Captain 
Strong,  and  the  only  consideration  for  the  note  is  the  balance  which 
might  from  time  to  time  be  due  from  the  company  to  the  bank.  There- 
fore it  was  a  note  given  by  third  persons,  the  only  consideration  for 
which  was  a  debt  to  be  due,  not  from  any  person  who  signed  the  note, 
but  from  the  company  ;  and  the  bank  has  so  treated  it,  because  the 
company  having  been  ordered  to  be  wound  up,  the  bank  brought  their 
action  against  Mr.  Seckham  on  his  liability,  and  recovered  from  him 
the  whole  sum. 

1  The  argument  for  appellants  is  omitted.  —  Ed 


SECT.  I.J  GRAY   V.    BECKHAM.  42? 

Upon  this  the  question  arises,  whether  there  is  anything  to  take  this 
case  out  of  the  ordinary  rule  that,  when  a  surety  is  only  surety  for  a 
part  of  the  debt,  and  has  paid  that  part  of  the  debt,  he  is  entitled  to 
receive  the  dividend  which  the  principal  debtor  pays  in  respect  of  that 
sum  which  the  surety  has  discharged. 

I  cannot  see  that  there  is  anything  to  take  this  case  out  of  the  ordi- 
narv  rule.  No  doubt  it  is  now  not  unusual  for  contracts  of  guaranty 
to  be  expressly  worded  so  as  to  show  that  it  is  intended  that  such  divi- 
dends may  be  kept ;  and  of  course  by  express  words  such  a  charge 
may  be  effected,  as  was  done  in  the  case  of  Midland  Banking  Co.  v. 
Chambers.  The  question  for  us  to  decide  is  whether  such  an  agree* 
ment  has  been  entered  into.  We  cannot  infer  this  from  the  simple 
fact  that  the  instrument  of  suretyship  is  in  the  ordinary  form  of  a  prom' 
issory  note.  No  doubt  by  the  form  of  the  note  the  persons  who  sign 
the  note  appear,  so  far  as  the  note  is  concerned,  to  be  the  principal 
debtors  ;  but  it  may  be  always  given  in  evidence  what  the  consideration 
of  the  note  really  was,  and  here  it  appears  that  the  only  consideration 
for  the  note  was  a  debt  due  from  third  parties. 

The  truth  is  that  the  introduction  of  such  provisions  into  contracts 
for  suretyship  is  a  modern  invention  ;  and  certainly  suretyship  by  a 
promissory  note  is  far  older  than  those  provisions,  and  has  existed  as 
long  as  promissory  notes  have  been  used  in  this  country. 

I  am  therefore  of  opinion  that  this  case  comes  within  the  ordinary 
rule,  and  I  do  not  think  that  there  is  in  this  respect  any  difference  be- 
tween a  bankruptcy  and  a  winding  up  ;  for  in  the  winding  up  of  a  com- 
pany it  is  obvious  that  there  must  be  a  settlement  of  everjT  possible 
•jlairu  against  the  company. 

Then  Mr.  Seckham  having,  at  the  request  of  the  company,  and  for 
their  interest,  executed  this  promissory  note,  and  having  paid  the 
£2,067,  he  is  a  creditor  of  the  company  for  that  amount ;  and  he  would 
be  eutitled  to  prove  against  them  for  it.  It  is  quite  clear  that  the  bank 
cannot  also  be  entitled  to  prove,  because  if  they  were,  the  company 
would  be  paying  the  dividend  twice  over  on  the  same  debt.  Then  the 
question  is,  which  of  the  two  is  entitled  to  the  dividend?  It  is  quite 
obvious  that  Mr.  Seckham,  not  having  pledged  that  dividend,  is  the 
person  who  is  entitled  to  receive  it,  he  having  in  fact  paid  the  bank, 
and  the  bank  having  received  from  him  that  part  of  the  debt  which  was 
due  to  the  bank. 

Upon  the  whole,  I  am  of  opinion  that  the  decision  of  the  Vice- 
Chancellor  was  right,  and  that  this  appeal  must  be  dismissed  with 
costs.1 

Sir  W.  M.  James,  L.  J.  I  am  of  the  same  opinion.  The  distinction 
which  has  been  raised  between  making  a  promissory  note  as  surety  to 

1  Ex  parte  Holmes,  Mont.  &  Ch.  301  ;  Ford  v.  London  Bank,  5  Vict.  L.  R.  (Eq.) 
328,  Accord. 

Brough's  Est.,  71  Pa.  460  (semble),  Contra. 
Compare  Ex  parte  Brook,  2  Rose,  334,  336,  and  note  (a). — Ed. 

28 


434  GKAY   V.    SECKHAM.  [CHAP.  IIL 

a  bank  and  making  a  promissory  note  and  depositing  it  as  security  to 
the  bank,  is  too  subtle  for  me. 

The  respondents  then  asked  that  the  order  made  by  the  Vice-Chan- 
cellor might  be  varied  by  directing  that  Mr.  Seckham  should  receive 
the  proportion  of  dividend  due  on  the  sum  paid  by  him  without  con- 
sidering the  sum  paid  by  him  as  having  been  expunged. 

Sir  W.  M.  James,  L.  J.  I  am  of  opinion  that  this  order  must  be 
rectified  in  the  way  suggested.  The  cases  Ex  parte  Turner,  and  Ex 
parte  Rushforth,  were  cases  under  the  bankruptcy  laws,  and  it  is  quite 
clear  that  they  may  be  explained  by  reference  to  the  then  state  of  the 
law  as  to  payments  by  sureties.  In  the  then  state  of  the  law  a  surety 
paying  a  debt  after  the  bankruptcy  had  no  means  whatever  of  proof, 
though  he  was  entitled  to  his  remedy  against  the  bankrupt  to  whom  the 
certificate  was  no  discharge.  That  was  the  remedy  of  the  surety,  and 
one  can  easily  understand  that  it  would  be  according  to  common  sense 
and  common  equity  for  the  principal  creditor  to  claim  the  same  rights 
as  if  the  suret}'  had  paid  the  debt.  But  I  cannot  understand  how  it  is 
possible  to  apply  the  principle  not  to  a  case  of  bankruptcy  but  to  a  case 
of  winding  up,  which  is  the  administration  of  an  estate  exactl}'  similar 
to  the  administration  of  the  estate  of  a  deceased  person.  In  that  case, 
whether  the  debt  is  paid  at  one  moment  or  at  another  does  not  in  the 
slightest  degree  affect  the  right  of  proof  against  the  estate,  which  has 
always  been  liable  to  exactly  the  same  amount  of  dividend.  I  am  of 
opinion  that  there  is  no  analogy  in  this  respect  between  the  cases  of 
bankruptcy  and  winding  up.  It  is  clear  that  no  harm  could,  in  any 
conceivable  state  of  things,  be  done  to  the  creditor  by  the  mode  in 
which  the  debt  was  paid,  either  at  one  particular  moment  or  another  ; 
and  therefore  there  is  no  ground  for  making  the  deduction  which  has 
been  directed  by  the  order  named.  The  point  is  not  raised  by  the 
special  case,  and  I  am  quite  sure  that  if  it  had  been,  it  would  not  have 
been  considered  reasonable. 

Sir  G-.  Mellish,  L.  J.  I  am  of  the  same  opinion.  It  appears  to 
me  that  there  is  a  great  deal  of  difference  between  the  winding  up  of  a 
company  and  an  ordinary  bankruptcy,  in  this  respect,  that  every  pos- 
sible claim  and  demand  against  the  company  has  to  be  settled  under 
the  winding  up.  Now  here,  directly  the  debt  of  £2,067  was  paid,  there 
was  a  debt  due  from  the  company  to  the  surety  who  paid  it.  It  appears 
to  me  that  he  must  be  entitled  to  receive  the  whole  of  the  dividend  in 
respect  of  that  debt,  and  I  do  not  see  what  equity  there  is  to  de- 
prive him  of  that  part  which  he  is  deprived  of  by  the  order  of  the 
court  below. 

The  order  of  the  court  below  must  be  affirmed  with  this  variation, 
and  the  appellants  will  pay  the  costs  of  the  appeal. 


SECT.  I.]  MIDLAND   BANKING   CO.    V.    CHAMBERS.  435 


MIDLAND   BANKING   CO.   v.   CHAMBERS. 

In  Chancery,  before  Sir  C.  J.  Selwyn  and  Sir  G.  M. 
Giffard,  L.  JJ.,  March  23,   1869. 

[Reported  in  Law  Reports,  4  Chancery  Appeals,  398.] 

This  was  an  appeal  by  the  defendants  from  a  decree  of  Vice-Chan- 
cellor Malins.1 

The  plaintiff's  were  bankers  at  Sheffield.  In  1865  they  agreed  to 
allow  Mercer,  a  customer  of  theirs,  to  overdraw  his  account,  on  the 
following  guaranty  being  given  them  by  J.  Thorpe. 

"  In  consideration  of  your  opening  an  account  with  Mr.  F.  J.  Mercer, 
and  advancing  to  him  at  any  time  the  sum  of  £300  at  my  request,  I 
hereby  guarantee  to  you  the  repayment  of  all  moneys  which  shall  at  any 
time  be  due  from  him  to  you  on  the  general  balance  of  his  account  with 
you,  and  I  hereby  declare  that  this  guaranty  shall  be  a  continuing 
guaranty  to  the  extent,  at  any  one  time,  of  £300  ;  and  shall  not  be 
considered  as  wholly  or  partially  satisfied  by  the  payment  or  liquidation 
at  any  time  or  times  hereafter  of  any  sum  or  sums  of  money  for  the 
time  being  due  upon  such  general  balance  as  aforesaid  ;  but  shall  extend 
to  cover  and  be  a  security  for  every  and  all  future  sum  and  sums  of 
money  at  any  time  due  to  you  thereon,  notwithstanding  any  such  pay- 
ment or  liquidation.  And  I  further  declare  that  you  may  grant  to  the 
said  F.  J.  Mercer,  or  to  any  drawers,  acceptors,  or  indorsers  of  bills  of 
exchange  or  promissoiy  notes  received  by  you  from  him,  any  time,  or 
other  indulgence,  and  compound  with  him  or  them  respectively  without 
discharging  or  satisfying  my  liability  ;  and  that  all  dividends,  composi- 
tions, and  payments  received  from  them  or  him  respectively,  shall  be 
taken  and  applied  as  payments  in  gross,  and  that  this  guaranty  shall 
apply  to  and  secure  any  ultimate  balance  that  shall  remain  due  to  the 
said  compan}* ;  and  I  further  declare  that  this  guaranty  shall  continue 
to  be  binding  notwithstanding  an}r  changes  that  may  from  time  to  time 
take  place  in  the  shareholders  in  the  said  Midland  Banking  Company, 
Limited." 

On  the  6th  of  January,  1866,  Mercer  assigned  all  his  estate  and  effects 
to  Thomas  Chambers  and  John  Thorpe  in  trust  for  the  payment  of  his 
debts,  to  be  applied  in  the  same  manner  as  if  he  had  been  adjudged 
bankrupt.  This  deed  was  registered  under  the  Bankruptcy  Act,  1861, 
§194. 

At  the  time  of  the  execution  of  the  deed  there  was  due  from  Mercer 
to  the  plaintiffs  on  the  balance  of  his  account  the  sum  of  £410  4s.  lid. 
In  May,  1866,  Thorpe  paid  over  to  the  plaintiffs  £300  in  discharge  of 
his  guaranty.  Mercer,  it  appeared,  had  given  to  Thorpe  a  mortgage 
to  indemnify  him  against  all  claims  on  the  guaranty.     The  mortgaged 

1  Law  Rep.  7  Eq.  179. 


436  MIDLAND    BANKING   CO.    V.    CHAMBERS.  [CHAP.  Ill 

property  was  sold  by  the  trustees  of  the  creditors'  deed,  and  the  £300 
paid  to  Thorpe,  and  the  £300  which  he  paid  to  the  plaintiffs  was,  in 
fact,  the  £300  which  he  thus  received  under  the  counter  security. 

The  trustees  contending  that  the  plaintiffs  were  entitled  to  prove  only 
for  £110  46'.  lie/.,  being  the  balance  due  from  Mercer  after  deducting 
the  £300,  the  present  bill  was  filed  asking  that  the  trusts  of  the  creditors' 
deed  might  be  administered  by  the  Court,  and  that  it  might  be  declared 
that  the  plaintiffs  were  entitled  to  a  dividend  on  their  whole  debt. 
Vice-Chancellor  Malins  made  a  declaration  accordingly,  and  the  trus- 
tees appealed. 

Mr.  Cotton,  Q.  C,  and  Mr.  Kekewich,  for  the  appellants.1 

Mr.  De  Gex,  Q.  C,  and  Mr.  Bristowe,  for  the  plaintiffs,  were  not 
called  upon. 

Sir  C.  J.  Selwyn,  L.  J.  There  are  two  questions  in  this  case.  One 
as  to  the  construction  of  the  guaranty,  the  other  as  to  the  effect  of 
Thorpe  having  been  fully  paid  by  means  of  his  counter-security.  It  is 
settled  by  Thornton  v.  M'Kewan,  2and  other  cases,  that  where  a  surety 
who  is  liable  for  part  of  a  debt  has  paid  the  whole  of  what  he  is  liable 
for,  he  is  entitled  to  stand  in  the  place  of  the  creditor  to  that  extent 
against  the  estate  of  the  bankrupt  debtor.  The  surety  may,  however, 
in  his  contract  of  suretyship  agree  to  waive  this  right  for  the  benefit  of 
the  creditor,  and  the  question  is,  whether  the  surety  did  so  in  the  pres- 
ent case.  I  am  of  opinion  that  the  clause  in  the  latter  part  of  the  guar- 
anty was  intended  to  exclude  the  surety  from  the  right  to  have  a  share 
in  the  benefit  of  the  proof,  and  to  allow  the  creditor  to  receive  the  full 
amount  of  the  dividend.3  This  being  so,  there  only  remains  the  ques- 
tion whether  the  position  of  the  creditor  is  affected  by  the  fact  that  the 
surety  has  been  fully  paid  by  means  of  the  security  given  him  by  the 
debtor.  This  question  is  answered  by  Ex  parte  Hope,4  which  differs 
from  the  present  case  only  in  this,  that  there  the  debt  was  joint,  and 
the  security  given  to  the  surety  was  upon  the  separate  estate  of  one  of 
the  bankrupts  ;  but  the  iudgment  treats  that  distinction  as  clearly  im- 
material. The  Lord  Justice  Knight  Bruce,  then  Chief  Judge  in  Bank> 
ruptcy,  says5:  "The  agreement  would,  I  conceive,  have  been  clearly 
effectual  and  binding  between  the  creditor  and  surety  if  the  surety  had 
not,  by  means  of  his  mortgage,  or  otherwise,  received  payment  from 
the  assignees  or  from  the  bankrupt's  estate,  and  if  so,  I  do  not  see  why 
their  redemption  of  the  mortgage,  or  the  payment  of  the  surety  in  any 
other  way  out  of  the  bankrupt's  estate  should  vary  the  rights  of  the 
creditor.  I  think  that  they  must  take  the  surety's  rights,  if  they  take 
them  at  all,  as  he  had  them  himself;  that  they  cannot  make  any  claim 

1  The  argument  for  the  appellants  and  the  concurring  opinion  of  Giffard,  L.  J.,  are 
omitted.  —  Ed. 
-  1  II.  &  M.  525. 

3  Ex  parte  Hope,  3  M.  T>.  &  D.  720 ;  Ex  parte  Miles,  De  Gex,  623  ;  Earle  v.  Oliver. 
2  Ex.  71 ;  Re  Sellers,  38  L.  T.  Rep.  395;  Ex  parte  National  Provincial  Bank,  17  Ch 
Div.  98 ;  In  re  Sass,  '96,  2  Q.  B.  12;  In  re  Gillespie,  L.  R.  19  Ir.  198,  Accord.  —Ed. 

4  3  M.  D.  &  D.  720.  5  3  M.  D.  &  D.  725. 


SECT.  I.]  ELLIS    V.    EMMANUEL.  437 

against  the  creditor's  dividends  which  the  surety  could  not  have  made ; 
that  he  could  not  have  made  this  claim,  and  that  their  petition  must  be 
dismissed.  I  may  observe  that  I  have  not  stated  the  facts  specifically 
as  they  appear,  nor,  indeed,  do  all  the  facts  clearly  appear ;  but  I  have 
meant  to  state,  and  I  believe  that  I  have  stated,  the  oase  in  a  manner 
as  favorable  as  possible  to  the  petitioners.  The  debtor  was,  in  truth,  a 
firm  of  several  persons  in  partnership  together,  and  the  mortgaged  es- 
tate seems  to  have  been  the  separate  property  of  one  of  the  firm,  a  cir- 
cumstance which  appears  to  me  to  make  no  difference,  at  least  in  favor 
of  the  petitioners.  I  suppose  that  if  it  had  been  made  originally  to  the 
respondents,  it  would  not  have  affected  their  right  of  proof  against  the 
firm."  If  such  a  transaction  as  this  were  entered  into  with  any  fraudu- 
lent purpose,  different  considerations  would  arise  ;  but  nothing  of  the 
kind  is  suggested.  The  case  is  the  simple  case  of  a  surety  who  is  fully 
paid  by  means  of  a  counter-security  given  him  by  the  bankrupt  debtor, 
and  the  appeal  must  be  dismissed  with  costs.1 


ELLIS  and  Another  v.  EMMANUEL. 

In  the  Court  of  Appeal,  February  23,  1876. 

[Reported  in  1  Exchequer  Division,  157.] 

The  judgment  of  the  Court  (Lord  Cairns,  L.  C,  Blackburn  and 
Brett,  JJ.)  was  read  by  — 

Blackburn,  J.2  In  this  case  Thomas  Robert  Etheridge,  as  principal 
debtor,  and  others  (seven  in  all,  if  we  reckon  each  firm  as  a  separate 
person),  as  sureties,  executed  a  bond  to  the  plaintiffs. 

The  instrument  is  not  in  all  respects  artificially  drawn,  but  in  sub- 
stance it  is  this.  The  eight  persons  bound  themselves,  and  every  two 
or  more  and  each  of  them,  jointly  and  severally,  in  the  penal  sum  of 
£14,000.  The  condition  of  the  bond  was  that  if  the  eight  parties,  or  any 
or  either  of  them,  paid  the  principal  sum  of  £7,000  by  certain  instal- 
ments, at  times  specified,  the  bond  should  be  void  and  of  none  effect, 
otherwise  it  should  remain  in  full  force.  Then  followed  a  proviso, 
on  the  effect  of  which  we  expressed  our  opinion  at  the  time  of  the 
argument. 

And  then  a  second  proviso,  that  four  of  the  sureties,  including  the 
now  defendant,  "  shall  not  nor  shall  either  of  them  be  liable  under  or 
by  virtue  of  the  said  bond,  whether  by  reason  of  a  joint  or  of  a  several 
action  or  demand,  for  a  sum  or  sums  exceeding  altogether  in  debt  or 
damages  £1,300." 

Then  a  similarly  worded  proviso,  that  two  others  of  the  sureties  shall 

1  Ex  parte  Hope,  3  M.  D.  &  D.  720,  Accord.  —  Ed. 
Only  the  opinion  of  the  court  is  given.  —  Ed. 


438  ELLIS   V.    EMMANUEL.  [CHAP.  Ill 

not  be  made  liable  for  more  than  £700  ;  and  another  proviso,  that  the 
seventh  suret}'  shall  not  be  liable  for  more  than  £400.  The  aggregate 
of  those  four  sums  of  £1,300,  two  of  £700,  and  one  of  £400,  is  exactly 
£7,000. 

I  think,  on  the  construction  of  this  instrument,  that  the  whole  seven 
sureties  jointly  and  severally  guaranteed  the  whole  £7,000,  and  there- 
fore, that  any  one  of  them  might  be  forced  to  pay  more  than  his  just 
proportion  of  what  remained  due.  For  example,  if  the  principal  debtor 
paid  on"  £6,000,  leaving  £1,000  only  due,  any  one  of  the  first  four  sureties 
might  have  been  forced  to  pay  the  creditor  the  whole  £1,000.  But,  on 
paying  more  than  his  just  proportion,  he  would  be  entitled  to  contribu- 
tion from  the  other  sureties,  on  the  ground  that  they  were  all  liable 
for  the  same  debt.  The  limits  put  on  the  amounts  which  could  be 
recovered  from  the  sureties  respectively  would  affect  the  amount  which 
each  was  to  contribute,  but  would  not  prevent  their  being  all  liable  to 
contribution. 

But  if  the  bond  had  been  framed,  as  it  might  have  been,  so  that  each 
surety  did  not  guarantee  the  whole  £7,000  jointly  with  the  others,  but 
that  each  of  the  four  first-named  sureties  should  each  guarantee  sev- 
erally £1,300,  parcel  of  the  £7,000,  and  that  each  of  the  two  next  named 
should  each  guarantee  severally  £700,  other  parcel,  and  the  last  surety 
guarantee  severally  £400,  the  residue,  the  result  would  be  different. 
There,  if  £6,000  was  paid  off,  the  creditor  probably  would  be  impliedly 
bound  to  apply  the  payments  ratably  to  every  part  of  the  £7,000,  or  at 
least  might  easily,  by  express  stipulation,  be  bound  to  do  so  ;  and  if  he 
did  so  apply  them,  he  could  not  recover  the  whole  £1,000,  remaining 
due  from  one  of  the  sureties  in  the  first  category ;  for,  six  sevenths  of 
the  £1,300  being  paid  off,  the  surety  would  only  be  liable  for  the  remain- 
ing seventh,  or  £145  some  shillings  and  pence,  and  no  more;  and  there 
could  be  no  contribution  between  the  sureties,  because  they  were  not 
liable  for  the  same  debt. 

The  practical  difference  between  the  two  forms  of  security  would 
be  that  in  the  first  case  the  creditor  can  recover  the  whole  from  any  of 
the  sureties  who  are  solvent,  leaving  to  them  the  trouble  of  getting 
contribution  from  the  others,  and  throwing  on  them  the  loss  if  any  of 
their  co-sureties  became  insolvent.  This  is  an  advantage  which  a 
creditor  ma}*  fairly  stipulate  for,  and  which  we  have  no  right  to  take 
away  from  him  if  he  has  stipulated  for  it. 

In  the  case  now  before  us  the  principal  debtor  made  a  liquidation 
arrangement  at  a  time  when  £6,020  lis.  of  the  £7,000  originally  secured 
to  the  plaintiffs  on  the  bond  remained  unpaid.  They  proved  for  that 
amount,  and  received  dividends  amounting  to  9s.  2d.  in  the  pound  on 
that  amount.  But  after  giving  credit  for  that  amount  considerably 
more  than  £1,300  was  due  on  the  bond  at  the  time  when  the  Court  below 
were  applied  to,  to  allow  execution  to  issue.  The  Court  of  Exchequer 
have  allowed  execution  to  issue  for  £850,  the  difference  between  £450 
paid  into  Court  and  £1,300,  the  limit  of  the  defendant's  liability. 


SECT.  I.]  ELLIS    V.    EMMANUEL.  439 

It  was  contended  that  the}-  were  wrong.  It  was  said  that  the  divi- 
dends are  by  law  applied  to  each  pound  of  the  debt  ratably,  which  is 
unquestionably  true  ;  and  it  was  argued  that  the  defendant  was  entitled 
to  take  credit  for  9s.  2d.  in  the  pound  on  the  £1,300,  just  as  he  would 
have  been  if  his  contract  had  been  not  to  be  surety  for  the  whole  £7,000, 
with  a  provision  limiting  his  lia,bility  to  £1,300,  but  to  be  surety  for 
£1,300,  parcel  of  the  £7,000.  If  this  was  so,  the  amount  for  which 
execution  has  been  allowed  to  issue  is  considerably  too  large.  I  have, 
however,  come  to  the  conclusion  that  the  Court  below  were  right. 

The  real  question,  I  think,  is,  whether  a  series  of  cases  beginning 
with  Ex  parte  Rushforth,  decided  by  Lord  Eldon  in  1805,  and  ending 
with  Gray  v.  Seckham,  decided  by  the  Lords  Justices  in  1871,  apply  to 
this  case.  These  decisions  are  several  of  them  in  Courts  of  Appeal  of 
co-ordinate  jurisdiction  with  this  Court,  and  are  clearly  binding  upon  us  ; 
and  I  do  not  think  we  ought  to  make  nice  distinctions,  or  depart  from 
these  cases,  unless  there  is  a  real  solid  distinction  between  these  cases 
and  the  present.     But  I  think  there  is  a  real  solid  distinction. 

I  think  that  the  class  of  cases  referred  to  do  not  lay  down  any  gen- 
eral doctrine  that  where  there  is  a  surety,  with  a  limit  on  the  amount  of 
his  liability,  for  the  whole  of  a  debt  exceeding  that  limit,  he  is  entitled 
to  the  benefit  of  a  ratable  proportion  of  the  dividends  paid  on  the  whole 
debt;  but  only  that  where  the  surety  has  given  a  continuing  guaranty 
limited  in  amount,  to  secure  the  floating  balance  which  may  from  time 
to  time  be  due  from  the  principal  to  the  creditor,  the  guaranty  is  as 
between  the  suret}'  and  the  creditor  to  be  construed,  both  at  law  and  in 
equity,  as  applicable  to  a  part  only  of  the  debt,  co-extensive  with  the 
amount  of  his  guaranty  ;  and  this  upon  the  ground,  at  first  confined 
to  equity,  but  afterwards  extended  to  law,  that  it  is  inequitable  in  the 
creditor,  who  is  at  liberty  to  increase  the  balance  or  not,  to  increase  it 
at  the  expense  of  the  surety. 

In  Ex  parte  Rushforth  Lord  Eldon  seems  to  me  to  express  this  very 
plainly.  There  Richard  Rushforth,  the  petitioner,  had,  along  with  the 
two  bankrupts,  entered  into  a  joint  and  several  bond  for  £10,000  to 
bankers,  conditioned  for  the  paj'ment,  from  time  to  time  and  at  all 
times  thereafter  within  two  months  after  notice  in  writing,  of  the  bal- 
ance that  might  be  then  due  from  the  bankrupts  to  the  bankers.  At 
the  time  of  the  bankruptcy  that  balance  was  £20,000.  The  bankers 
proved  that  amount,  and  received  dividends  on  it. 

Lord  Eldon  considered  the  matter  much.  He  first,  in  March,  1804, 
after  discussing  all  the  points,  ends  an  elaborate  judgment  b}T  saying : 
"  The  rule  certainly  has  been  that  where  a  man,  engaged  for  the  whole 
of  a  debt,  pa}Ts  onby  a  part,  he  has  no  equity  to  stand  in  the  place  of  the 
person  paid.  That  brings  it  to  the  question,  what  is  this  engagement, 
whether  for  the  whole  or  a  part?"  Another  petition  was  presented, 
and  final  judgment  was  not  given  till  the  5th  of  February,  1805,  after 
nearly  a  year's  consideration,  and  then  Lord  Eldon  says:  "The  ques- 
tion comes  round  to  this  :  whether,  according  to  the  true  nature  of  such 


440  ELLIS    V.    EMMANUEL.  [CHAP.  III. 

an  engagement  between  all  the  parties  in  this  bond  and  mortgage,  it 
was  competent  to  these  bankers  to  go  on  without  giving  notice  to  the 
surety  ;  for  this  is  a  case  in  which  they  contracted  to  give  him  notice 
before  forfeiture  of  the  bond  ;  whether  they  were  at  liberty  to  swell  the 
demand  to  his  prejudice  beyond  the  sum  of  £10,000.  The  agreement 
was  to  advance  all  such  sums  as  should  be  required  ;  but  it  is  limited  by 
an  express  contract  for  an  obligation  to  secure  all  those  sums  ;  and  the 
question  is,  whether  that  limitation  in  the  extent  of  the  obligation  is  not 
a  sufficient  ground  for  the  inference  that  those  sums  were  not  to  be 
extended  beyond  £10,000,  to  the  destruction  of  eveiy  right  of  the  surety. 
Take  the  case  of  two  sureties,  each  for  the  separate  sum  of  £10,000  :  each 
paying  the  principal  creditor  would  be  entitled  to  stand  in  his  place  for 
the  sum  paid.  It  would  be  venr  strong  to  hold  that,  as  they  have  taken 
but  one  surety,  he  shall  be  in  a  worse  situation.  I  think  the  bankers 
are  not  entitled  in  equit}T  to  sa}',  as  against  the  surety,  that  their  demand 
is  more  than  £10,000,  the  amount  of  the  bond  he  has  given,  upon  which 
he  would  be  prima  facie  entitled  to  stand  in  their  place  :  as  to  the 
residue  of  their  debt,  they  ought  to  be  considered,  if  I  inay  so  express 
it,  as  their  own  insurers."  He  adds  :  "  As  this  is  a  perfectly  new  case, 
I  make  the  order  with  liberty  to  file  a  bill." 

Lord  Eldon,  in  deciding  this  case,  attaches  much  weight  to  the  stipu- 
lation for  notice.  Subsequent  decisions  —  Ex  parte  Holmes1  and  Gray 
v.  Seckham  —  have  settled  that  the  result  would  have  been  the  same 
had  there  been  no  such  stipulation  ;  but  what  seems  to  me  important 
is,  that  Lord  Eldon's  reasoning  proceeds  entirely  on  the  ground  that 
the  surety  was  entitled  in  equity  to  treat  this  as  a  security  for  £10,000, 
part  of  the  balance,  because  the  bankers  voluntarily  swelled  the  balance 
beyond  the  £10,000  ;  a  reason  not  at  all  applicable  to  a  security  given 
for  a  sum  ahead}'  fixed  and  determined. 

The  next  case  in  order  of  date  was  Paley  v.  Field,2  in  1806,  before 
Sir  William  Grant.  There  the  bond  was  conditioned  for  the  payment 
of  the  floating  balance  due  to  the  bankers,  with  a  proviso  that  the 
surety  should  not  be  liable  to  pa}-  "any  sums  of  money  to  a  larger 
amount  than  the  sum  of  £1,500,"  the  meaning  of  the  parties  being  that 
the  bankers  should  not  be  indemnified  by  the  suret}'  b}T  virtue  thereof 
for  any  loss  which  they  should  sustain  by  giving  credit  to  the  debtor 
beyond  the  sum  of  £1,500.  Sir  William  Grant  rests  his  judgment  almost 
entirely  on  this  proviso.  He  says3:  "  I  hardly  know  how  the  parties 
could  have  more  clearly  provided,  not  merely  that  the  plaintiff  should 
not  be  called  on  to  answer  more  than  £1,500,  but  that  with  regard  to 
him  the  creditor  should  be  considered  as  limited  to  that  sum." 

The  next  case  in  order  of  date  that  I  find  reported  is  Bardwell  v. 
Lydall,  before  the  Court  of  Common  Pleas  in  1831.  There  the  guar- 
anty was,  "of  any  debt  which  the  principal  may  contract  from  time 
to  time  as  a  running  balance  of  account  to  any  amount  not  exceeding 

1  Mont.  &  Ch.  301.  2  12  Ves.  435.  3  12  Ves.  at  p.  444. 


SECT.  I.]  ELLIS   V.    EMMANUEL.  441 

£400."  The  decision  of  the  Court  was  that  the  same  rule  applied  at 
law  as  in  equity.  The  Court  say:  "The  amount  of  the  debt  does  in 
this  case  exceed  the  £400,  and  thereby  the  position  of  the  creditor  is 
so  far  altered  that  one  part  of  his  debt,  viz.  to  the  extent  of  £400,  is 
guaranteed,  and  the  remainder  not."  In  coming  to  this  conclusion, 
that  the  guaranty  was  to  be  read  as  between  the  creditor  and  surety, 
even  at  law  as  a  guaranty  for  £400,  parcel  of  the  balance,  and  not  as  a 
guaranty  of  the  whole  balance  with  a  limit  on  the  amount  recoverable, 
the  Court  seem  to  have  acted  on  Pale}'  v.  Field,1  but  perhaps  carry  the 
doctrine  one  step  further  than  either  Lord  Eldon  or  Sir  William  Grant 
had  done. 

In  Raikes  v.  Todd,2  in  1838,  the  Court  of  Queen's  Bench  decided 
the  case  on  another  ground,  viz.,  that  the  guaranty  was  bad  under 
the  Statute  of  Frauds;  but  Lord  Denman  during  the  argument  says 
that  if  that  had  not  been  so,  they  should  have  followed  Bardwell  v. 
Lydall. 

The  next  case  is  Ex  parte  Holmes,3  before  Lord  Cottenham  in  1839, 
sitting  in  appeal  in  bankruptc}'.  In  that  case  the  petitioner  accepted 
three  bills  of  exchange,  amounting  in  all  to  £523  15s.  Gd. ,  for  the 
accommodation  of  the  bankrupt.  The  bankrupt  deposited  them  with 
his  bankers  as  a  security  for  the  floating  balance.  The  petitioner  was, 
therefore,  a  surety  to  the  extent  of  £523  15s.  6d.  to  meet  a  floating 
balance,  but  from  the  manner  in  which  the  suretyship  was  created  no 
such  special  ground  as  the  notice  in  Ex  parte  Rushforth  or  the  proviso 
in  Paley  v.  Field1  could  exist,  nor  could  anything  turn  on  special  words 
in  the  guaranty.  The  balance  greatly  exceeded  £523  15s.  6c?.,  and 
the  bankers  proved  and  received  a  dividend  of  2s.  on  the  whole.  Then 
the  petitioner  paid  the  bills.  The  Court  of  Review  had  allowed  the 
petitioner  the  future  dividends  on  the  £523  15s.  6d. ,  but  refused  to 
make  the  bankers  account  for  the  2s.  in  the  pound  already  received  by 
them.  Lord  Cottenham  upon  appeal  said  very  truly  that  this  was 
illogical,  and  that  the  petitioner  was  entitled  to  both  or  neither.  He 
then  refers  to  the  fact  that  the  bills  were  deposited  to  secure  a  floating 
balance,  which  in  the  result  exceeded  their  amount.  He  cites  Bardwell 
v.  Lydall,  Pale}'  v.  Field,1  and  Ex  parte  Rushforth,  and  then  says: 
"  If  then  the  dividend  received  upon  £523  15s.  6d.  is  to  be  attributed 
to  that  portion  of  the  debt  which  was  secured  by  the  bills  of  Holmes,  it 
is  immaterial  that  the  bankers  had  larger  or  other  demands  against  the 
bankrupt."  It  seems  to  me  that  the  principle  he  assumes  is  that  a 
security  of  limited  amount  for  a  floating  balance  is,  as  between  surety 
and  creditor,  a  secm*ity  for  a  portion  of  the  balance  only,  and  that  the 
residue  is  unsecured. 

In  Thornton  v.  M'Kewan,4  in  1862,  Wood,  V.  C,  followed  these 
decisions,  and  had  no  occasion  to  enter  into  an  explanation  of  the 
principle. 

1  12  Ves.  435.  2  8  A.  &  E.  846,  855. 

3  Mont.  &  Ch.  30t,  316.  *  1  H.  &  M.  525. 


442  ELLIS   V.    EMMANUEL.  [CHAP.  IIL 

In  Gee  v.  Pack,1  in  1863,  an  action  was  bronght  in  the  Court  of 
Queen's  Bench  on  this  guaranty  :  "  £300.  On  demand  we  jointly  and 
severally  promise  to  pay  to  Messrs.  Gee  &  Co."  (who  were  bankers), 
'•  £300,  with  interest  on  same,  to  secure  an  advance  now  or  hereafter 
on  a  banking  account  with  Messrs.  Pack  &  Linton."  The  question 
raised  on  demurrer  to  a  plea  was,  whether  the  surety  was  entitled  to 
credit  for  a  proportionate  part  of  the  dividends  received  by  Gee  &  Co. 
on  the  balance  of  their  banking  account,  which,  at  the  time  the  prin- 
cipal debtors  entered  into  liquidation,  exceeded  £300.  The  decision 
was  in  favor  of  the  surety  on  the  ground  that  the  case  was  undis- 
tinguishable  from  Bardwell  v.  Lydall. 

In  Hobson  v.  Bass,2  Lord  Hatherley,  in  1871,  acting  upon  all  these 
cases,  states  the  question  thus  :  "If  a  person  guarantees  a  limited  por- 
tion of  a  debt,  all  the  authorities  show  that  if  he  pays  that  portion,  he 
has  in  respect  of  it  all  the  rights  of  a  creditor.  The  question  is,  whether 
the  guarantor  means,  '  I  will  be  liable  for  £250  of  the  amount  which 
A.  B.  shall  owe  you,'  or  '  I  will  be  liable  for  the  amount  which  A.  B. 
shall  owe  you,  subject  to  this  limitation  that  I  shall  not  be  called  upon 
to  pay  more  than  £250.'  The  words  of  this  guaranty  are  so  similar  to 
those  in  some  of  the  cases  cited  that  it  would  be  splitting  hairs  to  dis- 
tinguish them.  The  words  '  at  any  time'  are  material,  and  I  think  the 
meaning  of  the  instrument  is,  'I  guarantee  the  payment  of  all  goods 
supplied,  but  my  liability*  is  not  to  be  increased  by  their  amount  exceed- 
ing £250.  When  it  reaches  that  sum  I  am  to  be  a  surety  for  it  with  all 
the  rights  of  a  surety.'  " 

The  last  case  on  the  subject  that  I  am  aware  of  is  Gray  v.  Seckham. 
There  the  suretyship  was  by  means  of  a  promissory  note  deposited  bj1  the 
principal  with  his  bankers  as  a  security  for  the  floating  balance,  and  the 
case  so  far  was  identical  with  Ex  parte  Holmes.3  Lord  Justice  Mel- 
lish,  in  delivering  judgment,  states  the  point  thus:  "Upon  this  the 
question  arises  whether  there  is  anything  to  take  this  case  out  of  the 
ordinary  rule  that,  when  a  surety  is  only  surety  for  part  of  the  debt, 
and  has  paid  that  part  of  the  debt,  he  is  entitled  to  receive  the  dividend 
which  the  principal  debtor  pays  in  respect  of  that  sum  which  the  surety 
has  discharged." 

I  have  now  cited  and  examined  every  case  of  which  I  am  aware  bear- 
ing upon  this  subject.  In  every  one  of  them  the  limited  suretyship  was 
to  secure  a  floating  balance.  And  I  think  these  decisions  establish  that 
in  such  a  case  the  suretyship  is,  prima  facie  at  least,  to  be  construed 
as  a  security  for  a  part  onby  of  the  debt,  from  which  the  consequence 
stated  by  Lord  Justice  Mellish  follows.  And  I  agree  with  what  is 
intimated  by  Lord  Hatherley  in  Hobson  v.  Bass,2  that  if  a  creditor, 
taking  a  limited  security  for  a  floating  balance,  means  it  to  be  a  security 
for  the  whole  of  the  debt,  and  not  merely  for  a  part,  he  should  take 
care  that  this  is  clearly  expressed,   for  the  prima  facie  construction  is 

l  33  L.  J.  (Q.  B.)  49.  "  Law  Rep.  6  Ch.  at  p.  794.  3  Mont.  &  Ch.  301. 


SECT.  I.]  MARSH    V.    PIKE.  443 

the  other  way,  and  the  Court  ought  not  to  split  hairs  or  make  nice 
verbal  distinctions  on  the  words  used. 

But  there  is  no  case  that  I  am  aware  of  which  lays  down  that  where 
the  suretyship  limited  in  amount  is  for  a  debt  already  ascertained  which 
exceeds  that  limit,  it  is  prima  facie  to  be  construed  as  a  security  for 
part  of  the  debt  only.  And  I  have  failed  to  see  any  principle  on  which 
such  a  prima  fftcie  construction  ought  to  be  adopted. 

I  think  in  such  a  case  it  is  a  question  of  construction  on  which  the 
Court  is  to  say  whether  the  intention  was  to  guarantee  the  whole  debt, 
with  a  limitation  on  the  liability  of  the  surety,  or  to  guarantee  a  part  of 
the  debt  only.  And,  as  I  have  already  pointed  out,  I  think  the  bond  in 
the  present  case  expresses  an  intention  that  the  sureties  should  each 
guarantee  the  whole  £7,000,  though  their  liability  respectively  was  limited 
to  the  stipulated  amounts. 

It  seems,  therefore,  to  me  that  the  Court  below  were  altogether  right, 
and  that  the  judgment  should  be  affirmed. 

The  Lord  Chancellor  and  my  Brother  Brett  concur  in  this  judgment, 
and  in  the  reasoning  on  which  it  is  founded. 

Judgment  for  the  plaintiffs  affirmed.* 


MARSH   v.   PIKE  and  Others. 
In  Chancery,  before   Reuben  H.  Walworth,  C,  March  5,  1844. 

[Reported  in  10  Paige,  595.] 

The  Chancellor.2  The  facts  in  this  case  are  not  disputed ;  and 
the  only  question  is  whether  the  complainant  was  entitled  to  the  relief 
granted  as  against  the  defendant  Towle,  upon  these  facts  :  In  January, 
1839,  the  complainant,  who  was  the  owner  of  lot  No.  29,  Fourth  Street, 
in  the  citj'  of  New  York,  gave  to  the  defendant  Pike  his  bond,  con- 
ditioned for  the  payment  of  S3, 000  in  three  years,  with  interest  thereon, 
pa}Table  semi-annually.  In  April.  1841,  the  complainant  conveyed  the 
mortgaged  premises  to  the  defendant  McLean,  subject  to  the  mortgage, 
the  amount  of  which  was  deducted  from  the  purchase-money,  and 
which  mortgage  McLean  agreed  with  the  complainant  to  pay  off  and 
discharge.  And  in  August  of  the  same  year  McLean  sold  the  prem- 
ises to  the  defendant  Towle,  subject  to  the  mortgage  as  a  part  of  the 
consideration  of  the  conveyance,  and  which  mortgage  Towle  agreed  to 
pa}T  off  and  satisfy.  After  the  mortgage  became  due,  the  complainant 
called  upon  Towle  to  pay  off  and  satisfy  the  bond  and  mortgage,  so  as 
to  relieve  him  from  his  responsibility  upon  his  bond  ;  but  he  neglected 

i  Ex  parte  Nat.  Prov.  Bank,  17  Ch.  D.  98  (semble).  In  re  Sass,  '96,  2  Q.  B.  12 
(semble),  Accord.  —  Ed. 

2  Only  the  opinion  of  the  court  is  given. 


444  MARSH   V.    PIKE.  [CHAP.  III. 

to  do  so.  The  effect  of  these  several  conveyances  and  agreements  is, 
in  equity,  to  place  the  complainant  in  the  situation  of  a  surety  for  the 
payment  of  the  bond  and  mortgage,  and  to  make  the  defendants  Towle 
and  McLean  the  principal  debtors  as  to  him  ;  the  first  being  primarily 
and  the  latter  secondarily  liable  to  him  for  the  payment  of  the  debt. 

The  complainant,  therefore,  if  he  had  paid  the  bond  and  mortgage 
to  Pike,  would  have  been  entitled  to  be  substituted  in  Pike's  place,  not 
only  as  to  the  reined}'  against  the  land  x  but  also  as  to  the  equitable 
claim  against  McLean  and  Towle,  who  had  agreed  to  pay  off  the  mort- 
gage. This,  however,  was  not  his  only  reined}' ;  although  the  assistant 
Vice-Chancellor  rightly  decided  that  the  complainant  could  not  compel 
his  creditor  to  file  a  bill  of  foreclosure  against  the  persons  to  whom  the 
premises  were  subsequently  conve}ed,  when  there  was  no  good  reason 
why  the  complainant  did  not  pay  his  bond  according  to  his  agreement, 
and  take  an  assignment  of  the  bond  and  mortgage,  and  proceed  against 
the  land  and  the  subsequent  grantees  thereof,  for  his  indemnity.  For 
Marsh  has  the  right  to  come  into  this  court  to  compel  such  subsequent 
grantees,  as  to  whom  he  is  in  the  situation  of  a  mere  surety,  to  pay  off 
and  discharge  the  debt  for  his  protection  and  indemnity.  Warner  v. 
Beardsley  ; 2  Lee  v.  Rook  ; 3  Ranelaugh  v.  Hayes.  Here,  it  is  true, 
McLean  was  the  person  who  had  agreed  directly  with  the  complainant 
to  pay  off  and  discharge  the  mortgage,  for  his  protection  and  indem- 
nity. But  as  Towle,  the  appellant,  had  entered  into  a  similar  agree- 
ment with  McLean,  and  was  moreover  the  owner  of  the  mortgaged 
premises,  he  was  properly  joined  in  the  suit.  And  the  decree  was 
right  in  giving  to  McLean  a  remedy  over  against  Towle,  who  was  in 
justice  and  equity  bound  to  pay  off  and  discharge  the  debt,  as  between 
himself  and  all  the  other  parties  to  the  suit. 

The  part  of  the  decree  which  is  appealed  from  is  therefore  affirmed 
with  costs. 

1  Ely  i'.  Stannard,  44  Conn.  528  ;  Shinn  v.  Shinn,  91  111.  477  ;  Kiramey  v.  Wells, 
59  111.  Ap.  271  ;  Josselyn  v.  Edwards,  57  Ind.  213  ;  Hoffman  v.  Risk,  58  Iud.  113,  69 
Ind.  137  ;  Smith  v.  Otterman.  68  Ind.  432  ;  Massie  v.  Mann,  17  Iowa,  131  (se7nble)  ; 
Wheeler's  Est.,  1  Md.  Ch.  80;  Baker  v.  Terrell,  8  Minn.  195  ;  Knoblauch  v.  Fogle- 
song,  37  Minn.  320 ;  Greenwell  v.  Heritage,  71  Mo.  459  ;  Orrick  v.  Durham,  79  Mo. 
174 ;  Brown  v.  Kirk,  20  Mo.  Ap.  524  ;  Woodbury  v.  Swan,  58  N.  H.  380  (real  surety)  ; 
Stillman  v.  Stillman,  21  N.  J.  Eq.  126;  Johnson  v.  Zink,  51  N.  Y.  333,  52  Barb.  396 
(real  surety) ;  McLean  v.  Towle,  3  Sandf.  Ch.  117  ;  Cherry  v.  Munro,  2  Barb.  Ch.  6)8: 
Scott's  Ap.,  88  Pa.  173,  Accord.  —  Ed. 

2  8  Wend.  199.  3  Mose.  Rep.  318. 


•^c 


£3 

SECT    I  1  *     MATHEWS   V.   AIKIN. 


.,  '  MJCTHEWS  and  Others,  Appellants,  v.  AIKINjResp^dent.  *. 

"In  the  CcptT  OFAPPEALi,  New  York,/K£cembe3i,  1848.  qn> 

"^Xt.    ^T-~lkL>J      [Reported  if^fCol^k'^^^'        •  S&*~£~y     t/ ^/l 

Appeal  from  the  Supreme  Court  in  equity.  Abraham  Aikin  filed  his 
bill  in  the  court  of  chancery  before  the  Vice-Chancellor  of  the  seventh 
circuit,  against  John  Mathews  and  Oliver  Orcutt,  who  appeared  and 
defended,  and  against  Edward  Aikin,  who  suffered  the  bill  to  be  taken 
as  confessed.  The  case,  so  far  as  material  to  be  stated,  upon  plead- 
ings and  proofs  was  as  follows  :  On  or  before  the  22d  of  November, 
1837,  Edward  Aikin,  who  was  the  son  of  the  complainant,  executed  to 
James  Hasbrook  a  bond  secured  by  mortgage  on  certain  real  estate, 
bearing  date  December  6,  1836,  conditioned  for  the  payment  of 
$1,300  in  six  equal  annual  instalments.  At  the  time  of  the  execu- 
tion of  the  bond  and  mortgage,  Edward  Aikin  was  indebted  to  one 
Theodore  Wood  in  the  amount  thereof,  and  Wood  being  also  indebted 
to  Hasbrook,  procured  the  bond  and  mortgage  to  be  executed  directly 
to  him.  At  the  time  or  soon  after  the  bond  and  mortgage  were  given, 
the  complainant,  at  the  solicitation  of  said  Wood  and  Hasbrook, 
executed  upon  the  bond  a  sealed  guaranty  of  the  payment  thereof. 
There  was  no  evidence  that  the  complainant  executed  the  guaranty  at 
the  desire  or  request  of  Edward  Aikin,  the  mortgagor.  Edward  Aikin 
was  examined  as  a  witness  for  the  complainant,  and  on  cross-examina- 
tion testified  that  he  advised  his  father  not  to  sign  the  guaranty,  inform- 
ing him  that  he  was  under  no  obligation  to  procure  a  guaranty. 

The  complainant  claimed  by  the  bill  to  be  subrogated  to  the  rights 
of  the  holder  of  the  bond  and  mortgage  for  the  purpose  of  reimbursing 
to  himself  the  sum  collected  of  him  by  suit  on  the  guaranty.  From  a 
decree  in  favor  of  the  complainant  the  defendants  appealed  to  this 
Court.1 

Johnson,  J.  It  is  a  general  and  well  established  principle  of  equity 
that  a  surety,  or  a  party  who  stands  in  the  situation  of  a"surety,  is 
entitled  to  be  subrogated  to  all  the  rights  and  remedies  of  the  creditor 
whose  debt  he  is  compelled  to  pay,  as  to  any  fund,  lien,  or  equity  which 
the  creditor  haq  against  any  other  person  or  property  on  account  of  such 
deb"t  The  general  doctrine,  as  a  rule  of  equit}',  is  not  controverted  on 
the  part  of  the  appellants,  but  is  fully  conceded.  It  is  insisted,  how- 
ever, by  their  counsel,  that  the  guarantor  in  this  instance  did  not 
become  such  at  the  request  of  the  debtor ;  that  as  to  the  debtor,  he 
was  a  mere  volunteer,  having  no  remedy  over  against  him,  and  never 
acquiring  the  character  of  a  surety  so  as  to  be  entitled  to  subrogation 
to  the  rights  and  remedies  of  the  creditor. 

1  The  statement  of  the  case  is  abridged,  and  only  a  portion  of  the  opinion  is 
given.  —  Ed. 


446  .MATHEWS    V.    AIKIN.  [CHAP.  III. 

The  objection  seems  somewhat  narrow  and  technical  when  addressed 
to  a  court  of  equity  whose  peculiar  province  is  to  mete  out  substantial 
justice  where  the  more  restricted  powers  of  the  common  law  fail  in  its 
administration.  But  it  leads  us  to  examine  carefully  into  the  grounds 
and  principles  upon  which  the  right  of  subrogation  rests.  Does  it  rest 
upon  the  foundation  of  a  contract  binding  in  a  court  of  law  between  the 
debtor  and  his  surety?  In  other  words,  does  it  turn  substantially  upon 
the  question  whether  or  not  the  surety  who  has  paid  the  debt  to  the 
creditor  lias  a  remedy  over,  on  his  contract,  against  the  principal  debtor 
for  money  paid  in  an  action  at  law  ?  or  does  it  not  rest  rather  upon  the 
broader  and  deeper  foundations  of  natural  justice  and  moral  obligation? 
Chancellor  Kent  says,  in  Hayes  v.  Ward1:  "This  doctrine  does  not 
belong  merely  to  the  civil  law  system.  It  is  equally  a  well  settled 
principle  in  the  English  law  that  a  surety  will  be  entitled  to  every 
remedy  which  the  principal  debtor  has,  to  enforce  eveiy  security,  and 
to  stand  in  the  place  of  the  creditor,  and  have  those  securities  trans- 
ferred to  him,  and  to  avail  himself  of  those  securities  against  the  debtor. 
This  right  stands  not  upon  contract,  but  upon  the  same  principle  of 
natural  justice  upon  which  one  surety  is  entitled  to  contribution  against 
another."  Lord  Brougham,  in  Hodgson  v.  Shaw,2  said:  "The  rule 
here  is  undoubted,  and  is  founded  on  the  plainest  principles  of  natural 
reason  and  justice,  that  the  surety  paying  off  a  debt  shall  stand  in  the 
place  of  the  creditor,  and  have  all  the  rights  which  he  has  for  the  pur- 
pose of  obtaining  his  reimbursement.  It  is  scarcelj-  possible  to  put 
this  right  of  substitution  too  high  ;  and  the  right  results  more  from 
equity  than  from  contract  or  quasi  contract  unless  in  so  far  as  the 
known  equity  may  be  supposed  to  be  imported  into  any  transaction, 
and  so  to  raise  a  contract  by  implication."  Sir  Samuel  Romilly,  in  his 
argument  in  Craythorne  v.  Swinburne,3  stated  the  rule  to  be,  that  "  a 
surety  will  be  entitled  to  every  remedy  which  the  creditor  has  against 
the  principal  debtor  to  enforce  every  securit)7  by  all  means  of  payment, 
to  stand  in  the  place  of  the  creditor  not  only  through  the  medium  of 
contract  but  even  by  means  of  securities  entered  into  without  the 
knowledge  of  the  snret}7,  having  a  right  to  have  those  securities  trans- 
ferred to  him,  though  there  was  no  stipulation  for  that^~and  to  "avail 
himself  of  all  those  securities  against  the  debtor."  And  this  exposition 
oi  tne  rule  was  lull)'  sanctioned  by  Lord  Eldon  in  giving  judgment  in 
that  case. 

The  equity  is  certainly  as  strong,  and  it  seems  to  me  somewhat 
stronger  in  favor  of  substitution,  as  against  the  creditor  at  least,  than 
it  is  between  sureties  for  contribution  where  one  has  paid  the  whole 
debt,  and  -  it  has  been  likened  to  the  case  of  contribution  between 
sureties.  As  between  them  the  rule  in  equit}-  is  clear  that  the  ground 
of  relief  does  not  stand  upon  any  notion  of  mutual  contract  express  or 
implied,  but  arises  from  principles  of  equity  independent  of  contract. 
Story's  Eq.  §  493,  and  notes,  where  the  authorities  are  all  collected. 

l  4  John.  Ch.  130.  2  3  Mylne  &  Keene,  183.  3  14  yes   ]59 


SECT.  I.] 


MATHEWS    V.    AIKIN. 


447 


This  is  also  substantially  the  rule  in  courts  of  law.1  In  that  case  the 
circumstances  under  which  the  defendant  became  co-surety  were  such 
as  to  repel  the  presumption  of  any  promise  to  make  contribution.  But 
the  court  held  that  his  being  a  surety  on  the  same  contract  without 
qualification  in  terms  was  sufficient  to  fix  his  obligation  to  contribute, 
and  that  for  the  purposes  of  giving  the  plaintiffs  a  remedy  the  court 
would  presume  a  promise.  A  promise  was  therefore  imputed  where 
none  confessedly  existed,  in  order  to  provide  a  remedy  for  the  party 
where  there  was  no  doubt  as  to  the  legal  liability ;  and  the  legal 
liability  in  such  cases  springs  from  the  equitable  obligation  ;  the  law 
courts  having  borrowed  their  jurisdiction  in  these  particular  cases  from 
the  courts  of  equity.  In  the  present  case  it  seems  to  me,  if  it  were 
necessary,  a  court  of  equity  ought  to  imply  a  promise  on  the  part_of 
the  creditor  to  subrogate  the  surety  to  all  his  rights  and  remedies^in 
case  he  resorted  to  the  latter  for  payment  of  the  debt  upon  his  guaranty. 
The  equitable  obligation  resting  upon  him  to  do  so  seems  to  me  most 
manifest. 

I  agTee  fully  with  the  learned  judge  who  delivered  the  opinion  of  the  \  I 
Supreme  Court,  that  the  right  of  the  surety  to  demand  of  the  creditor, 
whose  debt  he  has  paid,  the  securities  he  holds  against  the  principal 
debtor  and  to  stand  in  his  shoes,  does  not  depend  at  all  upon  any  re- 
quest or  contract  on  the  part  of  the  debtor  with  the  surety,  but  grows 
■rather  out  of  the  relations  existing  between  the  surety  and  the  creditor, 
and  is  founded  not  upon  any  contract,  express  or  implied,  but  springs 
from  the  most  obvious  principles  of  natural  justice.  And  if  it  were 
true  that  the  surety  in  such  a  case  as  this  could  maintain  no  action  at 
law  against  his  principal  for  the  money  paid,  I  agree  with  the  Supreme 
Court  that  it  would  furnish  a  still  stronger  case  for  subrogation.  A 
court  of  equity  would  never  presume  that  the  principal  would  interpose 
such  a  defence.  If  the  creditor  has  insisted  upon  the  surety's  discharg- 
ing his  obligations  and  liabilities  as  such,  and  fastened  the  character 
upon  him  by  a  judgment,  he  cannot,  after  receiving  from  him  his  debt, 
turn  round  and  deny  him  the  rights  of  a  surety.  The  creditor  must 
then  fulfil  his  obligation  to  the  surety,  and  leave  the  latter  and  his 
principal  to  adjust  or  litigate  their  rights  or  claims  as  they  may  see  fit. 
There  is  no  hardship  in  this.  Decree  affirmed.2 

1  Norton  v.  Coons,  3  Denio,  130. 

2  Davis  v.  Schlemmer  (Indiana,  1898),  50  N.  E.  R.  373;  Bishop  v.  Rowe,  71  Me 
263,  Accord. — Ed. 


M 


^48  PACE  v.   pace's   ADMIIWSTKaTO 


V  PACE  v.  Pi^E'^DMINIST 


ftp.  in 


^~7 


MXNISTRATOR  and  Others. 
In  the  Supreme  Court  of  Appeals,  Virginia,  April  7,  1898. 

[Reported  in  95   Virginia  Reports,  792.] 

Harrisox,  J.,1  delivered  the  opinion  of  the  court. 

The  facts  of  this  case  in  brief  are  that  on  April  7,  1893,  one  T.  J. 
Talbott  (under  the  name  of  Pace,  Talbott,  &  Co.),  John  R.  Pace,  and 
James  B.  Pace,  made  a  note  for  sixteen  thousand  dollars,  payable  to 
William  F.  Cheek,  or  order,  one  hundred  and  twenty  days  after  date. 
T.  J.  Talbott  was  the  principal  in  the  note,  and  John  R.  Pace  and 
James  B.  Pace  co-sureties.  T.  J.  Talbott  died  in  the  fall  of  1894  en- 
tirely insolvent.  Prior  to  his  death,  to  wit:  On  October  9,  1893,  John 
R.  Pace  died,  leaving  an  estate  not  sufficient  to  pay  more  than  fifty 
cents  on  the  dollar  of  his  debts.  In  May,  1894,  this  suit  was  brought 
to  administer  John  R.  Pace's  estate,  and  a  decree  of  reference  was 
entered  in  July,  1894.  On  the  19th  of  September,  1895,  being  pressed 
by  the  executors  of  the  creditor,  William  F.  Cheek,  James  B.  Pace 
took  up  the  note  in  question  by  paying  $16,551.57,  the  entire  amount, 
principal  and  unpaid  interest,  to  that  time.  Thereupon  James  B.  Pace 
tendered  proof  of  these  facts  to  the  commissioner  in  this  suit,  and 
claimed  to  rank  in  the  distribution  of  John  R.  Pace's  estate  for  the 
whole  of  the  debt  so  paid  by  him  until  he  had  received  one  half  of  the 
amount  paid  by  him,  but  the  commissioner  reported  that  he  could  only 
rank  for  one  half  the  debt,  and  an  exception  made  by  James  B.  Pace 
on  that  ground  was  overruled  by  the  court  below,  from  which  ruling 
this  appeal  was  taken. 

The  contention  of  the  appellee  is  that  J.  B.  Pace  could  not  rank 
against  the  estate  of  his  co-surety  for  the  whole  debt  when  the  co-surety 
only  owed  him  one  half  of  the  debt.  In  other  words,  that  appellant  had 
no  right  to  prove  for  the  one  half  of  the  debt  which  he  himself  was  pri- 
marily bound  to  pay. 

The  question  presented  is  an  important  one  in  the  administration 
of  insolvent  estates,  and  there  is  some  conflict  of  opinion  in  respect 
thereto.  We  are,  however,  satisfied  that  the  view  taken  by  the  learned 
counsel  for  the  appellant  is  sustained  by  the  best  reason  and  the  weight 
of  authority. 

In  Enders  v.  Brune,2  Judge  Carr,  in  discussing  the  doctrine  of  sub- 
stitution, says:  "  It  has  nothing  of  form,  nothing  of  technicality  about 
it ;  and  he  who,  in  administering  it,  would  stick  in  the  letter,  forgets 
the  end  of  its  creation,  and  perverts  the  spirit  which  gave  it  birth.  It 
is  the  creature  of  equit}-,  and  real  essential  justice  is  its  object." 

The  doctrine  is  well  settled  that  the  surety  has  the  right  of  substitu- 
tion against  the  estate  of  his  principal,  where  payment  of_a  preferred 

1  Only  a  portion  of  the  opinion  of  the  court  is  given.  —  Ed 

2  4  Rand,  447. 


SECT.  I.]  PACE   V.    PACE'S    ADMINISTRATOR.  449 

debt  has  been  made  by  such  surety  after  the  death  of  theprincipal,  and 
the  rule  of  substitution  for  the  purpose  of  enforcing  contribution  among 
co-sureties  is  not  different.     One  surety  who  pays  the  common  debt~is    ^p     /) 
entitled  to"be  subrogated  to  all  the  rights  and  remedies  of  the  creditor.  fr^y^zZj 
as  against  his  co-sureties,  in  precisely  the  samemanner  as  against  the  ^7 

principal  debtor.     Robertson  y.  Trigg  ;  Dering  v.  P^arl  of  Winchelsea.1 

In  Mx  parte  Stokes,2  Stokes,  the  creditor,  held  a  bond  executed  by 
a  principal  and  three  sureties.  Two  of  the  sureties,  Clark  and  Phillips, 
became  bankrupts,  and  Stokes,  the  creditor,  proved  against  their  es- 
tates. Thereafter  the  principal  debtor  compounded  with  his  creditors ; 
and  the  other  surety,  Thomas  Charles  Ord,  executed  an  assignment  for 
the  benefit  of  his.  Stokes,  the  creditor,  by  dividends  received  from  the 
principal  debtor,  from  the  estate  of  Clark,  one  of  the  sureties,  and  from 
Thomas  Charles  Ord,  realized  his  whole  debt,  to  the  payment  whereof 
the  remaining  surety,  Phillips,  contributed  nothing.  The  creditor  real- 
ized from  the  estate  of  Thomas  Charles  Ord  10s.  in  the  pound,  whereas 
the  just  proportion  payable  by  each  surety  was  only  4s.  \Qd.  in  the 
pound.  Thereupon  the  assignees  of  Thomas  Charles  Ord  petitioned 
for  leave  to  stand  in  the  place  of  the  creditor  for  his  entire  debt  as 
against  the  estate  of  Phillips,  which  had  paid  nothing,  so  as  to  realize 
from  that  estate  its  just  proportion,  viz. :  4s.  \0d.  in  the  pound.  The 
petition  was  allowed,  Sir  J.  L.  Knight  Bruce  saying : 

"  The  question  then  substantially  is  whether,  as  between  the  estates 
of  the  two  sureties,  when  (one  of  them  having  become  bankrupt)  the 
creditor  has  proved  the  debt  under  the  fiat,  and  has  afterwards  been 
paid  in  full,  partly  by  the  principal  debtor  and  partly  by  the  surety, 
not  a  bankrupt,  —  the  latter  has  the  right  to  use  the  proof  for  the  pur- 
pose of  obtaining  from  the  bankrupt's  estate  that  amount  of  contribu- 
tion to  which  the  bankrupt  is,  or  but  for  the  bankruptcy  would  have 
been,  liable,  so  far  as  the  proof  can  furnish  means  for  that  end ;  and  1 
think  that  he  has. 

"  Where  several  persons  are  liable,  each  in  solido,  to  a  debt,  the 
creditor  may  enforce  payment  in  a  manner  which,  as  between  the  debt- 
ors themselves,  is  unjust.  This  must  sometimes  happen ;  but  in  such 
cases  is  it  not  the  function  and  the  duty  of  a  court  of  justice,  at  least 
of  a  court  of  equity,  to  place  them  in  the  same  situation  between  them- 
selves as  if  the  creditor  had  enforced  his  rights  against  them  in  a  man- 
ner conformable  to  their  rights  against  each  other,  so  far  as  it  can  be 
done?  Generally  speaking,  the  law  of  this  country,  as  I  apprehend, 
answers  that  question  in  the  affirmative. 

"  Now,  in  the  present  case,  had  Mr.  Stokes  regulated  his  proceeding 
in  such  a  manner,  a  portion  of  what  he  has  received  from  Mr.  Thomas 
Charles  Orel's  estate  would  have  been  taken  by  Mr.  Stokes  from  Mr. 
Phillips'  estate,  if  available,  for  the  purpose.  The  mere  circumstance 
that  it  has  not  until  the  present  time  become  practically  available  for 
the  purpose,  is,  I  conceive,  nothing." 

1  32  Gratt.  76.  8  De  Gex,  618. 

29 


450  PACE  v.  pace's  administrator.  [chap.  III. 

In  the  case  of  Morgan  v.  Hill,1  a  debt  was  owing  by  a  principal 
debtor  and  five  sureties.  Nothing  could  be  realized  from  the  principal 
debtor,  or  from  one  of  the  sureties,  and  only  a  very  insignificant 
sum  from  another  of  the  sureties.  So  three  of  the  sureties  were  left 
to  bear  the  liability.  One  of  these  three  made  an  assignment, 
which,  after  the  payment  of  specified  prior  claims,  provided  .for  the 
payment  of  his  remaining  debts  ratably.  The  creditor  presented  his 
claim  for  payment  to  the  trustees  in  the  assignment,  but  before  the 
trustees  paid  anything  thereon,  the  debt  was  paid  by  the  other  two 
sureties,  who  subsequently  also  took  from  the  creditor  an  assignment 
of  his  debt  and  securities.  These  two  sureties  then  claimed  the  right 
to  receive  a  dividend  from  the  assigned  estate  of  their  co-surety  on 
the  whole  amount  of  the  debt  paid  by  them,  until  the}-  had  received 
one  third  thereof,  that  being  the  just  proportion  payable  by  each 
surety.  And  this  claim  was  allowed  by  Kekewich,  J.,  and  on  appeal 
his  order  was  affirmed. 

Kekewich,  J.,  who  decided  the  case  in  the  lower  court,  said  :  k'  Two 
out  of  three  sureties  paid  the  whole  debt,  and  having  so  done,  they  are 
entitled  to  stand  in  the  shoes  of  the  creditor  whose  whole  debt  they 
have  paid.  That  would  seem  to  be  according  to  natural  justice ;  but 
whether  it  be  so  or  not,  at  all  events  it  is  strictly  in  accordance  with 
the  provisions  of  the  Mercantile  Law  Amendment  Act,  1856  (19  and  20 
Vict.  c.  97). 

"  A  surety  in  such  case  is  to  stand  in  the  place  of  the  creditor,  ana 
to  use  all  the  remedies,  and  if  need  be,  and  upon  a  proper  indemnity, 
to  use  the  name  of  the  creditor  in  any  action  to  obtain  indemnification.'' 

The  reference  of  the  learned  judge  to  the  "  Mercantile  Law  Amend- 
ment Act  "  as  justifying  his  conclusion,  if  not  justified  by  its  conformity 
to  "  natural  justice,"  is  a  circumstance  that  does  not  detract  from  the 
weight  of  this  case  as  an  authoritv  in  this  State,  because  that  act  was 
passed  to  do  away  with  the  doctrine  laid  down  in  Copis  v.  Middleton, 
which  was  disapproved  by  this  court  in  Powell  v.  White,'2  in  a  learned 
opinion  b}T  Judge  Tucker,  and  the  act  referred  to  simply  declared  the 
law  in  England  to  be  what  it  had  theretofore  been  under  our  decisions. 

In  TTejss^s_Estate,3  the  precise  question  involved  here  was  presented, 
and  the  Supreme  Court  of  Pennsylvania  held  that  the  suret}T paying  the 
debt,  after  the  death  of  his  co-surety,  was  entitled  to  prove  against  his 
estate  for  the  entire  amount  of  the  debt. 

There  are  man}'  cases  holding  that  where  a  creditor  of  an  insolvent 
person  who  is  dead,  or  has  made  an  assignment  for  the  general  benefit 
of  creditors,  holds  collateral  security  for  his  debt,  and  after  the  death, 
or  the  assignment,  of  his  debtor,  realizes  on  the  collaterals,  he  may, 
notwithstanding,  prove  against  the  decedent's  estate,  or  the  assigned 
estate,  for  the  full  amount  of  his  debt  as  it  stood  at  the  time  of  his 
death,  or  assignment.     The  grounds  upon  which  these  cases  proceed 

l  '94,  3  Ch.  400.  2  1 1  Leigh,  309.  8  69  Penn.  St.  272. 


SECT.  I.]         PACE  V.    PACE'S  ADMINISTRATOR.  451 

are  ably  set  forth  in  the  opinion  of  Judge  Taft  in  Chemical  National 
Bank  v.  Armstrong,1  in  which  he  reviews  all  the  authorities. 

The  only  case  involving  the  question  here  presented,  cited  by  appel- 
lee, is  that  of  New  Bedford  Institution  for  Savings  v.  Hathaway.2  In 
this  case  the  holder  of  a  note,  by  an  arrangement  with  a  solvent  surety 
thereon,  proved  the  note  against  the  insolvent  estate  of  another  surety, 
and  then  assigned  the  note  with  his  claim  against  the  estate  to  the  sol- 
vent surety,  who  paid  the  holder  in  full.  The  court  held  that  this 
amounted  to  a  payment  of  the  note,  ordered  the  proof  to  be  expunged, 
and  only  allowed  the  surety  to  prove  one  half  of  the  claim.  In  this 
conclusion  we  cannot  concur.  There  are  three  authorities  cited  in  its 
support  which  are  not  in  our  judgment  entitled  to  the  weight  given 
them.  The  one  chiefly  relied  on  is  Maxwell  v.  Heron,  a  Scotch  case 
which,  if  applicable,  has  been  overruled  in  England,  and  the  law  there 
settled,  as  we  have  seen,  to  the  contrary. 

It  further  appears  that  the  decisions  of  the  Massachusetts  court, 
upon  analogous  questions,  have  not  been  in  accord  with  the  views  of 
this  and  other  courts  upon  like  questions. 

An  important,  if  not  vital,  objection  to  the  Massachusetts  view  of 
this  question  is  that  the  rights  of  the  surety,  instead  of  being  fixed  and 
certain,  are  made  to  depend  upon  accident,  or  upon  the  caprice  of  the 
creditor.  It  encourages  a  policy  of  obstruction  in  the  administration 
of  estates,  for  if  those  interested  in  the  insolvent  estate  can  delay  its 
settlement  until  the  creditor  demands  his  debt  from  the  solvent  surety, 
they  reap  the  advantage  by  having  a  smaller  debt  to  share  with  them 
in  its  distribution.  On  the  other  hand,  temptation  is  held  out  for  a  cor- 
responding effort  on  the  part  of  the  solvent  surety  to  avoid  paying 
until  the  creditor  has  received  such  dividends  as  the  insolvent  estate 
will  pay,  because  the  amount  for  which  he  is  liable  is  thereby  reduced. 
It  gives  opportunity  to  the  creditor  by  collusion  or  otherwise  to  further 
the  interest  of  one  surety  at  the  expense  of  the  just  and  equal  rights  of 
the  co-suret}'. 

Results  like  these,  which  depend,  not  upon  the  rights  of  the  parties 
fixed  by  law,  but  upon  the  superior  skill  of  one  over  the  other  in  ma- 
noeuvring for  position,  or  upon  tne  will  and  caprice  of  the  creditor,  or 
upon  mere  accident,  cannot  be  founded  upon  sound  principles. 

In  Watts  v.  Kinney,3  Judge  Tucker,  speaking  for  this  court,  says 
that  the  surety,  in  paying  the  debt,  "is  governed  by  the  law  of  this 
court.  Even  on  entering  into  his  engagement  as  surety,  he  looks  to  its 
well  established  principles.  He  knows  if  he  pays  the  debt  to  the 
obligee  he  will  stand  in  the  obligee's  shoes.  He  knows  he  will  be  sub- 
rogated to  all  the  rights  of  the  obligee,  as  they  subsist  at  the  time  he 
makes  his  payment.  He  knows  that  a  court  of  equity  looks  not  to 
form,  but  to  substance  ;  that  it  looks  to  the  debt  which  is  to  be  paid, 
not  to  the  hand  which  may  happen  to  hold  it ;  that  the  fund  charged 
with  its  paj'ment  shall  be  so  applied,  whosoever  may  be  the  person  en- 

l  59  Fed.  380 ;  8  C.  C.  Ap.  163.  «  134  Mass.  69.  3  3  Leigh,  272. 


452  PACE  v.  pace's  administrator.  [chap.  in. 

titled  ;  and  that  it  considers  a  debt  as  never  discharged,  until  it  is  dis- 
charged by  payment  to  the  proper  person,  and  by  the  proper  person. 
He  knows  that  that  court  which  permits  no  act  of  a  trustee  to  prejudice 
the  cestui  que  trust  will  not  permit  one  who  stands  in  the  relation  of 
the  creditor  or  obligee  to  the  surety,  to  bar  him  of  those  rights  which  the 
principles  of  equity  have  secured  to  him.  He  is  conscious  that  his 
rights  do  not  depend  upon  the  caprice  of  the  creditor,  or  the  whim  of 
an  executor,  or  the  sense  of  right  of  other  creditors,  but  rest  upon 
the  immutable  principles  of  justice  and  equity  ;  and,  in  making  his  pay- 
ment, he  does  it  in  the  confidence  that  he  will  be  entitled  to  be  indem- 
nified to  the  full  amount  to  which  his  creditor  could  have  charged  the 
assets  of  the  principal." 

These  considerations  bring  us,  in  the  case  at  bar,  to  the  conclusion 
that  John  R.  Pace's  estate  and  James  B.  Pace  were  each  bound  in 
solido  to  their  common  creditor,  William  F.  Cheek,  for  the  entire 
amount  of  the  debt  in  question  ;  that  at  the  death  of  John  R.  Pace  the 
rights  of  his  creditors  became  fixed,  the  assets  of  the  estate  passing,  as 
a  trust  fund,  into  the  hands  of  his  representatives  charged  with  the 
payment  of  his  debts  ;  that,  subject  to  costs  of  administration  and  pre- 
ferred debts,  William  F.  Cheek  then  became  entitled  to  an  interest  in 
said  estate,  not  then  ascertained,  but  capable  of  being  made  certain, 
bearing  such  proportion  to  the  entire  assets  as  his  debt  bore  to  the 
entire  indebtedness.  That  when  James  B.  Pace,  thesurety, .  paid  this 
debt  he  became  at  once  subrogated  to  all  the  rights,  remedies,  .and 
means  01  payment  in  respect  thereto  that  were  possessed  bythe  credi- 
tor, and  had  the  right  to  prove,  as  the  creditor  could  have  done,  the 
entire  debt  against  the  estate  of  his  co-surety,  John"  R.  Pace,  and  to 
receive  dividends  upon  the  basis  of  the  entire  debt,  until  reimbursed 
that  half  of  the  common  burden  belonging  to  the  co-surety.  This  con- 
clusion works  no  injustice  to  the  other  creditors  of  John  R.  Pace  ;  their 
rights,  which  became  fixed  at  the  death  of  the  debtor,  remain  unim- 
paired. They  had  no  interest  in  that  proportion  of  the  assets  belong- 
ing to  William  F.  Cheek.  That  interest  was  as  distinct  and  separate 
from  theirs  as  if  it  had  been  already  segregated  and  set  apart  for  the 
benefit  of  AVilliam  F.  Cheek.  They  could  not  add  to,  or  take  from  it, 
while  it  was  the  property  of  Cheek,  nor  can  they  do  so  now  that  it 
stands,  in  equity,  as  indemnity  for  the  surety  who  has  paid  it. 

For  these  reasons  the  decree  appealed  from  must  be  reversed,  and 
the  cause  remanded  to  be  proceeded  with  in  accordance  with  the  views 
expressed  in  this  opinion.  Reversed.1 

i  Ex  parte  Stokes,  De  Gex,  618 ;  In  re  Parker,  '94,  3  Ch.  400;  Hess  v.  Hess,  69  Pa. 
Record 

Maxwell  v.  Herron,  3  Ross  L.  C.  129,  3  Paton,  350;  Apperson  v.  Wilboum,  58 
Miss.  439  (semble);  New  Bedford  Institution  v.  Hathaway,  134  Mass.  69,  Contra. 

In  4  Va.  L.  Reg.  302,  the  decision  in  Pace  v,  Pace  is  ably  vindicated  against  an 
adverse  criticism  in  4  Va.  L.  Reg.  298. 

In  jurisdictioi  t,  where  payment  by  a  surety  reduces  the  amount  provable  against  a 
co-surety,  the  rule  may  be  evaded  by  an  ingenious  But  simple  device.     The  surety,  in- 


SECT.  I.]       DUNCAN  ET  AL.  V.  NORTH  AND  SOUTH  WALES  BANK.         453 


DUNCAN,   FOX,    &   CO.,   and  Others,  Appellants,  v.  NORTH 
AND   SOUTH    WALP:S    BANK   and   Others,    Respondents. 

In  the  House  of  Lords,  November  27,   1880. 
[Reported  in  6  Appeal  Cases,  1.] 

The  two  firms  of  the  appellants  carried  on  business  at  Liverpool  as 
merchants.  They  were  not  connected  together  in  business,  but  the 
transactions  of  both  with  the  Radfords  were  exactly  of  the  same  kind. 
It  will  be  sufficient  to  refer  to  one  alone. 

Radford  &  Sons  were  millers  and  corndealers  at  Liverpool,  the  firm 
consisting  really  of  Samuel  Collins  Radford  and  James  Radford. 

The  Radfords  were  not  strictly  the  customers  of  the  North  and  South 
Wales  Bank,  but  had  opened  a  discount  account  with  it,  and  were  in- 
debted to  it  in  respect  of  discounts  of  bills  of  exchange.  This  dis- 
count account  was  considerable. 

On  the  1st  of  December,  1874,  Samuel  Collins  Radford  deposited 
with  the  bank  certain  deeds  of  freehold  property  belonging  to  himself, 
for  the  purpose  of  securing  payment  of  the  amount  then  due,  and  to 
become  due,  on  discounts,  from  his  firm  to  the  bank.  The  deposit  was 
effected  by  two  memorandums,  one  of  which,  executed  by  Mr.  S.  Col- 
lins Radford  alone,  stated  that  the  deposit  was  made  "  in  pledge  to 
secure  to  the  said  bank  the  balance,  for  the  time  being,  owing  to  the 
said  bank  by  my  firm  of  Samuel  Radford  &  Sons  for  discounts  and 
advances,  and  for  all  other  moneys  in  or  for  which  the  said  firm, 
whether  alone,  or  jointh'  with  any  other  person  or  persons,  were  or 
might,  from  time  to  time  thereafter,  be  or  become  indebted  or  liable  on 
their  account,  or  which  the  said  bank  might  at  any  time  claim  against 
the  said  firm."  The  second  memorandum  relating  to  other  property  of 
S.  C.  Radford  was  in  a  similar  form. 

In  November,  1875,  Duncan  &  Co.,  through  their  brokers,  Maxwell 
&  Co.,  sold  to  S.  C.  Radford  &  Co.  a  cargo  of  wheat  ex  Rima  for 

stead  of  payipg  the  creditor  outright,  has  only  to  deposit  the  money  with  the  creditor, 
to  be  carried  to  a  suspense  account,  with  power  to  the  creditor  to  appropriate  the  ac- 
cpunt  whenever  he  sees  lit!  Then  the  creditor,  not  having  been  paid  by  the  surety, 
will  prove  against  the  co-surety  for  the  full  amount,  receive  his  dividend,  take  out  of 
die  suspense  account  enough  to  give  him  100  per  cent,  and  surrender  the  resF  ot  tile 
suspense  account  to  the  surely.  CommercialBank  v.  Official  Assignee,  '9.3,  A.  C.  181. 
A  partner  who  has  paid  all  the  firm  debts  is  entitled  to  contribution  from  his  co- 
partners, for  their  share  of  the  deficiency  after  the  exhaustion  of  the  firm  assets.  In 
accordance  witli  the  doctrine  of  the  principal  case,  he  should  be  allowed  to  prove  in 
the  bankruptcy  of  a  co-partner,  by  subrogation,  for  the  full  amount  of  the  deficiency, 
recovering,  However,  only  the  due  proportion  of  the  bankrupt  partner.  5  Harv.  L. 
Rev.  40B,  li>  lb.  284.  See  also  St.  19  &20  Vict.  c.  97,  §  5,  given  supra,  382.  But  the 
solvent  paying  partner  seems  thus  far  to  have  underestimated  his  rights,  and  to  have 
proved  only  tor  this  due  proportion!  Ex  parte  Moore,  2  Gl.  &  J.  166,  172;  Ex  parte 
Plowden,  2  Dea.  456,  3  Mont.TTA.  402 ;  In  re  Dell,  5  Sawy.  354,  Ames  Cas.  on  Park 
419  s.  c.  —  Ed. 


454      DUNCAN  ET  AL.  V.  NORTH  AND  SOUTH  WALES  BANK.      [CHAP.  III. 

cash  after  deliver}7.  Part  of  the  price  was  paid  in  cash,  but  James 
Radford  applied  to  Mr.  Duncan  to  take  the  acceptances  of  Radford 
&  Sons  for  the  residue.  Duncan  at  first  declined  to  do  so,  on  which 
James  Radford  said,  ' '  You  bank  with  the  North  and  South  Wales 
Bank,  if  you  go  there  you  will  find  it  will  be  all  right  with  our  bills," 
to  which  Duncan  answered,  "  If  the  bank  will  accept  those  bills  with- 
out our  indorsement,  then  I  can  oblige  you."  Mr.  Duncan  went  to  the 
bank  and  saw  the  manager,  who  declined  to  discount  the  bills  without 
the  indorsement  of  Duncan  &  Co.,  stating  that  it  was  contrary  to  all 
banking  customs  to  discount  bills  for  an}'  one  who  did  not  indorse 
them  ;  he  added  that  he  did  not  think  that  Duncan  &  Co.  would  incur 
more  than  a  mere  nominal  responsibility  by  making  the  indorsement, 
or  something  to  that  effect.  Mr.  Duncan  thereon  informed  Radford 
that  he  would  consent  to  take  the  bills,  which  he  did,  and  then  indorsed 
them  and  handed  them  to  the  bankers,  who  discounted  them,  placing 
the  amount  to  the  credit  of  Duncan  &  Co.  At  that  time  Duncan  &  Co. 
had  no  knowledge  that  the  bankers  held  any  securities  from  Radford. 
In  January,  1876,  before  an}'  of  the  bills  became  due,  Radford  &  Sons 
stopped  payment.  When  the  bills  became  due  they  were  presented  for 
payment;  they  were  dishonored,  and  Duncan  &  Co.  became  liable  to 
the  bankers  for  the  amounts.  They  received  formal  notice  of  the  dis- 
honor, and  a  demand  of  payment.  There  were  other  bills  of  Radford 
&  Co.  held  by  the  bankers  under  similar  circumstances  on  which  Rob- 
inson &  Co.  were  indorsers,  all  of  which  became  due  between  the  22d 
of  February  and  the  27th  of  March.  On  the  24th  of  February,  1876, 
Radford  &  Co.  executed  a  deed  of  inspectorship.  The  bankers  made 
the  property  deposited  with  them  available  for  the  purpose  of  covering 
their  claims,  and  if  the  bills  in  question  were  not  included  in  the  gen- 
eral balance,  that  balance  would  be  satisfied,  but  if  they  were  included  in 
it,  the  bankers  would  still  be  creditors  of  Radford  &  Co.  upon  the  bills. 
Messrs.  Duncan  &  Fox  admitted  their  liability  on  the  bills  ;  but  (having 
in  the  meantime  heard  of  the  securities  held  by  the  bankers)  contended 
that  they  were  entitled,  in  calculating  the  amount  due  upon  the  bills,  to 
the  benefit  of  these  securities,  for  that  they,  Duncan  &  Fox,  being  merely 
as  between  themselves  and  the  bankers,  sureties  on  the  bills,  they  were 
entitled  to  the  indemnity  afforded  by  the  securities  which  the  principals 
on  the  bills,  Radford  &  Co.,  had  placed  in  the  hands  of  the  bankers. 

The  appellants,  after  coming  to  a  knowledge  that  the  bankers  held 
securities  to  cover  discount  and  balances,  applied  to  them  to  realize 
these  securities  and  apply  the  proceeds  in  payment  of  the  amounts  due 
on  the  bills,  or  to  render  to  the  appellants  an  account  of  what  was  due 
from  Radford  &  Sons,  and,  on  payment  of  the  same  by  the  appellants, 
to  transfer  to  them  the  securities  for  the  same  amount  remaining  in 
their  hands.  Balfour,  Williamson,  &  Co.,  and  the  other  unsecured 
creditors,  claimed  to  have  the  securities  paid  over  to  the  inspectors  for 
general  distribution  under  the  deed.  The  bankers  declined  of  them- 
selves to  adopt  either  claim,  and  required  the  direction  of  a  Court. 


SECT.  I.]       DUNCAN  ET  AL.  V.  NORTH  AND  SOUTH  WALES  BANK.         455 

An  action  was  thereupon  brought  by  Duncan  &  Co.  in  the  Chancery 
Court  of  the  Count}-  Palatine  of  Lancaster,  to  determine  this  question. 
Messrs.  Balfour,  Williamson,  &  Co.,  creditors  of  the  Radfords,  were 
joined  as  defendants  representing  the  creditors  in  general.  The  Vice- 
Chancellor  (Mr.  Little),  on  the  10th  of  May,  1878,  decided  in  favor 
of  the  claim  made  by  Duncan  &  Co.  The  decree,  dated  the  28th  of 
May,  1878,  declared  that  the  appellants  were  sureties  for  the  payment 
by  the  Radfords  of  the  balance  due  in  respect  of  the  bills  held  by  the 
bankers,  and  that  the  equitable  mortgages  of  the  1st  of  December, 
1874,  extended  to  such  bills  of  exchange  and  to  all  other  acceptances 
of  the  Radfords  held  by  the  bankers,  whether  discounted  by  the  Rad- 
fords or  for  third  parties,  and  relief  was  given  to  Duncan  &  Co.  upon 
the  principle  that  the}'  were  entitled  to  the  benefit  of  the  securities  so 
deposited  with  the  bankers.  On  appeal,  this  decree  was  ordered  to  be 
reversed  and  the  action  dismissed  with  costs.1  This  appeal  was  then 
brought.2 

The  Lord  Chancellor  (Lord  Selborne)  :  My  Lords,  the  appellants, 
Duncan,  Fox  &  Co.,  are  liable,  as  indorsers  of  three  bills  of  exchange, 
dated  the  25th  of  November,  1875,  drawn  upon  and  accepted  by  a  firm  of 
Samuel  Radford  &  Sons,  for  the  total  amount  of  £8,920  15s.  3c?.,  and 
given  to  Duncan,  Fox  &  Co.,  in  part  payment  for  wheat  sold  by  them 
to  Samuel  Radford  &  Sons.  The  other  appellants,  Jonathan  Robinson 
&  Co.,  are  liable  as  drawers  and  indorsers  of  two  other  bills,  also  drawn 
upon  and  accepted  by  Samuel  Radford  &  Sons,  under  dates  the  19th 
of  November  and  the  14th  of  December,  1875,  for  the  total  amount  of 
£5,432  7s.  6c?.,  on  account  of  other  wheat  sold  to  Samuel  Radford  & 
Sons.  All  these  bills  were  discounted,  in  the  usual  course  of  business, 
with  the  North  and  South  Wales  Lank,  without  any  special  agreement ; 
and  the  bank  has  never  parted  with  and  still  holds  them.  Samuel 
Radford  &  Sons  stopped  payment  in  January,  1876,  and  on  the  24th  of 
February  following  executed  a  deed  of  inspectorship,  under  which  their 
joint  and  separate  estates  are  applicable  for  the  benefit  of  their  credi- 
tors, parties  thereto,  who  are  represented  by  the  respondents.  Neither 
the  appellants  nor  the  bankers  are  parties  to  that  deed.  The  first  of 
the  five  bills  in  question  became  due  on  the  22d  of  February,  three 
others  on  the  28th  of  February,  and  the  last  on  the  17th  of  March, 
1876.  They  were  all  duly  presented  for  payment,  and  dishonored,  and 
notice  was  duly  given  of  dishonor.  Some  payments  have  been  made 
by  the  acceptors  on  account;  and  the  amount  now  remaining  due  upon 
them  is  claimed  by  the  bank,  as  to  three  from  Duncan,  Fox  &  Co.,  and, 
as  to  two,  from  the  other  appellants.  The  appellants  are  read}'  and 
willing  to  meet  their  liabilities  on  these  bills,  but  they  insist  that  a  sum 
of  £5,921  19s.  6(7.  now  in  the  hands  of  the  bank,  which  has  been  re- 
alized from  securities  held  by  the  bank  under  a  certain  memorandum 

i  n  Ch.  T>.  88. 

2  The  arguments  of  counsel  and  the  concurring  opinion  of  Lord  Watson  are 
omitted.  — Ed. 


456      DUNCAN  ET  AL.  V.  NORTH  AND  SOUTH  WALES  BANK.      [CHAP.  IIL 

of  deposit,  dated  the  1st  of  December,  1874,  ought  to  be  applied  to  re- 
lieve them  as  far  as  it  will  extend,  and  also  that  the  securities  yet 
remaining  unrealized  under  the  same  memorandum  (valued  at  about 
£2,000),  ought  to  be  handed  over  to  them,  on  payment  of  the  balance 
which,  after  the  application  of  the  £5,921  19s.  6c?.,  will  remain  due  upon 
the  bills.  This  claim  is  resisted  by  the  respondents,  who,  for  this  pur- 
pose, may  be  regarded  as  standing  in  the  shoes  of  Samuel  Collins  Rad- 
ford, one  of  the  partners  in  the  firm  of  Samuel  Radford  &  Sons. 

The  deposit  consisted  of  the  title  deeds  of  certain  real  estate  at 
Liverpool,  belonging  absolutely  to  Samuel  Collins  Radford,  which,  by 
the  memorandum  of  the  1st  of  December,  1874,  were  pledged  to  secure 
to  the  bank  (whose  customers  Samuel  Radford  &  Sons  were),  "the 
balance  for  the  time  being  owing  to  the  said  bank  bj'  Samuel  Radford 
&  Sons  for  discounts  and  advances,  and  for  all  other  moneys  in  or  for 
which  the  said  firm,  whether  alone  or  jointly  with  any  other  person  or 
persons,  were  or  might,  from  time  to  time  thereafter,  be  or  become  in- 
debted or  liable  on  their  account,  or  which  the  said  bank  might  at  any- 
time claim  against  the  said  firm."  At  the  time  when  the  present  ques- 
tion arose  all  dealings  and  accounts  between  the  bank  and  Samuel 
Radford  &  Sons  had  been  closed,  and  nothing  remained  due  to  the 
bank,  under  the  memorandum  of  deposit,  except  the  balance  then  un- 
paid upon  those  bills.  The  property  from  which  the  sum  of  £5,921  19s. 
6d.  was  realized  was  sold  by  the  bank  after  the  commencement  of  the 
action.  The  bank  is  before  the  Court  (subject  of  its  right  to  receive 
payment  of  the  balance  due  on  the  bills  and  of  its  costs)  me  re  by  as  a 
stakeholder.  In  its  answer  it  professes  to  be  "  desirous  of  acting  with 
entire  impartiality,  and  holding  an  even  hand  between  the  plaintiffs  and 
the  defendants,  and  of  dealing  with  the  securities  and  the  proceeds 
thereof  under  the  direction  of  the  Court ;  "  and  it  offers,  on  receiving 
paj'ment  of  what  is  due  to  it,  to  pa)'  over  any  surplus,  and  to  assign  any 
property  comprised  in  its  security  which  may  remain  unsold,  to  such 
persons  as  the  Court  may  consider  entitled. 

The  question,  therefore,  as  to  the  proper  appropriation  of  the  £5,921 
19s.  6d.  and  the  remaining  securities,  is  between  the  respondents,  claim- 
ing in  right  of  Samuel  Collins  Radford  (one  of  the  acceptors),  and  the 
appellants,  the  indorsers  of  the  bills  of  exchange  ;  and  it  ought,  I  con- 
ceive, to  be  determined  upon  the  same  principles  as  if  the  appellants 
had  actually  paid  the  bills,  and  as  if  the  bank  had  paid  the  proceeds  of 
the  securities  either  to  the  appellants  or  into  Court  in  this  action.  If, 
in  either  of  those  events,  Samuel  Collins  Radford  would  have  been 
entitled  to  an  order  against  the  appellants  for  repayment,  or  for  pay- 
ment out  of  Court  of  such  proceeds,  to  be  applied  as  part  of  his  estate 
under  the  inspectorship  deed,  your  Lordships'  judgment  ought  now  to 
be  for  the  respondents  ;  if  not,  the  appellants  are  right.  The  Vice- 
Chancellor  of  the  Palatine  Court  of  Lancaster  thought  that  the  appel- 
lants were  right;  and,  with  the  utmost  respect  to  the  Court  of  AppeaJ 
(which  thought  otherwise),  I  am  of  the  same  opinion. 


BECT.  I.]       DUNCAN  ET  AL.  V.  NORTH  AND  SOUTH  WALES  BANK.         457 

In  examining  the  principles  and  authorities  applicable  to  this  ques- 
tion, it  seems  to  me  to  be  important  to  distinguish  between  three  kinds 
of  cases :  (1)  Those  in  which  there  is  an  agreement  to  constitute,  for 
a  particular  purpose,  the  relation  of  principal  aud  surety,  to  which 
agreement  the  creditor  thereby  secured  is  a  party  ;  (2)  Those  in  which 
there  is  a  similar  agreement  between  the  principal  and  surety  only,  to 
which  the  creditor  is  a  stranger  j  and  (3)  Those  in  which,  without  any 
such  contract  of  suretyship,  there  is  a  primary  and  a  secondary  lia- 
bility of  two  persons  for  one  and  the  same  debt,  the  debt  being,  as 
between  the  two,  that  of  one  of  those  persons  only  and  not  equally 
of  both,  so  that  the  other,  if  he  should  be  compelled  to  pay  it,  would 
be  entitled  to  reimbursement  from  the  person  by  whom  (as  between  the 
two)  it  ought  to  have  been  paid. 

It  is,  I  conceive,  to  the  first  of  these  classes  of  cases,  and  to  that 
class  only,  that  the  doctrines  laid  down  in  such  authorities  as  Owen  v. 
Homan,1  Newton  v.  Chorlton,2  and  Pearl  v.  Deacon,  apply  in  their 
full  extent.  If,  so  far  as  the  creditor  is  concerned,  there  is  no  con- 
tract for  suretyship,  if  the  person  who  has  (in  fact)  made  himself 
answerable  for  another  man's  debt  is,  towards  the  creditor,  no  surety, 
but  a  principal,  then  I  think  that  the  creditor  would  not  be  subject  to 
those  special  obligations  which  were  described  by  Lord  Truro  in  Owen 
v.  Homan,1  and  would  not,  generally,  have  his  powers  of  dealing  with 
securities  circumscribed  and  restricted  in  the  manner  described  by 
Vice-Chancellor  Wood  in  Newton  v.  Chorlton,2  and  by  Lord  Romilly 
and  the  Lords  Justices  in  Pearl  v.  Deacon.  If,  for  example,  in  Pearl 
v.  Deacon  the  contract  of  suretyship  had  been  only  between  Pearl  and 
Pearson  inter  se,  Messrs.  Deacon  dealing  with  them  both  as  principals, 
and  not  with  Pearl  as  a  surety,  I  should  take  it  to  be  clear  that  Messrs. 
Deacon  might  have  distrained  upon  goods  comprised  in  their  security 
for  the  rent  due  to  them  from  Pearson,  without  losing  (as  they  did  in 
the  actual  case)  their  remedy  against  Pearl.  The  difficulties,  there- 
fore, which  in  the  present  case  appear  to  have  weighed  most  upon  the 
minds  of  the  judges  in  the  Court  of  Appeal,  would  not  ordinarily 
arise,  unless  there  was  a  contract  of  suretyship  properly  so-called,  not 
between  the  two  debtors  only  but  between  them  and  the  creditor  also. 

It  is,  however,  consistent  with  this  that  the  person  who,  as  between 
himself  and  another  debtor,  is  in  fact  a  surety  (though  the  creditor  is 
no  party  to  that  contract  of  suretyship),  has,  against  that  other  debtor, 
the  rights  of  a  surety  ;  and  that  the  creditor,  receiving  notice  of  his 
claim  to  those  rights,  will  not  be  at  liberty  to  do  anything  to  their 
prejudice,  or  to  refuse  (when  all  his  own  just  claims  are  satisfied)  to 
give  effect  to  them.  The  judgment  of  Lord  Justice  Turner,  in  Davies 
v.  Stainbank,3  and  the  cases  of  Ex,  parte  Hippins  &  Harrison,4  and 
Liquidators  of  Overend,  Gurney,  &  Co.  v.  Liquidators  of  Oriental 
Financial  Corporation,6  are  founded,  as  I  understand  them,  on  this 

l  3  Mac.  &  G.  378.      '  "  10  Hare,  646.  E  6  D.  M.  &  G.  694. 

4  2  Glyn  &  Jameson,  93.  5  Law  Rep.  7  H.  L.  348. 


458      DUNCAN  ET  AL.  V.  NORTH  AND  SOUTH  WALES  BANK.     [CHAP.  IIL 

view  of  the  law.  In  such  cases  the  equity  is  direct  in  favor  of  the 
Suret3*-debtor  against  the  principal  debtor ;  but  it  affects  the  creditor 
towards  whom  they  are  both  principals  onljr  as  a  man  who  has  notice 
of  the  obligations  of  one  of  his  own  debtors  towards  the  other.  As 
between  the  two  debtors,  the  "  established  principles  of  a  Court  of 
Equity,"  to  which  Sir  Samuel  Rom  illy  referred  in  his  argument  in 
Craythorne  v.  Swinburne,  judicially  approved  by  Lord  Eldon,  are 
fully  applicable.  "Natural  justice"  (it  was  there  argued)  "requires 
that  the  surety  shall  not  have  the  whole  thrown  upon  him,  by  the  choice 
of  the  creditor  not  to  resort  to  remedies  in  his  power."  In  Aldrich  v. 
Cooper,1  Lord  Eldon  speaks  of  a  suret3*'s  equity  as  resting  upon  the 
same  principles  with  that  of  marshalling,  when  one  creditor  of  the  same 
debtor  is  able  to  resort  to  either  of  two  funds,  and  another  creditor  to 
only  one.  "  It  is  not"  (he  sa3Ts)  "  by  force  of  the  contract,  but  that 
equity,  upon  which  it  is  considered  against  conscience  that  the  holder 
of  the  securities  should  use  them  to  the  prejudice  of  the  surety ;  and 
therefore  there  is  nothing  hard  in  the  act  of  the  Court  placing  the  suret}' 
exactly  in  the  situation  of  the  creditor."  And  soon  afterwards 
(where  he  speaks  of  marshalling),  "The  principle,  in  some  degree,  is 
that  it  shall  not  depend  upon  the  will  of  one  creditor  to  disappoint 
another;  "  and,  "The  Court  has  said  that  if  a  creditor  has  two  funds, 
the  interest  of  the  debtor  shall  not  be  regarded,  but  the  creditor  having 
two  funds  shall  take  to  that  which,  paying  him,  will  leave  another  fund 
for  another  creditor."  And  in  Younge  v.  Reynell,2  Vice-Chancellor 
Turner  said  :  "  When  Lord  Eldon  says  it  is  against  conscience  to  sue 
the  suret}',  it  must  be  considered  what  is  the  meaning  of  that  expres- 
sion, and  why  this  Court  considers  it  against  conscience  that  the  surety 
should  be  sued  ;  and  I  take  it  to  be  because,  as  between  the  principal 
and  suret}',  the  principal  is  under  an  obligation  to  indemnify  the  surety  ; 
and  it  is,  I  conceive,  from  this  obligation  that  the  right  of  the  surety  to 
the  benefit  of  the  securities  held  by  the  creditor  is  derived.  The  prin- 
ciple is  not,  I  think,  much  dissimilar  to  that  which  applies  where  a  man 
directs  part  of  his  estate  to  be  employed  in  carrying  on  a  trade,  in  which 
case  the  creditors  of  the  trade  have  a  right  to  resort  to  that  part  of 
the  estate,  because  the  trustees  have  a  right  to  be  indemnified  out 
of  it." 

It  appears  to  me  that  these  principles  of  equity  are  not  less  applic- 
able to  cases  of  the  third  class,  —  cases  in  which  there  is,  strictly  speak- 
ing, no  contract  of  suretyship,  but  in  which  there  is  a  primary  and 
secondaiy  liability  of  two  persons  for  one  and  the  same  debt,  hy  virtue 
of  which,  if  it  is  paid  by  the  person  who  is  not  primarily  liable,  he  has 
a  right  to  reimbursement  or  indemnity  from  the  other,  — than  to  those 
of  the  second  class,  in  which  there  is  a  contract  of  suretyship  to  which 
the  creditor  is  not  a  part}'.  To  this  third  class  of  cases,  the  rights  of 
an  indorser  against  an  acceptor  of  a  bill  of  exchange  may  most  properly 
be  referred.  The  liability  of  the  indorser  to  the  holder  is,  by  the  law 
1  8  Ves.  382,  389.  2  9  Hare,  819. 


SECT.  I.]       DUNCAN  ET  AL.  V.  NORTH  AND  SOUTH  WALES  BANK.  459 

merchant,  conditional,  and  (as  was  said  by  Mr.  Justice  Buller,  in  Tindal 
v.  Brown1)  "only  secondary;"  but,  when  the  conditions  required  by 
that  law  are  fulfilled,  it  becomes  absolute,  and  is  that  of  a  principal ; 
and  the  indorser's  right,  if  he  pays  the  holder,  to  recover  over  against 
the  acceptor  is  not  founded  on  any  agreement  between  him  and  the 
acceptor  (who  is  as  likely  as  not  to  be  a  stranger  without  any  com- 
munication with  him  before  the  indorsement),  but  is  established  by  the 
same  law.  But  contracts  of  this  kind,  as  well  as  suretyships  proper, 
are  entered  into,  by  all  the  parties  to  them,  with  a  knowledge  and  in 
view  of  the  law  by  which  the}'  are  governed.  The  acceptor,  though  he 
may  know  nothing  of  any  particular  indorser,  knows  that  by  his  accept- 
ance he  does  an  act  which  will  make  him  liable  to  indemnify  any  person 
who  may  indorse,  and  may  afterwards  pay  the  bills  ;  and  he  knowingly 
and  intentionally  undertakes  that  liability,  as  much  as  if  the  indorse- 
ment were  the  result  of  direct  communication  between  himself  and  that 
person.  Lord  Eldon,  in  ex  parte  Younge,2  said  with  his  usual  accuracy 
(his  language  being  as  applicable  to  an  indorser  as  to  a  drawer)  :  "  The 
drawer  of  a  bill  of  exchange  is  not  strictly  a  suret}^  for  the  acceptor.  In 
general  cases,  the  acceptor  is  primarily  liable  upon  the  bill,  and  the 
drawer  may  be  in  the  nature  of  a  surety."  The  statement  in  Smith's 
Mercantile  Law  (3d  edition,  p.  253)  is  also  correct,  and  is  established 
b}'  many  authorities,  that  "in  the  contract  by  bill  or  note,  the  maker 
or  acceptor  is  considered  the  principal,  and  the  indorsers  as  his  sure- 
ties ;  and  consequently,  if  the  holder  either  discharge  or  suspend  his 
remedy  against  the  former,  the  latter,  unless  the}'  have  previously  con- 
sented to  it,  or  afterwards  promised  to  pay  with  knowledge  of  it,  are  all 
immediately  discharged."  Mr.  Smith  uses,  in  this  passage,  the  language 
of  Mr.  Justice  Chambre  in  Clark  v.  Devlin,3  who  stated  that  the  case  of 
Darley  v.  English  was  decided  b}r  Lord  Eldon  (in  the  Common  Pleas) 
on  that  principle.  I  am  unable  to  conceive  an}'  ground  on  which  the 
principle  which  prevails  in  cases  of  suretyship  should  go  so  far  as  this, 
in  favor  of  the  drawer  or  the  indorser,  and  not  also  extend  (when  the 
indorser  is  compelled  to  pay  the  bill,  and  when  the  question  arises  be- 
tween him  and  the  acceptor  only)  to  securities  deposited  by  the 
acceptor  with  the  holder.  In  the  present  case  the  holder  has  actually 
in  his  hands  a  large  sum  of  money,  realized  by  him  from  such  securi- 
ties. It  is  very  difficult,  on  any  rational  principle,  to  distinguish  the 
receipt  of  such  a  sum,  under  such  circumstances,  from  an  actual  pay- 
ment on  account  by  the  acceptor.  Of  the  creditor's  right,  if  he  pleases, 
to  apply  it  in  payment  of  the  bills  there  can  be  no  possible  question  ; 
yet  it  is  contended  that  he  may,  at  his  option,  give  the  money  back  to 
the  acceptor,  and  sue  the  indorser  on  the  bills  ;  na}',  more,  that  if  he 
does  compel  the  indorser  to  pay  the  bills,  without  applying  that  money 
to  them,  a  court  of  equity  is  bound  to  leave  the  burden  on  the  indorser, 
and  restore  to  an  insolvent  acceptor  the  money  which  has  been  so  re- 

1  1T.K.  170  ;  affirmed  2  T.  R.  186. 

4  3  V.  &  B.  40.  3  3  b.  &  P.  366. 


460      DUNCAN  ET  AL.  V.  NOKTH  AND  SOUTH  WALES  BANK.      [CHAP.  III. 

alized  from  the  securities.  I  cannot  reconcile  such  a  decision  with  the 
doctrines  of  Lord  Eldon  and  Lord  Justice  Turner.  No  case  before  the 
present  has  been  cited,  in  which  the  right  of  a  drawer  or  indorser  to 
the  benefit  of  such  securities,  as  between  himself  and  the  acceptor,  has 
ever  been  denied  or  doubted.  The  opinion  of  Sir  John  Byles,  in  his 
very  learned  Treatise  on  Bills,  is  (no  doubt)  no  authority  ;  and  I  will 
not  lay  stress  upon  the  case  of  Praed  v.  Gardiner,1  because,  as  was  ob- 
served by  Mr.  Marten,  what  was  really  done  in  that  case  was  to  marshal 
securities  held  by  the  creditor  according  to  the  equities  of  the  different 
persons  entitled  to  redeem  them,  and  the  exact  grounds  of  the  judgment 
do  not  appear.  But  I  think  that  the  principles  deducible  from  all  the 
authorities  lead,  necessarily,  to  the  conclusion  that,  under  circumstances 
like  the  present,  the  equity  between  the  indorser  and  the  acceptor  is  the 
same  as  that  between  a  surety  and  a  principal  debtor  when  the  creditor 
is  not  a  party  to  the  contract  of  suret3'ship.  That  equity,  according  to 
my  view  of  it,  need  not  interfere  with  the  ordinary  operation  of  such  a 
general  covering  security  as  that  given  by  Samuel  Collins  Radford  to 
the  North  and  South  Wales  Bank,  during  the  continuance  of  the  deal- 
ings between  the  secured  creditor  and  the  acceptor  of  bills  not  overdue, 
which  the  creditor  may  hold  or  part  with  as  he  pleases.  It  will  not  in- 
capacitate bankers  who  ma}'  hold  such  a  bill,  accepted  by  a  customer 
and  indorsed  by  a  third  party,  from  carrying  on  their  dealings  with 
that  customer,  by  varying  the  securities  received  from  him  according 
to  the  ordinary  course  of  those  dealings,  as  long  as  he  remains  solvent 
and  before  the  acceptance  has  been  dishonored.  It  will  not,  in  my 
opinion,  tend  to  paralyze  the  business  of  discounting  bills  of  exchange. 
But  it  is  an  equity  which,  in  mj'  judgment,  does  certainly  attach,  when 
the  bills,  overdue  and  dishonored,  and  the  securities,  are  found  together 
in  the  hands  of  the  secured  creditor,  at  the  time  when  he  requires  pay- 
ment from  the  indorser ;  when  the  creditor  has  no  other  transactions 
then  depending  with  the  customer,  and  no  claim  upon  the  securities  ex- 
cept for  the  bills  themselves.  And  when  the  competition  is  between 
the  indorser  and  the  acceptor  onby. 

For  these  reasons,  I  think  that  the  judgment  under  appeal  is  errone- 
ous, unless  it  can  be  suppoi'ted  on  the  ground  that  the  security  in  this 
case  was  given  by  one  only  of  the  partners  in  the  firm  by  which  the 
bills  were  accepted.  But  it  appears  to  me  that  it  can  make  no  differ- 
ence whether  the  security  was  given  by  all  the  acceptors  or  by  one  of 
them.  In  each  case  alike  the  person  giving  the  security  is  principal 
debtor  as  between  the  indorser  and  himself;  and  the  interest,  whether 
of  a  sole  debtor  or  of  one  of  two  or  more  joint  debtors,  is  not  (in  my 
opinion)  to  be  regarded  in  competition  with  the  equity  of  an}-  one 
who  is  in  the  nature  of  a  surety  for  him,  and  whom  he  is  bound  to 
indemnify. 

I  therefore  propose  to  your  Lordships  to  reverse  the  decree  appealed 
from,  and  to  restore  that  ol  the  Vice-Chancellor  of  the  County  Palatine 

1  2  Cox,  86. 


FECT.  I.]       DUNCAN  ET  AL.  V.  NORTH  AND  SOUTH  WALES  BANK.         461 

of  Lancaster.  The  bankers  will  take  their*costs  here  and  below  out  of 
the  fund  arising  from  the  securities  ;  and  the  appellants  must  have 
their  costs  here  and  below  out  of  an}'  surplus  remaining  from  the  secu- 
rities in  the  first  instance,  and  (so  far  as  the  securities  may  not  be 
sufficient  to  pay  them)  from  the  respondents. 

Lord  Blackburn.  My  Lords,  the  North  and  South  Wales  Bank  had, 
amongst  its  customers,  a  firm  of  Samuel  Radford  &  Sons.  The  bank 
had  taken  from  Samuel  Collins  Radford,  one  of  the  partners  in  that 
firm,  the  title  deeds  of  some  property  belonging  to  him  with  two  mem- 
orandums, by  which  he  acknowledged  to  have  delivered  the  title  deeds 
in  pledge  to  secure  to  the  bank  whatever  might  be  owing  from  the  firm 
to  the  bank. 

I  do  not  think  it  either  necessary  or  desirable  to  inquire  what  might 
have  been  the  rights  of  the  various  parties  under  all  the  complicated 
state  of  things  which  might  have  arisen  during  the  winding  up  of  the 
transactions  between  the  bank  and  Samuel  Radford  &  Sons.  It  is 
enough  to  consider  the  state  of  facts  which  has  in  this  case  actually 
occurred. 

The  bank  had  discounted  for  one  of  the  appellants  two  bills  of  ex- 
change, and  for  the  other  appellant  three  bills  of  exchange  accepted  by 
the  firm  of  Samuel  Radford  &  Sons,  payable  at  a  bank  in  London. 
These  bills  were  indorsed  by  the  appellants  respectively.  At  maturity 
they  were  dishonored,  and  the  firm  was  consequently  liable  to  the 
bankers  as  holders  of  them,  so  that  the  equitable  mortgage  was  held  in 
pledge  to  the  bank  to  cover,  amongst  other  things,  those  bills.  The 
bank  gave  due  notice  of  dishonor  to  the  several  indorsers  respectively, 
and  they  became  bound  to  pay  to  the  bankers,  as  holders,  the  amount 
of  the  bills,  on  having  the  bills  delivered  to  them  so  as  to  remit  them 
to  their  former  rights  as  holders  against  the  acceptors  and  an}'  indorsers 
prior  to  themselves. 

The  estate  pledged  to  the  bank  has,  in  fact,  been  converted  into 
money,  and  partly  from  that  source,  and  parti}'  from  others,  most  of 
the  liabilities  of  Samuel  Radford  &  Sons  to  the  bank  have  been  dis- 
charged in  full,  and  some  payments  have  been  made  by  the  acceptors 
on  account  of  the  bills  in  question.  And  now  it  is  ascertained  that  after 
all  liabilities  of  the  partners  to  the  bank,  except  those  on  the  five  bills 
in  question,  have  been  discharged,  there  will  remain  on  the  equitable 
mortgage,  partly  realized,  a  considerable  surplus,  though  not  sufficient 
to  pay  the  bills  in  full.  The  indorsers  offer  to  pay  the  bills  on  having 
credit  for  the  money  realized,  so  far  as  not  applicable  to  other  purposes, 
and  having  the  equitable  mortgage  transferred  to  them.  Samuel  Col- 
lins Radford  has  not  become  bankrupt,  but  the  general  creditors  of  the 
firm  insist  that  the  indorsers  of  the  bills  ought  to  be  made  to  pa}'  in 
full,  and  then  that  the  surplus  of  the  pledged  estate  should  be  delivered 
to  Samuel  C.  Radford  to  be  applied  for  the  general  benefit.  The  ap- 
pellants have  filed  this  bill  to  have  the  memorandums  and  the  title 
deeds,  together  with  the  bills  of  exchange,  delivered  to  them,  on  pay- 


462      DUNCAN  ET  AL.  V.  NORTH  AND  SOUTH  WALES  BANK.     [CHAT.  III. 

ment  by  them  of  what  remains  due  to  the  bank  on  the  bills.  The  bank 
is  sure  to  be  paid  in  full  either  wa}',  and  having  no  interest  in  the 
matter,  does  not  wish  to  favor  either  party,  and  submits  to  deal  with 
the  bills  of  exchange  and  equitable  mortgages,  after  satisfaction  of  the 
principal  moneys,  interest,  and  costs,  as  the  court  may  direct. 

The  Vice-Chancellor  held  that  the  appellants  were  entitled  to  what 
they  claim.  The  Lords  Justices  reversed  his  decision,  and  the  sub- 
stantial question  before  the  house  is,  whether  the  indorsers  of  the  bills 
have  such  a  right. 

I  think  it  is  clear  that  they  have  no  such  right  by  contract.  They 
did  not  at  the  time  when  they  got  the  bills  discounted  at  the  bankers  so 
much  as  know  that  the  bank  held  an}'  security  from  Samuel  Radford  & 
Sons,  and  of  course,  that  being  the  case,  made  no  express  stipulation 
about  it ;  and  there  is  nothing  in  the  nature  of  an  indorsement  for  value 
to  give  the  indorser  any  right,  during  the  currency  of  the  bill,  to  any 
securit}'  which  either  his  immediate  indorsee,  or  any  other  holder  of  the 
bill,  may  have  from  any  party  to  the  bill.  The  indorser,  by  the  law 
merchant,  is  liable,  on  having  due  notice  of  dishonor,  to  pay  the  amount 
of  the  bill  to  the  holder  for  the  time  being,  on  having  the  bill  restored 
to  him  ;  but  till  the  bill  is  dishonored  there  is  nothing  to  prevent  the 
party  who  may  be  the  holder  for  the  time  being  indorsing  it,  even  with- 
out recourse,  so  as  to  make  it  impossible  that  he  can  ever  be  the  per- 
son to  whom  the  prior  indorser  will  have  to  pay  the  bill.  I  think, 
therefore,  with  the  Lords  Justices,  that  there  is  neither  principle  nor 
authority  for  saying  that  the  indorsers  are,  during  the  currency  of  the 
bill,  sureties,  or  in  the  nature  of  sureties  to  the  indorsee,  or  that  they 
have  an}'  equit}'  to  prevent  the  indorsee  from  dealing  as  it  may  seem  to 
him  most  desirable,  with  any  other  parties  unless  thereb}r  he  prevent? 
himself  from  giving  notice  of  dishonor,  so  as  to  give  them  their  rernedj 
against  prior  parties  to  the  bill ;  and  I  agree  with  them  in  thinking 
that  any  contrary  decision  would  be  very  mischievous. 

But  though  the  indorsers  had  no  such  right  by  contract,  yet  after  the 
bills  were  dishonored  and  notice  of  dishonor  had  been  given  to  the  in- 
dorsers, the  position  of  the  parties  is  altered.  Though  the  indorser  is 
primarily  liable  as  principal  on  the  bill,  and  is  not  strictly  a  surety  for 
the  acceptor,  he  has  this  in  common  with  a  surety  for  the  acceptor, 
that  he  is  entitled  to  the  benefit  of  all  payments  made  b}'  the  acceptor, 
and  is  entitled,  on  paying  the  holder,  to  be  put  in  a  situation  to  have  a 
right  to  sue  the  acceptor.  And  now  the  state  of  affairs  is  so  far  cleared 
up,  that  the  bank  had,  besides  the  right  to  come  upon  the  indorsers,  a 
right  to  come  upon  the  security  pledged  to  the  bank  b}'  Samuel  Collins 
Radford. 

I  think  it  is  established  by  the  case  of  Deering  v.  Lord  Winchelsea, 
and  the  observations  on  that  case  by  Lord  Eldon  in  Craythorne  v. 
Swinburne,  and  Lord  Redesdale  in  Stirling  v.  Forrester,1  that  where 
a  creditor  has  a  right  to  come  upon  more  than  one  person  or  fund  for 

1  3  Bli.  575. 


SECT.  I.]       DUNCAN  ET  AL.  V.  NORTH  AND  SOUTH  WALES  BANK.  463 

the  pa}Tment  of  a  debt,  there  is  an  equity  between  the  persons  inter* 
ested  in  the  different  funds  that  each  shall  bear  no  more  than  its  due 
proportion.  This  is  quite  independent  of  any  contract  between  the 
parties  thus  liable.  Lord  Eldon,  in  Craythorne  v.  Swinburne,  says  of 
Deering  v.  Lord  Winchelsea:  "  That  case  also  established  that  though 
one  person  becomes  a  suret}*  without  the  knowledge  of  another  surety, 
that  circumstance  introduces  no  distinction."  And  Lord  Redesdale,  in 
Stirling  v.  Forrester,1  says  :  "  The  principle  established  in  the  case  of 
Deering  v.  Lord  "Winchelsea  is  universal,  that  the  right  and  dut}r  of 
contribution  is  founded  upon  doctrines  of  equity,  it  does  not  depend 
upon  contract.  If  several  persons  are  indebted,  and  one  makes  the 
payment,  the  creditor  is  bound  in  conscience  (if  not  bj'  contract)  to  give 
to  the  party  paying  the  debt  all  his  remedies  against  the  other  debtors. 
.  .  .  He  (the  creditor)  is  bound,  seldom  by  contract  but  always  in 
conscience,  as  far  as  he  is  able,  to  put  the  party  paying  the  debt  upon 
the  same  footing  as  with  those  who  are  equally  bound.  That  was  the 
principle  of  decision  in  Deering  v.  Lord  Winchelsea,  and  in  that  case 
there  was  no  evidence  of  contract."  And  this  last  principle,  that  the 
person  making  payment  of  more  than  his  due  proportion  is  entitled  to 
have  assigned  to  him  all  rights  and  securities  of  the  creditor  for  the 
purpose  of,  by  means  thereof,  obtaining  contribution,  is  recognized 
and  enacted  b}r  the  19  &  20  Vict.  c.  97,  s.  5. 

I  think  that  though  the  indorser  of  the  bill  is  not  exactby  a  surety  for 
the  acceptor,  or  a  co-surety  with  those  who  are  sureties  for  the  accep- 
tor, yet  he  stands  in  a  position  sufficiently  analogous  to  that  of  a  surety 
to  bring  him  within  the  principle  of  Deering  v.  Lord  Winchelsea. 

If  this  be  correct,  it  seems  to  me  that  the  question  in  the  present 
case  is  reduced  to  this:  what  are  the  due  proportions  as  between  the 
indorsers  and  the  security  created  by  one  of  the  acceptors  on  his  separ- 
ate estate?  If  a  third  person,  not  a  member  of  the  firm  or  liable  for  its 
engagements,  had  become  surety  or  pledged  his  estate  as  security  to  the 
bank  for  the  general  balance  due  to  it  from  the  firm,  it  might  be  con- 
tended, at  least  plausibly,  that  he  became  onty  surety  for  the  balance 
after  all  indorsers  had  paid,  and  was  therefore  entitled  to  say  that,  as 
between  him  and  the  indorser,  the  indorser  should  pay  all  before  the 
surety  paid  anything.  I  do  not  express  any  opinion  how  that  would  be. 
But  the  owner  of  the  pledged  estate  in  this  case  was  himself  one  of  the 
firm  and  an  acceptor  of  the  bill,  and  as  such  liable  to  the  indorser. 
And  if  the  bank  had  applied  the  whole  of  the  proceeds  of  the  security, 
as  far  as  the}'  went,  to  the  payment  of  these  bills,  it  seems  quite  clear 
that  Samuel  Collins  Radford  could  not  have  come  on  the  indorsers  to 
repay  him  part  of  the  debt  which  he  had  thus  paid.  The  answer  would 
have  been  that  he  was,  as  between  him  and  the  indorsers,  bound  to  pay 
the  whole.  And  it  follows,  that  if  the  bank  comes  upon  the  indorsers 
first,  they  must  have  the  right  to  be  recouped  out  of  the  security,  unless 
the  bank  had  an  option  to  favor  whichever  set  of  those  liable  it  pleased, 

1  3  Bli.  at  p.  590. 


464  CHICAGO   AND   ALTON   R.    E.    CO.    V.   GLENNY.       [CHAP.  IIL 

which  the  reasoning  of  Lord  Eldon  seems  to  me  to  treat  as  manifestly 
inconsistent  with  the  doctrine  of  equity. 

I  have,  therefore,  come  to  the  conclusion  that  the  decision  below 
ought  to  be  reversed. 

I  have  not  done  so  without  some  hesitation.  For  it  is  not  to  be  de- 
nied that  the  result  is  that  the  indorsers  of  bills  who  happen  to  have  dis- 
counted them  with  other  banks  are  worse  off  than  the  appellants,  who, 
by  what  as  regards  them  is  a  lucky  chance,  have  got  the  benefit  of  this 
securit}-.  I  am  afraid  to  question  the  justice  of  a  rule  approved  by 
such  great  lawyers  as  Lords  Eldon  and  Redesdale,  though  Lord  Eldon 
does  not  seem  at  first  to  have  approved  of  Deering  v.  Lord  Win- 
chelsea ;  but  if  it  were  res  Integra  I  am  by  no  means  sure  that  it 
would  not  have  been  better  to  say  that  every  one  should  have  the  full 
extent  of  his  rights  given  by  contract,  express  or  implied,  and  no 
more.  But  I  think  the  unbroken  current  of  authority  from  Deering  v. 
Lord  Winchelsea,  decided  in  1787,  very  nearly  a  century  since,  ren- 
ders it  impossible  now  to  indulge  in  such  speculations. 

I  agree  to  the  order  as  to  costs  which  has  been  proposed  by  the 
woble  and  learned  Lord  on  the.  woolsack.1  ^ 


,,     a^C/5**-  77   — "  — "  ^*7     SPW   <^&l 

V  THE   CHICAGQAND__ALTON  R.  R.  CO.  v.  J.  GLENNYr 

In  the  Supreme  Court,  Illinois,  October  24,  1898. 

f~&4  •  'Zmr     //    •  [Reported  in  175  Illinois  Reports,  238.] 

Mr.  Justice  "Wilkin  delivered  the  opinion  of  the  Court.2 
It  appears  that  the  property  destroyed  was  partly  covered  by  insur- 
ance, and  the  insurance  company  had  paid  the  loss  before  this  action 
was  brought.  It  is  said  this  suit  is  in  fact  brought  by  that  company, 
the  intimation  being,  that  inasmuch  as  plaintiffs  had  received  compen- 
sation for  their  loss  from  the  insurance  company  they  cannot  maintain 
this  action  against  the  defendant.  The  insurer  stood  in  the  position  of 
a  suret}T,  and  having  paid  the  loss~?or  which  the  defendant,  by~Ms 
negligence,  was  primarily  liable,  became  subrogated  to  the  rights  "of 
the  plaintiffs  to  the  extent  it  "Had  paid.  If  authority  is  needed  in  sup- 
port oi  tnis  proposition  it  will  readily  be  found  in  our  own  decisions. 
Peoria  Marine  and  Fire  Ins.  Co.  v.  Frost ; s  Chadsey  v.  Lewis ;  * 
American  Express  Co.  v.  Haggard.5  Other  cases  might  be  cited  to  the 
same  effect,  but  we  regard  the  law  so  well  settled  that  it  cannot  be 
seriously  questioned.  Judgment  affirmed? 

1  Compare  Pitts  v.  Congdon,  2  N.  Y.  352,  and  Havens  v.  Willis,  100  N.  Y.  482.  —  Ed. 

2  Only  the  opinion  of  the  Court  relating  to  subrogation  is  given.  — Ed. 

3  37  111.  333.  *  1  Gilm.  153.  5  37  111.  465. 
6  Mason  v.  Saintsbury,  3  Doug.  61  ;  Clarke  v.  Inhabitants,  2  B.  &  C.  254;  Yates  v. 

Whyte,  4  Bing.  N.  C.  272 ;  North  of  England  Ass'n  v.  Armstrong,  L.  R.  5  Q.  B.  244; 


SECT.  I.]  COOPER   V.    JENKINS.  465 

COOPER  v.  JENKINS. 
In  Chancery,  before  Sir  John  Romilly,  M.R.,  February  10,  11, 1863. 

[Reported  in  32  Beavan,  337.] 

The  plaintiff  Cooper  was  entitled,  during  the  life  of  his  wife,  to  some 
property  designated  as  lots  1  and  2.  The  defendant,  W.  P.  Jenkins, 
was  entitled  to  an  interest  in  reversion  in  the  same  property. 

By  an  indenture  dated  the  19th  of  March,  1822,  W.  P.  Jenkins,  and 
Cooper  as  his  surety,  mortgaged  lot  2  for  £250  and  interest,  but  W.  P. 
Jenkins  alone  received  the  money  and  alone  covenanted  to  pay  it. 

By  a  contemporaneous  deed,  dated  the  19th  of  March,  1822,  W.  P. 
Jenkins  conveyed  his  interest  in  lot  1  to  a  trustee,  upon  trust  to  save 
harmless  and  keep  indemnified  Cooper,  and  his  estate  in  lot  2,  from  and 
against  the  pa3'ment  of  the  sum  of  £250  and  the  interest  thereof;  and 
for  that  purpose,  in  case  Cooper,  or  his  life  estate,  should  become  liable 
to  pay  or  make  good,  and  should  actually  pay  or  make  good,  any  sum 
or  sums  of  money  on  account  or  in  respect  of  the  £250  or  the  interest 
thereof,  then,  upon  trust,  out  of  the  rents  and  profits  of  lot  1,  or  by 
mortgage,  sale,  or  other  disposition  thereof,  to  raise  and  repay  to  Cooper 
such  sum  or  sums,  with  interest  thereof  after  the  rate  of  £5  per  cent 
per  annum. 

Cooper  paid  the  interest  on  the  mortgage  from  1822,  amounting  to 
£420,  and  the  interest  on  the  sums  so  paid  by  him  amounted  to  £456. 

In  1855,  £100  (being  the  produce  of  part  of  lot  2,  sold  to  a  railway 
company)  was  applied  in  part  discharge  of  the  £250. 

Mrs.  Cooper  died  in  1856,  and  Mr.  Cooper's  life  estate  thereupon 
ceased. 

The  property  had  been  sold,  and  lot  1  had  produced  £400,  and  lot  2 
had  produced  £991.  Out  of  the  latter  sum,  the  amount  remaining  due 
on  the  mortgage  (£171)  was  paid,  under  an  order  made  in  1862  in  other 
suits. 

This  bill,  filed  by  Cooper  in  May,  1862,  prayed  the  execution  of  the 
trusts  of  the  indemnity  deed  of  the  19th  of  March,  1822,  and  that  the 

Simpson  v.  Thomson,  3  App.  Cas.  279  (semble) ;  Midland  Co.  v.  Smith,  6  Q.  B.  D.  561 
(semble);  King  v.  Victoria  Co.,  1896,  A.  C.  250;  Hall  v.  R.  R.  Co.,  13  Wall.  367; 
Chicago  Co.  v.  Pullman  Co.,  139  U.  S.  79  ;  iEtna  Co.  v.  Hannibal  Co.,  3  Dill. 
1  (semble)  ;  Marine  Co.  v.  St.  Louis  Co.,  41  Fed.  R.  643;  Springfield  Co.  v.  Richmond 
Co.,  48  Fed.  R  360 ;  Norwich  Soc'y  v.  Standard  Co.,  59  Fed.  R.  984 ;  Railway  Co.  v. 
Fire  Ass'n,  60  Ark.  325 ;  Conn.  Co.  v.  N.  Y.  Co.,  25  Conn.  265  (semble) ;  Regan  v. 
N.  Y.  Co.,  60  Conn.  124;  Holcombe  v.  Richmond  Co.,  78  Ga.  776;  Peoria  Co.  v. 
Frost,  37  111.  333  (semble);  Atchison  Co.  v.  Kansas  Co.,  7  Kas.  Ap.  44  (semble); 
Rockingham  Co.  v.  Bosher,  39  Me.  253  (semble);  Leavitt  v.  R.  R.  Co.,  90  Me.  153 
(semble) ;  Hart  v.  Western  Co.,  13  Met.  99 ;  Monmouth  Co.  v.  Hutchinson,  21  N.  J. 
Eq.  107;  Conn.  Co.  v.  Erie  Co.,  73  N.  Y.  399;  Piatt  v.  Richmond  Co.,  108  N.  Y.  358 
(semble);  Fayerweather  v.  Phenix  Co.,  118  N.  Y.  324  (semble);  Wunderlich  v. 
Chicago,  93  Wis.  132;  Allen  v.  Chicago  Co.,  94  Wis.  93;  Quebec  Co.  v.  St  Louia^ 
I  Low.  Can.  R.  222,  7  Moo.  P.  C.  286,  Accord.  —  Ed. 

30 


466  MUSGKAVE   V.    DICKSON.  [CHAP.  III. 

£400  (the  produce  of  lot  1)  might  be  applied  for  the  plaintiff's  indem- 
nity, and  that  the  deficiency  of  that  sum  might  be  paid  out  of  Jenkins' 
share  in  the  £991,  the  produce  of  lot  2. 

The  Master  of  the  Rolls.1  My  opinion  remains  the  same  as 
I  expressed  yesterday.  The  plaintiff  cannot  have  the  benefit  of  the 
mortgage  on  the  principle  of  the  Mercantile  Law  Amendment  Act. 
He  must  proceed  under  one  or  other  of  the  two  rights  which  he  claims. 
If  he  had  bound  himself  to  pay  the  mortgagee,  and  had  done  so,  he 
would  then  have  been  entitled  to  the  benefit  of  the  mortgage.  He  has 
not  done  so,  he  has  bargained,  by  a  separate  instrument,  for  an  indem- 
nity which  is  perfectly  distinct.  This  pa}'ment  of  interest  was  perfectly 
voluntary,  but  that  does  not  affect  the  deed  of  indemnit}*,  which  is  pre- 
cise, and  entitles  him  to  what  he  has  paid,  whether  he  was  compelled  to 
pa}'  or  not.  If  a  surety  pay  off  the  mortgage,  he  is  entitled  to  the  bene- 
fit of  all  the  securities.  But  here,  the  plaintiff  has  contracted  with  the 
mortgagor,  for  whom  he  is  surety,  that  he  should  receive  a  particular 
species  of  indemnity,  if  he  pay  off  any  part  of  the  principal  or  interest 
of  the  mortgage.  That  indemnity  he  is  entitled  to,  and  not  to  the 
benefit  of  the  mortgage  paid  off. 

All  I  can  do  in  this  suit  is,  to  make  a  decree  for  the  enforcement  of 
the  indemnity  deed.2  ^  _  ^  .^      v 

~s  /SAMUEL  MUSGRAVE  v.    H.    S.^ICKSON   and   Others. 
In  the  Supreme  Court,  Pennsylvania,  January  6,  1896. 
[Reported  in  172  Pennsylvania  Reports,  629.] 

k*^7  in)   77-OpiNION  DJ  Mr.  Justice  Fell,  January  6,  1896. 

This  proceeding  is  founded  upon  a  petition  by  Samuel  Musgrave,  one 
-of  the  sureties  on  a  replevin  bond,  for  subrogation  to  the  rights  of  the 
plaintiff  in  the  judgment.     An  answer  was  filed  by  the  appellant,  the 

~T^\  m    (/         plaintiff,  in  which  he  averred  that  the  judgment  had  not  been  fully  paid. 

Subrogation  rests  upon  purely  equitable  grounds,  and  it  will  not  be 

enforced  against  superior  equities.     Unless  the  surety  pays  the  debt  in 

full  he  is  not  entitled  to  subrogation,  and  until  this  is  done  the  creditor 

/JP  will  be  left  in  full  possession  and  control  of  the  debt  and  the  remedies 

fol'  Us  tilifoKMJTMht.0    Uenng  v.  Earl  of  W inchelsea  f4'  Ky ner  v.  Kyner ; 5 

1  The  arguments  of  counsel  are  omitted.  —  Ed. 

2  See  Cornwell's  App.,  7  Watts  &  S.  305.  —Ed. 

3  Ewart  v.  Latta,  4  McQu.  983  ;  McConnell  v.  Beattie,  34  Ark.  113;  Schoonover  v. 
Allen,  40  Ark.  132;  Stamford  Bank  v.  Benedict,  15  Conn.  437;  Hardcastle  v.  Com- 
mercial Rank,  1  Ilarringt.  374,  n.  (a)  (semble);  Bridges  v: Nicholson,  20  Ga.  90;  Darst 
v.  Bates,  51  111.  439 ;  Connell  v.  McCowan,  53  111.  363  ;  Corey  v.  Neff,  63  Ind.  391  ; 
Rice  v.  Downing,  12  B.  Mon.  44;    Glass  v.  Pulleu,  6  Bush,  346;   Grieff  v.  Steamboat, 


-y 


4  1  Leading  Cases  in  Equity,  120.  5  6  Watts,  221. 


sect,  i.]  Douglass's  appeal.  467 

Bank  v.  Potius ; 1  Hoover  v.  Epler ; 2  Allegheny  National  Bank's  Ap- 
peal.3 The  settlement  of  the  account  between  the  sureties  and  the 
defendant  fixed  the  amount  of  the  liability  of  the  latter  and  the  extent 
of  the  right  to  indemnity,  but  it  did  not  affect  the  right  of  subrogation, 
which  will  never  be  allowed  to  the  prejudice  and  injury  of  the  creditor. 
The  judgment  is  reversed  and  the  record  is  remitted  to  the  Court  of 
Common  Pleas  in  order  that  there  may  be  a  finding  upon  the  issue  raised 
by  the  answer  of  the  appellant. 


DOUGLASS'S   APPEAL. 
In  the  Supreme  Court,  Pennsylvania  1864. 

{Reported  in  48  Pennsylvania  Reports,  223.] 

Strong,  J.4  In  the  distribution  of  the  proceeds  of  a  sheriff's  sale, 
the  rights  of  those  claiming  to  participate  are  to  be  determined  as  they 
were  at  the  time  the  sale  was  made.  Such  a  sale  divests  whatever 
liens  are  upon  the  lands  at  the  time,  and  the  lien-holders  are  turned 
over  to  the  proceeds.  No  lien  upon  the  fund,  and  consequently  no 
right  to  participate  in  its  distribution,  can  be  acquired  afterwards. 
These  are  familiar  principles,  and  they  are  applicable  to  this  case. 
The  sheriff's  sale  of  the  real  estate  of  Thomas  McMasters  was  made  on 
the  30th  day  of  Januar}r,  1864.  At  that  time  the  judgment  of  Robert 
Coulter  against  McMasters  and  Watson  appeared  from  the  record  to 
have  been  satisfied.  An  execution  had  issued  upon  it  to  June  Term, 
1862,  to  which  the  sheriff  had  returned  "  money  made."  There  was 
also  indorsed  a  receipt  of  the  plaintiff's  attorney  for  the  debt  and 
interest  in  full.  Thus  the  judgment  was  paid,  and  at  law,  certainly,  it 
no  longer  had  an}r  existence.  The  next  judgment  to  Coulter's  was 
that  of  the  appellant,  under  which  the  property  was  sold.  It  was  not 
until  the  1st  of  February,  1864,  after  the  sheriff's  sale,  and  nearly 
two  j'ears  after  Coulter's  judgment  against  McMasters  and  Watson 
had  been  satisfied,  that  Watson  went  into  court,  representing  that 
he  had  been  a  surety  of  McMasters  in  that  judgment,  and  as  such 
had  paid  it,  and  obtained  an  order  that  he  should  be  subrogated 
to  the  rights  of  the  plaintiff.  The  order  was  made  without  any 
notice  to  Douglass,  the  next  judgment  creditor  of  McMasters.     It  was 

12  La.  An.  8 ;  Hollingsworth  v.  Floyd,  2  Har.  &  G.  87 ;  Union  Bank  v.  Edwards, 
1  Har.  &  J.  346 ;  Neptune  Co.  v.  Dorsey,  3  Md.  Ch.  334,  7  Md.  164 ;  Grove  v.  Brien, 
1  Md.  438 ;  Commonwealth  v.  Chesapeake  Co.,  32  Md.  501  ;  Magee  v.  Leggett,  48  Miss. 
139;  Gannett  n.  Blodgett,  39  N.  H.  150;  Kyner  v.  Kyner,  6  Watts,  221 ;  Bank  of  Penna. 
v.  Potius,  10  Watts,  148;  Hoover  v.  Epler,  52  Pa.  522;  Brough's  Est.,  71  Pa.  460; 
Church,  Pet.,  16  R.  I.  231  ;  Gilliam  v.  Esselman,  5  Sneed  (Tenn.),  86  ;  Boston  v.  Brent, 
87  Va.  385,  Accord.  —Ed. 

1  10  Watts,  148.  2  52  Pa.  522.  3  19  W.  N.  C.  78. 

*  Only  the  opinion  of  the  Court  is  given. 


168  DOUGLASS'S   APPEAL.  [CHAP.  III. 

upon  this  state  of  the  record  that  the  Court  below  decreed  that  out 
of  the  fund  now  in  court  for  distribution,  arising  from  the  sale  of 
Thomas  McMaster's  estate,  Watson  should  take  the  amount  of  the 
Coulter  judgment  to  the  rights  of  the  plaintiff  in  which  he  was  subro- 
gated on  the  1st  of  Februaiy,  1864,  after  the  sheriff's  sale.  We  think 
the  decree  was  erroneous.  Whatever  may  have  been  Watson's  equity 
against  McMasters  by  virtue  of  the  contract  of  suretyship,  he  could 
not  enforce  it  to  the  prejudice  of  Douglass,  after  the  sheriffs  sale. 
Even  the  order  of  subrogation  made,  on  the  day  after  the  sale,  made 
him  but  the  holder  of  an  equity,  and  such  an  one  as  will  not  be 
enforced  when  thereby  injustice  will  be  done  to  the  rights  of  others.  It 
is  a  settled  principle  that  the  holder  of  an  equit}'  must  be  vigilant  in 
asserting  it,  if  he  would  have  the  aid  of  a  chancellor.  Laches  in  such 
a  holder  will  always  postpone  him  to  one  who  may  have  been  injured 
by  his  inertness.  But  here  Watson,  after  having  paid  the  judgment 
against  his  principal,  remained  qujet  nearly  two  years  without  any 
assertion  of  his  secret  equity.  He  permitted  the  record  to  show  con- 
tinuously during  all  that  period  that  the  judgment  of  Coulter  against 
his  principal  was  paid.  While  thus  inactive,  the  sheriff's  sale  of  the 
debtor's  property  took  place.  Thus  the  appellant  was  thrown  off  his 
guard  by  the  state  of  the  record.  It  was  his  right  to  assume  that  the 
judgment  of  Coulter  was  no  longer  in  existence,  and  either  refrain 
from  bidding  at  the  sale,  or  regulate  his  bid  accordingly.  It  is  not  to 
be  permitted  that  a  secret  equity  may  be  held  unasserted  until  holders 
of  legal  rights  have  lost  an  opportunity  to  protect  themselves  against  it, 
and  then  brought  forward  to  the  injury  of  those  who  had  no  knowledge 
of  its  existence.  It  is  insisted,  however,  that  the  decree  of  the  Court 
ordering  the  subrogation  of  Watson  to  the  rights  of  Coulter  was  con- 
clusive upon  the  auditor,  and  also  upon  all  claimants  to  the  fund  for 
distribution.  But  of  what  was  it  conclusive  ?  Not,  surely,  of  the 
claim  that  Coulter's  judgment  was  a  lien  upon  the  land  of  McMasters 
when  the  sheriffs  sale  was  made.  It  was  doubtless  an  adjudication 
that  Watson  had  a  right,  as  against  his  principal,  to  use  the  judgment, 
but  it  gave  to  him  no  right  at  law.  Notwithstanding  the  decree  he 
was  but  the  holder  of  an  equity.  The  decree  of  subrogation  is  only  a 
form  ;  it  is  the  right  to  subrogation  which  is  the  substance:  After  the 
1st  of  February,  1864,  Watson  was,  therefore,  in  no  better  situation 
than  he  was  before.  His  equitable  right  was  liable  to  postponement 
because  of  his  laches,  as  fully  as  if  subrogation  had  never  been 
decreed.  Consequently  an  award  of  the  fund  in  court  was  no  attack 
upon  what  the  Court  had  done.  It  left  the  decree  of  subrogation  un- 
touched. Hence,  there  was  nothing  to  preclude  the  appellant  from 
asserting  his  claim  to  the  fund  in  preference  to  any  equitable  claim  of 
Watson.1 

1  Gring's  App.,  89  Pa.  336;  Searight's  Est.,  163  Pa.  222,  Accord.  —  Ed. 


SECT.  I.] 


DINKGKAVE. 


SUCCESSION    OF 


the  Supreme 


o-»^-t-«*P     -3 


filed  on 
the  3d  April,  1878,  a  final  account.  He  charged  himself  with  $5,104.25, 
and  credited  himself  with  $5,186.90  mortgage  and  privilege  debts,  and 
$590.51  of  ordinary  debts  were  acknowledged,  thus  showing  the  estate 
to  be  insolvent.  Among  the  debts  stated  as  privileged  was  $2,500  paid 
the  State  of  Louisiana  as  a  mortgage  creditor. 

The  credit  as  to  the  $2,500  mortgage  debt  due  the  State  results  from 
the  following  facts  :  The  deceased  was  a  tax  collector,  and  as  such 
owed  the  State  say  $3,200,  mostly  for  the  revenues  of  1876.  The 
surely  on  his  bond  made  an  arrangement  in  1877  with  the  Auditor  of 
Public  Accounts,  by  which  the  indebtedness  was  compromised  or  agreed 
to  be  compromised  on  the  payment  into  the  State  treasury  of  twenty- 
five  hundred  dollars  in  valid  State  warrants.  This  having  been  done, 
on  the  14th  February,  1878,  the  Auditor  of  Public  Accounts  issued  a 
quietus,  in  which  he  recited  that,  "  whereas,  B.  H.  Dinkgrave  (through 
Jno.  T.  Ludeling  for  sureties)  .  .  .  has  exhibited  .  .  .  the  receipts  of 
the  Treasurer  in  full  for  the  payment  of  the  State  taxes  for  the  year 
1874,  $2,500,  compromise  settlement,  I  therefore  issue  this  quietus.'* 
.  .  .  The  Auditor,  whose  testimony  is  in  the  record,  says  that  the  pay- 
ment was  made  in  ''valid  State  warrants."  The  opponents  contend 
that,  as  such  warrants  were  only  worth  twent}*  cents  on  the  dollar  at 
the  date  of  the  settlement,  the  estate  is  fairly  chargeable  only  with  the 
value  of  the  warrants  ;  that  is,  $500,  instead  of  their  face  value,  $2,500, 
charged  in  the  account.  The  lower  court  sustained  the  proposition, 
and,  as  a  matter  of  fact,  found  the  warrants  were  worth  at  the  time  of 
the  settlement  thirty  cents  on  the  dollar,  and  allowing  for  them  at  that 
rate  reduced  the  credit  from  $2,500  to  $750.  We  think  it  correctly 
applied  the  law  and  facts.  The  contract  of  suretyship  is  essentially  a 
beneficent  one,  and  whilst  the  surety  who  paid  was  legally  subrogated, 
he  was  so  only  to  the  extent  ot  his  actual  and  necessary  payment.  If 
he  made  an  advantageous  settlement,  the  benefit  of  such  payment  was 
as  much  the  principal's  as  his  own.  Indemnification  and  not  profit  is 
the  measure  of  the  surety's  recourse  against  the  principal,  as  taught  by 
our  law  and  the  jurisprudence  thereunder.  C.  C.  3052  ;  7  N.  S.  9  ; 
5  R.  506  ;  3  A.  627.  In  tact  such  was  tfie  rule  under  the  Roman  law, 
whence  the  law  of  suretyship  as  existing  in  our  Code  has  been  in  a 
large  measure  drawn.  "  /Sciendum  est  non  in  plus  fidejussorem  con~ 
seqiti  debere  mandati  judicio  quam  quod  solveret."  2 

1  Only  a  portion  of  the  opinion  is  given.  —  Ed. 

2  Pickett  v.  Bates,  3  La.  An.  627 ;  Eaton  v.  Lambert,  1  Neb.  339,  Accord. 

If  the  surety  proceeds  against  the  principal  on  his  collateral  contract  of  indemnity.  j^-*^T 
It  is  obvious  that  he  can  recover  only  what  he  paid  to  the  creditor.     Reed  v.  Norris,  /  ^ 


470  FOWLER   V.   STRICKLAND.  [CHAP.  IIL 


C.  F.  FOWLER  and  Another  v.  F.  G.  STRICKLAND 

and   Another. 

In  the  Supreme  Judicial  Court,  Massachusetts, 
September  Term,  1871. 

[Reported  in  107  Massachusetts  Reports,  552.] 

Contract,  brought  January  1 1 ,  1870,  on  a  promissory  note  for  $2,000, 
dated  August  2,  1869,  signed  by  the  defendants,  and  payable  to  the 
plaintiff  or  order  in  four  months  from  date.  The  declaration  was  in 
the  usual  form  of  an  action  by  payee  against  maker. 

At  the  trial  in  the  Superior  Court,  before  Pitman,  J.,  "it  appeared 
in  evidence  that  the  plaintiff  indorsed  the  note  for  the  accommodation 
of  the  defendants  ;  that  the  note  was  negotiated  by  the  defendants  to 
Haswell  Loomis  for  its  full  value  ;  that  the  plaintiff  took  up  the  note, 
giving  Loomis  in  payment  three  promissory  notes  signed  by  himself 
and  Ro}-al  Fowler,  two  for  $300  each,  and  one  for  $400  ;  and  that  the 
plaintiff  paid  no  other  consideration  whatever  for  the  note  declared  on. 

The  jury  returned  a  verdict  for  the  plaintiff  for  the  whole  amount  of 
the  note  and  interest ;  and  the  defendants  alleged  exceptions.1 

Gray,  J.  The  note  sued  on  being  an  accommodation  note,  and  the 
action  between  the  original  parties,  the  consideration  was  doubtless 
open  to  inquiry.  But  the  note  was  made  for  the  accommodation  of  the 
defendants,  the  makers  ;  not  of  the  plaintiff,  the  payee  and  indorser. 
The  defendants,  upon  negotiating  to  Loomis  the  note  thus  indorsed  b}' 
the  plaintiff  for  their  accommodation,  received  from  Loomis  the  whole 
amount  of  the  note,  and  were  responsible  to  an  equal  amount  in  an 
action  on  the  note  by  Loomis  or  any  lawful  holder.  The  plaintiff  had 
the  same  right  as  airy  other  person  to  purchase  the  note  from  Loomis 
for  such  price  as  might  be  agreed  on  between  them.  Even  if,  by  the 
terms  of  such  an  agreement,  Loomis  had  retained  any  interest  in  the 

2  M.  &  Cr.  361;  Martin  v.  Ellerbe,  70  Ala.  326;  Jordan  v.  Adams,  7  Ark.  348; 
Coggeshall  v.  Ruggles,  62  111.  401  ;  Goodwin  v.  Davis,  15  Indiana  Ap.  120;  Miles  v. 
Bacon,  4  J.  J.  Marsh.  457 ;  Crozier  v  Grayson,  4  J.  J.  Marsh.  514 ;  Gillespie  v.  Cres- 
well,  12  Gill  &  J.  36  ;  Delaware  Co.  v.  Oxford  Co.,  38  N.  J.  Eq.  151 ;  Bonney  v.  Seely, 
2  Wend.  481;  Faires  v.  Corkerell,  88  Tex.  434,  437  (semble) ;  Blow  v.  Maynard, 
2  Leigh,  29  ;  Kendrick  v.  Forney,  22  Grat.  748 ;  Southall  v.  Farish,  85  Va.  403  (semble) ; 
Butler  v.  Butler,  8  W.  Va.  674 ;  Feamstier  v.  Withrow,  9  W.  Va.  296 ;  Mathews  v. 
Hall,  21  W.  Va.  510.  The  dictum  in  Hickman  v.  McCurdy,  7  J.  J.  Marsh.  555,  559, 
is  not  to  be  supported. 

Similarly,  a  surety  who  settles  with  the  creditor  for  less  than  the  par  value  of  the 
debt  must  make  a  proportionate  allowance  in  his  claim  for  contribution  from  a  co- 
surety. Owen  v.  McGehee,  61  Ala.  440;  Stone  v.  Hammell,  83  Cal.  547  ;  Williams  v. 
Riehl  (California,  1899),  59  P.  R.  762;  Hickman  v.  McCurdy,  7  J.  J.  Marsh.  555; 
Fuselier  v.  Babineau,  14  La.  An.  764  (co-debtors) ;  Sinclair  v.  Redington,  56  N.  H.  146; 
Edmonds  v.  Sheahan,  47  Tex.  443 ;  Acers  o.  Curtis,  68  Tex.  423,  425 ;  Tarr  v.  Ravens- 
croft,  12  Grat.  642.  —  Ed. 

1  The  statement  of  the  case  is  slightly  abridged.  —  Ed. 


SECT.  I.]  LEAKE    V.   FERGUSON.  471 

proceeds  of  the  note  which  he  delivered  to  the  plaintiff,  the  latter,  in 
an  action  against  the  defendants  on  the  note,  could  have  recovered  the 
full  amount  thereof,  although  he  might  have  held  a  part  of  the  proceeds 
in  trust  for  Loomis.  If  he  purchased  the  entire  interest  of  Loomis  in 
the  note,  at  the  time  of  its  delivery  by  Loomis  to  him,  he  might  recover 
the  whole  amount  to  his  own  use.  The  defendants  having  received  the 
whole  amount  of  the  note  at  the  time  of  its  original  negotiation,  and 
being  now  no  longer  liable  to  any  action  by  Loomis,  the  amount  of 
their  liability  in  this  action  against  them  as  makers  of  the  note  is  not 
affected  by  the  question  how  much  the  plaintiff  paid  to  Loomis,  or 
whether  the  sum  recovered  will  belong  to  Loomis  or  to  the  plaintiff. 
If  the  note  had  been  made  by  the  defendants  for  the  accommodation  of 
the  plaintiff,  a  different  case  would  have  been  presented.  Johnson  v. 
Kennion  ; 1  Reid  v.  Furnival ; 2  Wiffen  v.  Roberts  ; 3  Babson  v.  "Web- 
ber ; 4  Ellsworth  v.  Brewer  ; 5  Pinney  v.  McGregory  ; 6  McGregor}'  v. 
McGregory  ; '  Allaire  v.  Hartshorne.8  Exceptions  overruled.9 


LEAKE  v.  FERGUSON. 
In  the  Col'rt  of  Appeals,  Virginia,  January  Term,  1846. 

[Reported  in  2  Grattan,  419.] 

At  the  June  term  of  the  General  Court  for  1817,  the  Commonwealth 
recovered  a  judgment  against  Jacob  B.  Fowler,  William  Miller,  and 
three  others,  for  the  sum  of  $14,840,  the  penalty  of  a  bond  executed 
by  them  to  Wilson  Cary  Nicholas,  governor  of  the  Commonwealth,  to 
be  discharged  by  the  payment  of  $7,420.  On  this  judgment  an  execu- 
tion of  fieri  facias  was  issued  in  July,  1817,  which  was  never  returned ; 
and  in  November,  1818,  a  ca.  sa.  was  issued,  upon  which  Miller  was 
taken  in  execution,  and  delivered  to  the  sheriff  fifteen  slaves  in  dis- 
charge of  his  body  from  custody ;  and  then,  with  James  B.  Ferguson 
as  his  surety,  executed  a  bond  to  the  officer  for  the  forthcoming  and 
delivery  of  the  slaves  on  the  day  of  sale.  This  bond  was  forfeited  ; 
and  in  July,  1819,  a  judgment  was  obtained  thereon  against  Miller  and 
Ferguson. 

Miller  and  Ferguson  proceeded  to  make  payment  upon  the  judgment 
against  them  until  1829,  when  an  execution  was  issued  for  the  balance 
remaining  unpaid,  against  their  lands  and  goods,  and  was  levied  upon 
the  lands  of  Ferguson,  which  were  sold,  and  the  money  made. 

1  2  Wils.  262.  2  5  C.  &  P.  499,  and  1  Cr.  &  M.  538. 

3  1  Esp.  261.  4  9  Pick.  163.  5  11  Pick.  316. 

6  102  Mass.  186.  "  107  Mass.  543.  8  1  Zab.  665,  671. 

9  Dorsey  v.  Creditors,  7  Mart.  n.  s.  498 ;  Pace  v.  Robertson,  65  N.  Ca.  550 ;  Burton 
v.  Slaughter,  26  Grat.  914,  Contra.  See  Delaware  Co.  v.  Oxford  Co.,  38  N.  J.  Eq.  151, 
\52.— Ed. 


472  LEAKE  V.   FERGUSON.  LCHAP    <tf 

The  judgment  of  the  Commonwealth  having  been  satisfied  b'    the 
sale  of  Ferguson's  land,  he,  in  1833,  filed  his  bill  in  the  Circuit  Supe- 
rior Court  of  Law  and  Chancery  for  Goochland  County,  against  Jacob 
B.  Fowler  and  Josiah  Leake,  in  which,  after  stating  the  above  facts, 
he  charged  that  Fowler  was  the  principal  in  the  bond  on  which  the 
original  judgment  in  favor  of  the  Commonwealth  was  obtained,  and 
that  Miller  was  his  surety;   that  at  the  time  that  judgment  was  ren- 
dered, Fowler  owned  a  tract  of  land  in  the  count}"  of  Goochland,  upon 
which  said  judgment  was  a  lien ;  and  that  this  land  had  since  come 
into  the  possession,  and  was  then  owned  by  Josiah  Leake.     He  there- 
fore asked  that  he  might  be  substituted  to  the  rights  of  the  Common- 
wealth against  said  land,  and  that  it  might  be  subjected  to  satisfy  him 
for  the  amount  he  had  paid  in  discharge  of  the  Commonwealth's  judg 
ment.     From  a  decree  in  favor  of  the  plaintiff,  Leake  obtained  ai 
•appeal  to  this  Court.1 

Allen,  J.  If  on  judgment  against  principal  and  surety  the  lattei 
pay  the  debt  before  execution,  his  right  to  be  substituted  to  the  lien  of 
the  judgment  would  scarcely  be  controverted.  The  fact  that  he  has 
been  compelled  to  pay  it  under  process  of  execution,  either  against  his 
person  or  his  property,  cannot  place  him  in  a  worse  position.  To  hold 
that  it  did  would  be  to  make  his  rights  dependent  on  the  caprice  of  the 
creditor.  As  regards  the  latter,  it  may  be  the  humane  policy  of  the 
law  to  discourage  the  harsh  process  of  execution  against  the  body,  and 
therefore  to  confine  him  to  the  lien  of  his  ca.  sa.  executed  when  he 
resorts  to  that  remedy.  But  his  act  should  not  deprive  the  surety  of 
any  right  which  once  existed  for  his  benefit.  In  this  case,  therefore,  if 
Miller,  upon  the  service  of  the  ca.  sa.  upon  him,  had  paid  the  debt,  it 
seems  to  me  he  would  have  a  clear  right  to  substitution  against  thf 
principal.  He  is  responsible  to  his  surety  in  the  forthcoming  bond  whc 
has  paid  it  for  him.  His  surety  should  then  be  permitted  to  stand  in 
his  shoes  and  assert  all  his  rights.  Indeed,  he  occupies  still  higher 
ground,  for  this  Court  held  in  Garland  v.  Lynch  that  the  surety  in  the 
forthcoming  bond  becomes  surety  for  the  debt  itself,  under  the  terms 
of  the  law,  and  therefore  a  supplemental  security  for  the  original 
debtor ;  and,  as  regards  the  principal,  he  does  not  occupj*  the  position 
of  one  voluntarily  intromitting  himself,  in  invitum.  It  was  the  duty 
of  the  principal  to  have  discharged  the  debt  and  relieved  his  surety ; 
failing  in  this  he  cannot  be  heard  to  allege  that  the  surety  to  relieve  his 
person  or  property,  which  the  law  allows,  has  brought  in  another  secu- 
rity who,  upon  paying  the  debt,  may  acquire  rights  against  him. 

The  other  judges  concurred. 

*  The  statement  is  abridged,  and  only  a  portion  of  the  opinion  is  given.  —  Ed. 


K2> 


SECT,  ij  PRESTON    tt. 

'H~*<-      *r.  l.  PRESTON  v.  J.  PRESTON  and  Others. 


rr    "—  T.   .L.    fKJKSTUJN    V.   J.   ntJSMUJN    AND  UTHERS.  •  — —      . 

^M-  t>  3  >i^X  ^   ~z*<-  d«~+f—  *~&L   w-^  -^~- -**  ^^-^  -*- 

^^~~     In  toe  CxJuiq^OF  Appeals,  Virginia,     July  Term,  1847.  /  \ 

/**<  (^^zT^^r^^—~     [Reported  in  4  Grattan,  88.1  —sv.        ^*  — =^—  .  /     _£? 


^,his  was  a  bill  filed  by  Thomas  L.  Preston  against  John  Preston,  to        * 
compel  contribution  to  the  satisfaction  of  a  debt  for  which  they  were  ^J     /\ 
the  sureties  of  William  P.  Floyd.     The  facts  are  as  follows  :  —  -^Pt**'    O 

In    September,   1841,  James   Rhea   recovered  a  judgment   against  ^<?C-k      "^ 
William  P.  Floyd,  John  B.  Floyd,  and  John  Preston,  on  a  bond  for     xjjb- <-» *  i 
$1,000  ;  and  in  April,  1842,  he  recovered  a  judgment  on  the  same  bond— jj.    <. 
against  Thomas  L.  Preston.     William  P.  Flo}'d  was  the  principal  in  ^ 

this  bond,  and  the  other  parties  were  his  sureties.  On  the  first  judg--^X«*r  -^** 
ment  an  execution  was  issued,  which  was  levied  on  the  property  of^^i£_  *-•- 
John  B.  Floyd  ;  and  he  thereupon  executed  a  forthcoming  bond  with  •  o  ~^r 
Thomas  L.  Preston  as  his  security'.  An  execution  afterwards  issued 
against  John  B.  Floyd  and  Thomas  L.  Preston  on  the  forthcoming  bond  ; 
and  at  the  same  time  a  separate  execution  was  issued  against  Thomas 
L.  Preston  on  the  separate  judgment  recovered  against  him.  Both 
William  P.  Floyd  and  John  B.  Floyd  had  then  become  insolvent ;  and 
Thomas  L.  Preston  paid  off  the  debt ;  paying  the  principal  and  interest 
of  the  debt  on  the  separate  execution  against  himself,  and  the  costs  of 
the  forthcoming  bond  and  the  execution  thereon,  on  the  execution 
against  John  B.  Flovd  and  himself.  He  then  filed  this  bill  against 
John  Preston  for  contribution  ;  who  objected  that  he  had  been  released 
by  the  plaintiff's  joining  in  the  forthcoming  bond  ;  and  especially,  as 
b}T  his  so  doing  the  property  of  John  B.  Floyd,  which  had  been  levied 
on,  had  thereby  been  released.  And  he  charged,  that  by  agreement 
between  William  P.  Floyd  and  John  B.,  the  latter  had  undertaken  to 
pay  the  debt. 

When  the  cause  came  on  to  be  heard  the  Court  dismissed  the  bill ; 
and  the  plaintiff  thereupon  applied  to  this  court  for  an  appeal,  which 
was  allowed. 

It.  M.  Johnston,  for  the  appellant. 

Sheffey,  for  the  appellee. 

Allen,  J. ,  delivered  the  opinion  of  the  Court. 

The  Court  is  of  opinion,  that  by  the  principles  of  equit}\  the  right 
accrues  to  one  security  having  paid  the  debt  of  the  principal,  in  the 
event  of  the  insolvency  of  the  principal,  to  receive  contribution  from 
the  other  securities  ;  and  where  all  the  sureties  are  solvent  each  surety 
is  liable  for  his  share  of  the  sum  so  advanced  and  paid  to  relieve  them 
from  a  common  burthen.  The  Court  is  further  of  opinion,  that  there  is 
no  evidence  of  any  contract  or  obligation  on  the  part  of  John  B.  Floyd, 
one  of  the  sureties,  to  pay  the  debt  in  exoneration  of  his  co-securities ; 
and  if  when  the  execution  was  levied  on  the  property  of  said  John  B. 
Floyd,  he  had  paid  the  debt  instead  of  giving  a  forthcoming  bond,  he 


474  PRESTON   V.    PRESTON.  [CHAP.  III. 

would  have  been  entitled  to  receive  contribution  from  the  other  sureties. 
And  as  the  forthcoming  bond  was  executed  by  said  John  B.  Floyd  and 
one  of  the  co-securities,  against  whom  judgment  had  not  been  obtained, 
and  no  new  part}'  Was  introduced,  the  execution  and  forfeiture  of  said 
bond  alone,  in  the  absence  of  any  other  circumstance  affecting  the 
liability  of  the  parties,  could  not  of  itself  operate  so  as  to  destroy  the 
right  of  the  security  for  the  original  principal,  having  paid  the  debt,  to 
call  for  contribution  ;  although  such  security  was  also  a  security  in  the 
forthcoming  bond.  And  whether  the  security  who  so  paid  the  debt 
elected  to  pa}*  the  same  on  the  judgment  against  himself  for  the  original 
debt,  or  on  the  judgment  on  the  forthcoming  bond,  the  substance  of 
the  transaction,  as  it  respects  the  original  debt  and  the  legal  costs  in- 
curred in  the  discharge  thereof,  was  the  same,  the  relieving  of  the 
co-securities  from  a  burthen  resting  on  all,  and  from  which  neither  had 
been  exonerated. 

The  Court  is  further  of  opinion,  that  where  a  security  seeks  for  the 
application  of  a  rule  growing  out  of  the  general  principles  of  equity, 
and  not  affected  by  any  specific  contract  of  the  parties,  the  relief  given 
should  be  regulated  by  the  circumstances  of  the  case  ;  that  though  if 
one  security  is  insolvent,  his  share,  as  a  general  rule,  should  be  appor- 
tioned amongst  the  solvent  sureties,  in  this  case  the  appellant  is  not 
entitled  to  charge  his  solvent  co-security  with  a  moiety  of  the  share  of 
the  said  John  B.  Floyd,  alleged  to  be  insolvent ;  for  as  it  appears  that 
the  execution  which  issued  on  the  first  judgment  was  levied  on  the  prop- 
erty of  said  John  B.  Floyd,  if  no  forthcoming  bond  had  been  executed 
the  proportion  of  the  said  John  B.  Floyd  would  have  been  made  out 
of  his  property.  Justice  between  the  securities  required  that  the  re- 
maining two  should  have  paid  their  proportions,  leaving  the  property 
of  said  John  B.  Floyd  liable  for  his.  By  uniting  with  said  Floyd  in 
the  forthcoming  bond,  the  appellant  disturbed  the  relation  which  then 
existed  between  the  sureties,  so  far  as  to  enable  the  said  Floyd  to  with- 
draw from  the  lien  of  the  execution  the  property  which  had  been  levied 
upon  ;  and  if  in  consequence  of  the  subsequent  insolvency  of  said 
Floyd,  he  is  unable  to  I'Onti-lbufe"  his" "propoVTion.  the  loss  occasioned 
thereby  should  not  be  borne  by  the  co-security  who  did  not  join  in  the 
forthcoming  bond,  but  was  merely  passive.  The  Court  is  further  of 
opinion,  that  the  co-security,  John  Preston,  is  not  responsible  for  the 
costs  in  awarding  execution  on  the  forthcoming  bond,  as  that  was 
given  for  the  benefit  of  the  said  John  B.  Floyd  alone  ;  and  for  such 
costs  the  appellant  was  entitled  to  an  immediate  decree  against  said 
John  B.  Floyd.  But  the  Court  is  of  opinion  that  the  appellant  was 
entitled  to  a  decree  against  me  principal  debtor  for  the  whole  amount 
paid  by  him,  with  interest,  except  the  costs  of  awarding  the  judgment 
on  the  forthcoming  bond  ;  and  in  the  event  said  decree  should  prove 
unavailing,  then  to  a  decree  against  said  John  Preston,  for  one-third 
of  the  amount  of  the  sum  so  decreed  against  said  William  P.  Floyd, 
the  principal,  or  any  residue  remaining  unsatisfied ;    and  to  a  decree 


SECT.  I.]       NEW  YOKK  STATE  BANK  V.   FLETCHER.  475 

against  said  John  B.  Floyd  for  the  remaining  third  of  the  amount 
decreed  against  said  William  P.  Floyd,  or  any  balance  which  remained 
unsatisfied. 

The  Court  is  therefore  of  opinion,  that  said  decree  was  erroneous,  and 
the  same  is  reversed  with  costs.1 


THE  NEW  YORK   STATE  BANK  v.  FLETCHER. 

In  the  Supreme  Court  of  Judicature,  New  York,  August  5,  1830. 

[Reported  in  5  Wendell,  85.] 

Motion  to  set  aside  an  execution  on  the  ground  of  the  judgment 
having  been  paid.  In  December,  1827,  C.  Adams  became  the  indorser 
of  a  note  of  $500  made  by  the  defendant,  which  was  discounted  at  the 
New  York  State  Bank.  The  note,  when  due,  not  being  paid,  the  maker 
and  indorser  were  sued,  and  separate  judgments  obtained  against  them 
in  August,  1828.  The  amount  of  the  judgment  against  the  maker,  the 
defendant  in  this  cause,  was  $548.18,  on  which  the  execution  now 
sought  to  be  set  aside  was  issued.  In  October,  1828,  Adams  applied 
to  the  attorney  of  the  bank  and  inquired  whether,  if  he  could  procure 
the  note  of  Roswell  Reed,  the  plaintiffs  would  accept  it  in  pa3rment  of  the 
judgments  against  him  and  Fletcher;  and,  receiving  an  assurance  that 
such  note  would  be  accepted,  he  shortly  after  presented  to  the  attorney 
of  the  bank  a  joint  and  several  note  of  himself  and  Reed  for  the  sum  of 
$600,  dated  1st  November,  1828,  payable  in  six  months,  which  the  at- 
torney delivered  to  the  cashier  of  the  bank  ;  the  note  was  discounted, 
and  the  amount  due  on  the  above  judgment  was  retained  by  the  bank, 
and  the  balance  was  paid  to  Adams.  The  $600  note  not  being  paid,  a 
suit  was  commenced  upon  it,  the  writ  being  issued  29th  July,  1829, 
and  made  returnable  at  the  August  term  following ;  Reed  alone  was 
arrested,  and  on  the  18th  August  he  paid  the  amount  due  on  the  note, 
together  with  the  costs. 

The  defendant  made  affidavit  that,  after  the  commencement  of  the 
suits  against  him  and  Adams  on  the  note  of  December,  1827,  he  from 

1  Crow  v.  Murphy,  12  B.  Mon.  444,  Accord. 

Compare  Smith  v.  Anderson,  18  Md.  520.     In  this  case  M,  N,  and  O,  were  co-obligors 
in  a  bond  to  A,  M  being  principal  and  N  and  O  sureties.     A  obtained  a  joint  judg- 
ment against  M  and  N,  and  afterwards  a  separate  judgment  against  the  executors  of    AniJ^   /4 
O.     Prior  to  the  last  judgment,  the  judgment  against  M  and  N  was  superseded  by         "/ 
them  with  X  and  Y  as  sureties.     The  executors  of  O  paid  A  in  full  and  claimed  an    -»-»^*-^ 
assignment  of  the  supersedeas  judgment  from  A  and  contribution  from  N,  X,  and  Y.    Qrt~^^Y, 
M  was  hopelessly  insolvent.     By  the  decree  relief  was  limited  to  contribution  from  N        /^^* 
for  a  moiety  of  the  original  claim. 

See  also  Bowman  v.  Blodgett,  2  Met.  308,  and  Osborn  v.  Cunningham,  4  Dev.  &  B. 
423,  deciding  that  a  bail  for  one  of  two  co-obligors  who  pays  the  obligee  has  no  claim 
for  the  money  paid'against  the  other  obligor.  —  Ed. 


476  PARSONS   AND    COLE    V.    BRIDDOCK.  [CHAP.  III. 

time  to  time  made  paj'ments  to  Adams,  to  be  applied  to  the  discharge 
of  that  note  ;  and  that  on  the  28th  of  Jul}',  1829,  he  made  a  final  set- 
tlement with  Adams,  who  pretended  that  he  had  been  obliged  to  pay 
the  whole  amount  of  the  judgment  against  him  on  execution,  and  paid 
the  balance  due,  and  received  from  him  a  release  and  an  indemnity 
against  all  liabilities  on  account  of  the  said  note.1 

By  the  Court,  Marcy,  J.  A  suret}'  who  pays  a  debt  for  his  principal 
has  a  right  to  be  put  in  the  place  of  the  creditor,  and  to  avail  himself  of 
every  means  possessed  by  the  creditor  to  enforce  payment  against  the 
principal.  Reed  was  not  the  surety  of  Fletcher,  the  defendant  in  this 
cause,  but  of  Adams.  He  has  a  right  to  be  put  in  the  place  of  the 
bank,  so  far  as  respected  their  means  to  enforce  payment  against 
Adams,  but  not  against  Fletcher.  By  the  relationship  of  principal  and 
surety  between  Adams  and  Reed,  and  the  pa3'ment  of  the  debt  by  the 
latter,  he  acquires  no  right  to  assert  a  claim  against  Fletcher  that 
Adams,  his  principal,  could  not  have  asserted.  I  do  not  mean  to  say 
that  if  Adams,  by  paying  the  plaintiffs,  could  have  enforced  the  judg- 
ment against  Fletcher,  that  Reed,  having  done  the  same  thing  as  surety 
of  Adams,  would  not  have  a  similar  right  to  enforce  that  judgment ; 
but  Fletcher  has  paid  Adams  the  amount  of  the  judgment  on  the  alle- 
gation by  Adams  that  he  had  paid  it  to  the  plaintiffs.  Adams  could 
not,  therefore,  invoke  any  equity  powers  of  this  or  any  other  court  to 
aid  him  to  enforce  the  judgment  against  Fletcher ;  and  Reed,  succeed- 
ing to  the  rights  of  Adams,  must  be  under  the  same  interdict.  Equity 
will  not  put  Reed  into  the  shoes  of  Adams,  though  he  has  paid  the  debt 
for  which  Adams  was  surety  for  Fletcher,  to  enable  him  to  do  what  it 
would  restrain  Adams  from  doing.  Motion  granted* 


^T//^^?  JgARSOKS  andXOCE  v.  Dr.  BRIDDOCK  and  Another,        a  _ 
r^f  Jn  Chancery,  before  Lord-^owpfTk"  CT^ 'April,  28,  ~l"708.  -         \ 

~^7  •  /f™       Plaintiffs,  in  1694,  were  bound  as  sureties  for  Mr.  Briddock,  and 

7  had  counter-bonds.     Briddock,  the  principal,  was  afterwards  arrested, 

'U&f  --w<-T<__and  the  defendant,  his  brother,  became  his  bail,  and  judgment  was  ob- 

f  Jt^i^ained  against  the  bail.     The  plaintiffs  being  sued  on  the  original  bond 

were  forced  to  pay  the  money,  and  now  brought  their  bill  to  have  the 

judgment  obtained  against  the  bail  assigned  unto  them,  in  order  to  be 

reimbursed  what  they  had  paid. 

*2    A*-i  ^ER  Lord  Chancellor.     The  bail  stand  in  the  place  of  the  principal, 

r**^~  I        aPd  cannot  be  relieved  on  other  terms  than  on  paj'ment  of  principal,  \ 

1  The  statement  is  abridged,  and  only  a  part  of  the  opinion  is  given.  —  Ed. 

2  See  Putnam  v.  Tash,  12  Gray,  121 ;  Elwood  v.  Deifendorf,  5  Barb.  398.  —  Ed. 


SECT.  I.]  CHESTER    V.    BRODERICK. 


477 


akd  Others 
fj  Jff  the  Court 

[Reported  in  131  iVew  Yiwib  /fcyjojl 


°»^ 


Peckham,  J. 


interest,  and  costs,  and  the  sureties  in  the  original  bond  are  not  to  be 
contributory  ;  and  therefore  decreed  the  judgment  against  the  bail  to 
be  assigned  to  the  plaintiffs,  in  order  to  reimburse  them  what  they  had 
paid,  with  interest  and  costs. 

And  although  the  plaintiffs  by  their  bill  had  unadvisedly  charged 
that  they  had  agreed  to  pay  an  equal  proportion  of  the  debt,  yet  the 
defendants  having  by  answer  denied  they  made  any  such  agreement, 
that  set  the  plaintiffs  at  large,  and  left  them  at  liberty  to  demand  the 
whole  against  the  defendants  ;  and  decreed  it  accordingly.1 

As 

-         n       ,    y    n     COP-—     —    /T!S?W     ^^^£.    *J^>     +-& 
***  j!  A.  CHESTER  and  Others,  Rejspondents/v.  L.  BRODERICK    r 

DTHERi.    ExECUTORSjETC,    AfPELLA^^^^         i*rr*?     * *** 

:t  of  Appeals,  ^Ew  /iori^V  March  25,  1892-     ^         ^*\ 

The  general  doctrine  of  subrogation  may  be  assumed/^  ~p 

to  be  correctly  stated  by  the  counsel  for  the  appellants,  but  the  doctrine  •"     *~T\ 

itself  has  no  application  to  the  present  case.  Z&U-^    * 

The  judgment  creditor,  having  obtained  the  decree  of  foreclosure,  .-*»  a —   ». 

had  a  right  under  it  to  sell  the  land  described  in  the  decree.     The  de-  j^^JZZ 

fendants'  testator  became  one  of  the  sureties  on  the  appeal  bond  given  '    . 

^  G» 

1  Hull  v.  Pitfield,  1  Wils.  46  ;  Wright  v.  Morley,  11  Ves.  12,  22  (sembfe)  (see  Hodgson  ^  • 

v.  Shaw,  3  M.  &  K.  183,  189);  Armitage  v.  Baldwin,  5  Beav.  278  (semble) ;  Dunlap  v.      ^f" 
Foster,  7  Ala.  734 ;  Fletcher  v.  Menken,  37  Ark.  206 ;  March  v.  Barnet,  121  Cal.  419^<T  +—~J  ~ 
Yoder  v.  Briggs,  3  Bibb,  228;   Hoskins  v.  Parsons,  1  Met.  (Ky.)  252;  Kouns  v.  Bank,  ^,     ^      t 
2  B.  Mon.  303;  Bohannon  v.  Combs,  12  B.  Mon.  563;  Brandenburg  v.  Flynn,  12  B. 
Mon.  397  ;  Hammock   v.  Baker,  3  Bush,  208 ;  Creager  v.  Brengle,  5  Har.  &  J.  234 
(semble)  (but  see  Summers  v.  Naylor,  12  Gill  &  J.  358) ;  Mechanics'  Bank  v.  Hazard,  13_ 
Johns.  353  ;  Culliford  v.  Walser,  1 58  N.  Y.  65,  705 ;   Hanner  v.  Douglass,  4  Jones  Eq.- 
262  ;  Smith  v.  Bing,  3  Oh.  33  ;  Hartwell  v.  Smith,  15  Oh.  St.  200,  205  (semble) ;  Denier 
v.  Myers,  20  Oh.  St.  336 ;  Burns  v.  Huntington  Bank,  1  Pen.  &  W.  395 ;  Pott  v.  Na- 
thans, 1  Watts  &  S.  155;  Schnitzel's  Ap.,  49  Pa.  23  ;  Allegheny  Co.  v.  Dickey,  131       T^J&f  . 
Pa.  86  ;  Chaffin  v.  Campbell,  4  Sneed,  184;  Higgs  v.  Landrum,  1  Cold.  81  ;  Tennessee/^         \J  '4 

Hospital  v.  Fuqua,  1  Lea,  608,  612  (semble) ;  Langford  v.  Perrin,  5  Leigh,  552  ;  Bentle^         (/ 

v,  Harris,  2  Grat.  357;  Preston  v.  Preston,  4  Grat.  88;  Dent  t\  Wait,  9  W.  Va.  41,  £.   .  /V^ 
Accord. 

A  surety  on  a  second  bond  given  by  a  guardian,  under  sec.  2533  of  Ga.  Civ.  Code, 
is  nofTrTT>s~urety  with  a  surety  6n  the  first  h6nd  of  the  guardian,  but  is  bound  to  in- 

Tittle  r.  Bennett,  94  Ga.  405 ;   Snow  v.  Brown,  100  (ia.  117. 


demnifv  the  ftM'ST  suTelyT 
See  also  to  same  effect,  Field  v.  Pelot,  McMull.  Eq.  369;  Bobo  v.  Vaiden,  20  S.  Ca. 
271  ;  Morris  0.  Morris,  9  Heisk.  814.  In  some  cases  the  execution  of  a  new  bond  with 
a  new  surety  operates  as  a  complete  discharge  of  the  surety  for  the  same  principal  on 
an  earlier  bond.  Peoples.  Lott,  27  Til.  215;  Lingle  v.  Cook,  32  Grat.  262.  In  some 
jurisdictions  the  sureties  on  the  earlier  of  two  successive  bonds  are  primarily  liable 
as  between  themselves  and  the  sureties  on  the  later  bond.  Corrigan  v.  Foster,  51 
Oh.  St.  2^5.  —  Ed. 

2  Only  the  opinion  of  the  Court  is  given.  — Ed. 


478 


CHESTER   V.    BRODERICK. 


["CHAP.  III. 


by  the  judgment  debtor  to  stay  proceedings  pending  the  appeal,  and 
thereupon  the  right  of  the  creditor  to  enforce  her  judgment  was  tempo* 
rarily  suspended.  Upon  the  affirmance  of  the  judgment  by  the  Gen- 
eral Term,  the  defendant  in  the  judgment  took  a  further  appeal  to  the 
Court  of  Appeals,  and  upon  that  appeal  two  other  persons  became 
sureties  to  stay  proceedings  on  the  judgment  appealed  from.  The 
bonds  were  given  pursuant  to  section  1331  of  the  Code,  under  which 
the  amount  is  fixed  by  the  court.  In  the  bond  given  upon  appeal  to 
the  General  Term,  that  amount  was  fixed  at  $7,000,  and  upon  appeal 
to  the  Court  of  Appeals  it  was  fixed  at  $9,000.  After  the  final  affirm- 
ance of  the  decree  for  a  foreclosure,  the  land  was  sold,  and  there  re- 
sulted a  deficiency  of  between  $11,000  and  $12,000.  The  plaintiffs,  in 
order  to  obtain  payment  of  such  deficiency,  collected  from  the  sureties 
on  the  second  or  Court  of  Appeals  bond  the  full  amount  thereof, 
viz.,  $9,000,  and  now  ask  to  recover  from  the  sureties  on  the  first  or 
General  Term  bond  the  balance  of  the  deficiency,  being  about  $2,500, 
and  the}'  have  obtained  a  judgment  for  that  sum,  which  the  defendants 
seek  to  reverse  on  this  appeal. 

The  position  of  the  counsel  for  the  defendants  is  that  the  plaintiffs, 
by  collecting  the  full  amount  of  the  bond  on  appeal  to  the  Court  of 
Appeals,  exhausted  the  liability  of  the  sureties  on  that  instrument, 
who  were  primarily  liable  for  the  debt  secured  by  both  bonds,  and  the 
plaintiffs  thereby  discharged  the  sureties  on  the  first  bond,  because 
such  sureties  were  in  that  way  deprived  of  the  right  of  subrogation 
against  the  sureties  on  the  Court  of  Appeals  bond.  Upon  the  facts 
herein  there  was  no  such  right  of  subrogation. 

In  Hinckley  v.  Kreitz,1  it  was  simply  held  in  a  case  of  this  kind, 
where  there  are  two  bonds  on  appeal,  one  to  the  General  Term 
and  one  to  the  Court  of  Appeals,  and  when  each  contains  an  agree- 
ment to  pay  the  amount  directed  to  be  paid  by  the  judgment  if 
affirmed,  the  primary  liability  in  the  event  of  affirmance  rests  upon  the 
sureties  to  the  bond  on  appeal  to  this  court,  and  that  their  release  by 
the  judgment  creditor  without  payment  in  full  discharges  the  sureties 
in  the  General  Term  bond.  This  is  no  such  case.  There  has  been  no 
release,  but,  on  the  contrary,  the  sureties  on  the  second  bond  have 
paid  its  full  amount  to  the  very  last  penny.  The  counsel  for  the  appel- 
lant claims  that  the  first  sureties  were  only  secondarily  liable,  and  yet 
upon  his  doctrine  their  liability  amounts  to  nothing.  The  effect  of  his 
argument  is  to  deprive  the  plaintiffs  of  all  benefit  of  the  first  bond.  If 
the  sureties  in  the  second  one  are  first  proceeded  against,  and  a  full 
recovery  against  them  to  the  amount  of  their  bond  is  obtained,  and  a 
deficiency  still  exists,  the  sureties  in  the  first  bond  are  not  liable  ac- 
cording to  defendants'  argument  on  the  ground  above  stated.  If,  on 
the  contrary,  the}-  are  first  proceeded  against,  and  a  recovery  to  the 
full  amount  of  their  bond  ($7,000)  obtained,  they  are  in  that  event 
entitled  to  be  subrogated  to  the  plaintiffs'  rights  in  the  second  bond  to 

1  58  N.  Y.  583. 


SECT.  I.]  CHESTER   V.    BRODERICK.  179 

the  extent  of  such  payment,  and  the  plaintiffs  can  have  only  the  bal- 
ance of  $2,000,  making  the  $9,000  of  the  second  bond.  In  this  way 
the  first  sureties  are  in  effect  completely  exonerated  ;  for,  although  they 
have  paid  the  $7,000  of  their  bond,  yet  they  are  entitled  to  recover  it 
all  back  from  the  sureties  on  the  Court  of  Appeals  bond,  leaving  only 
the  balance  of  $2,000  on  that  bond  for  the  judgment  creditor. 

Such  contention  prevents  the  use  of  the  first  bond  for  the  purpose  of 
recovering  any  part  of  a  deficiency  which  exceeds  the  amount  of  the 
second.  The  creditor  has  simply  a  double  securit}'  for  $7,000,  and  the 
single  security  of  the  second  bond  for  $2,000  in  addition,  being  the  full 
amount  of  the  second  bond.  This  is  not  the  real  condition  of  the  par- 
ties. The  creditor  has  the  securit}-  of  the  second  bond,  and  the  sure- 
ties thereon  are  primarily  liable.1  Rut  the  creditor  has  also  the  security 
of  the  first  bond  for  the  payment  of  the  deficiency  if  it  exceed  the 
amount  of  the  second  bond,  and,  therefore,  when  such  excess  in  fact 
exists,  no  injur}'  is  done  the  nrst  sureties  by^obtaiuing  thrrfull  payment 
oi  me  second  bond,  and  resorting  to  them  for  the  balance  up  to  the 
amount  of  their  own  bond.  There  is  in  such 'event  no  right  of  subro- 
gation, because  the  security  to  which  under  other  circumstances  the 
first  sureties  might  have  had  the  right  to  resort  has  been  satisfied  bj- 
the  full  payment  thereof,  and  the  application  of  the  proceeds  to  the 
payment  of  the  liability  for  which  it  was  originally  executed. 

It  cannot  be  said  that  in  enforcing  the  obligation  of  the  sureties  in 
the  second  bond,  the  creditor  has  done  any  act  which  has  injured  the 
rights  of  the  sureties  in  the  first  bond.  The  defendants  have,  therefore, 
shown  no  defence  to  this  action,  and  the  judgment  must  be  affirmed, 
with  costs. 

All  concur.  Judgment  affirmed. 

1  Chrisman  v.  Jones,  34  Ark.  73  ;  Friberg,  v.  Donovan,  23  111.  Ap.  58 ;  Opp  v.  Ward, 
125  Ind.  241;  Kellar  v.  Williams,  10  Bush,  216;  Dillon  v.  Scofield,  11  Neb.  419 
(semble) ;  Hinckley  v.  Kreitz,  58  N.  Y.  583;  Barnes  v.  Mott,  64  N.  Y.  397;  Culliford 
v.  Walser,  158  N.  Y.  65,  705;  Daniel  v.  Joyner,  3  I  red.  Eq.  513;  Hartwell  v.  Smith,  15 
Oh.  St.  200  (semble) ;  McCormick  v.  Irwin,  35  Pa.  Ill ;  Coles  v.  Anderson,  8  Humph. 
489;  Briggs  v.  Hinton,  14  Lea,  233;  Moore  v.  Lassiter,  16  Lea,  630;  Mitchell  v.  De 
Witt,  25  Tex.  Sup.  180;  Hanby  v.  Heuritze,  85  Va.  177  (compare  Rosenbaum  v.  Good- 
man, 78  Va.  121),  Accord. 

Howe  v.  Frazer,  2  Bob.  (La.)  624,  Contra. 

But  the  relations  Iwtwppn  fHfforp.nt.  sureties  upon  successive  appeals  may  be  modi-  ^ 
fled  by  agreement,  so  as  to  give  to  the  later  surety  the"  rights  oi_subrogatron~and  in-  ^ 
dehinity  against"  the  earlier  surety.     Whitman  v.  Gaddie,  7  B.  Mon.  591 ;  Dillon  v. 
Scoheld,  UHeb.  419;  Hartwell  v.  Smith,  15  Oh.  St.  200;  Yeager's  App.  19  W.  N.  C. 
(Pa.)  151  ;  Cowan  v.  Duncan,  Meigs,  470;  Harnsberger  v.  Yancey,  33  Grat.  527. 

See  also  Salvers  v.  Ross,  15  Iud.  130;  Bradford  v.  Mooney,  2  Cincin.  S.  C.  468.  — 
Ed. 


480  HOLMES   V.    DAY.  [CHAP.  Ill 

WILLIAM  A.  HOLMES  v.  JOHN  S.  DAY. 
In  the  Supreme  Judicial  Court,  Massachusetts,  November,  1871. 

[Reported  in  108  Massachusetts  Reports,  563.] 

Contract  against  the  surety  in  a  recognizance  taken  by  a  magis- 
trate under  the  Gen.  Sts.  c  124,  §  10.  Writ  dated  November  1,  1870. 
The  parties  stated  the  following  case  to  the  Superior  Court :  — 

"  On  August  12,  1869,  William  A.  Holmes  brought  an  action  of 
contract  against  William  S.  Matthews,  and  caused  the  attachment  upon 
mesne  process  of  certain  personal  property  belonging  to  Matthews. 
On  August  13  the  attachment  was  dissolved  by  Matthews  giving  bond, 
with  John  E.  Maynard  and  George  W.  Calef  as  sureties.  Holmes  re- 
covered judgment  against  Matthews  in  this  suit  at  April  term,  1870, 
of  the  Superior  Court  in  this  county,  to  wit,  on  May  4,  1870,  for 
$191.32  damages,  and  $29.15  costs.  This  judgment  not  having  been 
paid,  Holmes  brought  an  action  upon  the  bond,  and  at  July  term, 
1870,  of  the  Superior  Court  aforesaid,  recovered  judgment  against 
William  S.  Matthews,  John  E.  Maynard,  and  George  W.  Calef,  for 
$228.34  damages,  and  $10.52  costs.  A  writ  of  execution  issued  upon 
said  judgment,  in  due  form  of  law,  on  July  30,  1870  ;  the  affidavit  and 
certificate  required  by  law  were  annexed  to  the  execution ;  and  Mat- 
thews was  duly  arrested  by  a  proper  officer  on  September  8,  1870,  and 
on  the  same  day  brought  before  a  master  in  chancery  for  this  county  ; 
and  then  and  there  Matthews  as  principal,  and  the  present  defendant 
John  S.  Day  as  surety,  entered  into  the  recognizance  declared  on  in 
this  case.  Matthews  did  not  observe,  perform,  or  keep  the  condition 
named  in  the  recognizance,  but  committed  a  breach  thereof  by  not 
appearing  for  examination  within  the  time  stated.  On  October  31, 
1870,  Ma}'nard  and  Calef  paid  to  Holmes  the  amount  of  his  judgment 
against  Matthews  and  themselves,  together  with  costs  accrued  upon  the 
same,  amounting  in  the  aggregate  to  $253.73,  and  immediately  there- 
after caused  the  present  action  to  be  brought  upon  the  recognizance, 
for  their  own  benefit,  in  the  name  of  Holmes  as  plaintiff,  against  said 
John  S.  Da}'  as  defendant.1 

Morton,  J.  If  a  judgment  debtor,  who  has  been  arrested  upon  ex- 
ecution, and  has  entered  into  a  recognizance  with  surety  under  the 
Gen.  Sts.  c.  124,  pays  the  judgment,  the  surety  is  thereby  discharged. 
Paj'ment  of  the  judgment  in  full  is  a  satisfaction  for  all  damages  for  a 
breach  of  the  recognizance,  and  no  cause  of  action  remains  against  the 
surety.  In  the  case  at  bar  there  were  three  joint  judgment  debtors  ; 
one  of  them  was  arrested  on  the  execution,  and  entered  into  a  recog- 
nizance, with  the  defendant  as  suret}7,  and  after  a  breach  of  the  recog- 
nizance, the  other  two  paid  the  judgment  in  full.     As  a  general  rule, 

1  The  statement  is  slightly  abridged.  —  Ed. 


SECT.  I.]  TURNER   V.    DAVIES.  481 

payment  of  a  judgment  by  one  of  several  joint  debtors  extinguishes 
the  judgment  as  to  all.  Hammatt  v.  Wyman  ; 1  Brackett  v.  Winslow  ; 2 
Adams  v.  Drake.8  We  think,  in  this  case,  the  payment  of  the  judgment 
b\r  Maynard  and  Calef  was  a  satisfaction,  and  extinguished  the  claim 
for  damages  against  the  defendant.  The  doctrine  of  subrogation  does 
not  apply.  Maynard  and  Calef,  for  whose  benefit  the  suit  is  brought, 
and  the  defendant  were  sureties  for  Day  under  different  contracts. 
There  was  no  privity  of  contract  between  them.  We  can  see  no  reason 
for  holding,  as  between  these  parties,  that  the  liabilitj-  of  the  defendant 
was  principal  and  primary,  and  that  of  Maynard  and  Calef  secondary. 
If  the  defendant  had  been  compelled  to  pa}'  this  judgment  under  his 
recognizance,  he  would  have  had  a  claim,  as  strong  as  that  now  urged 
b}T  Maynard  and  Calef,  to  be  subrogated  to  the  rights  of  the  plaintiff, 
and  to  continue  the  judgment  in  force  against  them. 

Judgment  for  the  defendant} 


TURNER  v.  DAVIES. 
At  Nisi  Prius,  before  Lord  Kenton,  C.  J.,  Trinity  Term,  1796. 

{Reported  in  2  Espinasse,  479.] 

This  was  an  action  of  assumpsit  for  money  paid,  laid  out,  and  ex- 
pended to  the  use  of  the  defendant. 

Plea  of  non  assumpsit. 

The  action  was  brought  to  recover  from  the  defendant  a  moiety  of 
the  sum  of  £23  paid  b}r  Turner,  the  plaintiff,  on  account  of  the  debt  of 
one  Evans,  and  arose  under  the  following  circumstances. 

There  being  an  execution  in  Evans's  house,  at  the  suit  of  Brough, 
to  induce  Brough  to  withdraw  it,  and  to  secure  the  debt,  Turner,  the 
plaintiff,  and  Davies,  the  defendant,  joined  in  a  warrant  of  attorney  to 
Brough,  but  Davies  had  joined  in  consequence  of  having  been  applied 
to  b}'  Turner  and  Brough,  who  required  an  additional  security.  Turner, 
the  plaintiff,  took  a  bill  of  sale  from  Evans  for  his  own  security,  dated 
20th  January,  1796  ;  and  an  indorsement  was  made  on  it  declaring  the 
purpose  for  which  it  was  given. 

Another  execution  having  issued  against  Evans,  the  goods  were 
taken  in  execution,  and  Turner,  the  plaintiff,  had  paid  the  whole  of 
Brough's  demand,  and  now  brought  this  action  against  the  defendant 
for  contribution  of  the  moiety. 

Lord  Kenton.  I  have  no  doubt  that  where  two  parties  became 
joint  sureties  for  a  third  person,  if  one  is  called  upon  and  forced  to 

1  9  Mass.  138.  2  17  Mass.  153.  3  11  Cush.  504. 

4  Kane  v.  State,  78  Ind.  103;  Dessar  v.  King,  110  Ind.  69;  Morse  v.  Williams,  22 
Me.  17,  Accord.  —  Ed. 

31 


482  CRAYTHORNE  V.    SWINBURNE.         [CHAP.  III. 

pay  the  whole  of  the  money,  he  has  a  right  to  call  on  his  co-security 
for  contribution  ;  but  where  one  has  been  induced  so  to  become  surety 
at  the  instance  of  the  other,  though  he  thereby  renders  himself  liable  to 
the  person  to  whom  the  security  is  given,  there  is  no  pretence  for  sa}'- 
ing  that  he  shall  be  liable  to  be  called  upon  by  the  person  at  wThose 
request  he  entered  into  the  security.1  This  is  the  case  here  ;  Davies, 
the  defendant,  became  security  at  the  instance  of  Turner,  the  plaintiff, 
to  Brough,  and  there  is  still  less  pretext  for  Turner  to  call  on  the  de- 
fendant in  this  action,  as  he  took  the  precaution  to  secure  himself  by  a 
bill  of  sale.  I  am  of  opinion  the  defendant  ought  to  have  a  verdict. 
The  jury  found  for  the  defendant. 

Tic  f!ff<Nrr!F.RY.  SSwre  -Lord  Eldon,  C,  July  23,  1807.    //• 

V 

Zed  *JT14  Vesei/,  160.] 


The  Lord  Chat«5ellor.2  Before  I  delivered  the  opinion  I  had 
formed  upon  this,  I  desired  to  have  the  Register's  Book  examined  as 
to  the  case  in  Freeman,3  which  occurred  to  me,  with  the  view  of  being 
enabled  to  determine  whether  it  was  the  opinion  of  the  Master  of  the 
Rolls  of  that  da}r,  or  had  the  authority  of  a  judgment,  when  such  a 
question  as  this  was  before  him.  I  cannot  find  that  any  such  judgment 
appears  in  the  Register's  Book.  I  must  therefore  take  it  to  be  only  a 
declaration  of  the  opinion  of  the  Master  of  the  Rolls  upon  the  point,4  — 

1  This  opinion  of  Lord  Kenyon  has  been  approved  extrajudicially  in  a  few  cases. 
Daniel  v.  Ballard,  2  Dana,  296 ;  Byers  v.  McClanahan,  6  Gill  &  J.  250 ;  Taylor  v.  Sav- 
age, 12  Mass.  98 ;  Whitehouse  v.  Hanson,  42  N.  H.  9. 

But  in  the  following  decisions  it  was  repudiated,  the  request  alone  not  being 
thought  sufficient  to  create  the  presumption  of  a  contract  of  indemnity  on  the  part  of 
the  one  making  the  request.  Bagott  v.  Mullen,  32  Ind.  332  ;  McKee  v.  Campbell,  27 
Mich.  497  ;  Burnett  v.  Millsaps,  59  Miss.  333. 

In  the  following  cases  there  was  an  express  contract  of  the  one  surety  to  indemnify 
the  other  who  signed  at  his  request.  Hayden  v.  Thrasher,  18  Fla.  795;  Jones  v. 
Letcher,  13  B.  Mon.  363 ;  Blake  v.  Cole,  22  Pick.  97  ;  Cutter  v.  Emery,  37  N.  H.  567 ; 
Apgar  v.  Hiler,  4  Zab.  812 ;  Auderson  v.  Peareson,  2  Bail.  107  ;  Rae  v.  Rae,  60  Vt.  321. 
In  Martin  v.  Marshall,  60  Vt.  321,  the  contract  of  indemnity  was  inferred  from  the 
fact  that  the  co-surety's  signing  was  particularly  for  the  benefit  of  the  surety.  —  Ed. 

2  Only  this  opinion  of  the  Lord  Chancellor  is  given.  —  Ed. 

3  Cooke  v.  ,  2  Freem.  97  [1686.     Before  Sir  John  Trevor,  M.  R.     Three 

bound  in  a  bond,  one  being-  principal  and  the  other  two  sureties;  afterwards  a  fourth 
man  becomes  bound  to  the  obligee,  that  if  the  other  three  did  not  pay  according  to 
the  condition  of  the  bonds,  that  he  would  pay ;  a  month  after  one  of  the  two  sureties 
pays  the  money,  and  prefers  his  bill  against  the  fourth,  now,  for  contribution ;  and 
the  question  was,  whether  he  should  be  bound  to  contribute,  his  beiagJboit  a  supple- 

ental  security ;  and  the  Master  of  the  Rolls  seemed  to  think  that  he  should]. 

4  Tins  opinion  of  Sir  John  Trevor,  M.  R.,  is  criticised  in  Hartly  v.  O'Flaherty, 
LI.  &  G.  temp.  Plunkett,  208,  217. 


SECT.  I.]  CRAYTHORNE  V.    SWINBURNE.  48 


.1 


a  declaration,  undoubtedly,  of  great  weight,  and  deserving  great  atten- 
tion. It  is  therefore  ni}-  duty  upon  a  case,  in  its  circumstances  per- 
fectly new,  to  deliver  my  own  opinion. 

I  take  the  case  to  be  this,  that  Henry  Swinburne  was  the  only  origi- 
nal debtor  to  Hamersley  &  Co.,  who  called  for  their  money;  and  it 
therefore  became  necessary  for  him  to  raise  the  money  elsewhere. 
Sir  John  Swinburne  appears  to  have  applied  to  the  bank  at  Newcastle, 
and,  according  to  the  proposal  made  to  those  bankers,  the  sum  of 
£1,200  was  to  be  raised  upon  the  credit  of  Henry  Swinburne  and  the 
plaintiff,  to  be  applied  to  discharge  the  debt  to  Hamerslej-  &  Co.  In 
that  transaction,  so  proposed,  Henry  Swinburne  was  to  be  the  prin- 
cipal, and  the  plaintiff  the  surety.  The  Newcastle  bank,  upon  a 
discussion  that  took  place  between  them  and  Sir  John  Swinburne, 
intimated  their  dislike  to  deal  upon  the  security  of  Henry  Swinburne  ; 
and  that  they  were  not  satisfied  to  deal  upon  the  security  of  both  him 
and  Craythorne.  One  bond  was  executed  and  tendered  to  the  bank, 
in  which  Henry  Swinburne,  as  principal,  and  Craythorne,  as  surety, 
are  jointly  and  severally  bound  for  the  sum  of  £1,200.  Another  bond 
was  executed  in  consequence  of  some  conversation  between  the  bank, 
by  one  of  the  partners,  and  Sir  John  Swinburne,  which,  I  think,  is 
admissible  evidence.  The  cause  may  be  decided  without  reference  to 
that  question  ;  but,  as  it  has  an  effect  upon  my  mind,  it  is  proper  that 
the  parties  should  know  that.  The  substance  of  that  communication 
is  that  the  house  did  not  like  to  trust  to  the  securit}'  of  Henry  Swin- 
burne and  Craythorne  ;  but,  if  Sir  John  Swinburne  had  a  good  opinion 
of  the  credit,  that  might  be  given,  if  not  to  Henrj'  Swinburne,  to  Cray- 
thorne, and  would  become  security  to  the  bank,  that  he  would  pay,  if 
they  did  not,  by  entering  into  a  bond  to  pay  the  debt,  if  the}'  did  not 
pay  it,  the  bank  would  advance  the  money. 

The  sum  of  £1,200  was  advanced  accordingly;  the  bond,  executed 
by  Sir  John  Swinburne,  reciting  the  former  bond  for  money  advanced 
to  Henry  Swinburne  and  Craythorne  ;  and  the  condition  is  that  it  shall 
be  void  if  Henry  Swinburne  and  Craythorne,  or  either  of  them,  pay  the 
money  ;  and  the  banker  saj's  he  understood  it  to  be  a  collateral  secu- 
rity, b}T  which  he  means  a  supplemental  Security. "" 

The  question  is,  first,  whether  Sir  John  Swinburne  is,  under  this 
instrument,  to  be  considered  as  a  co-surety  with  Craythorne,  or 
whether  the  effect  is  that  Sir  John  Swinburne  did  not  undertake  to 
stand  as  a  co-surety  with  Craythorne,  but  was  surety  for  both  ;  to 
pay  only  if  both  should  make  default.  It  must  be  considered  as  en- 
tirely clear  of  any  objection  that  Craythorne  could  take,  that  Sir  John 
Swinburne  was  not  at  liberty  to  deal  thus,  as  the  proposition  to  the 
bank  was  that  Henry  Swinburne  and  Craythorne  were  to  be  their  debt- 
ors ;  and  Sir  John  Swinburne,  voluntarily  adding  his  security,  can- 
not be  bound  beyond  the  extent  to  which  he  thought  proper  to  bind 
himself. 

It  was  contended  for  the  first  time,  in  Deering  v.  The  Earl  of  Win. 


^84  CRAYTHORNE  V.   SWINBURNE.         LCHAP-  IIL 

chelsea,  that  there  is  no  difference,  whether  the  parties  are  bound  by 
the  same  or  by  different  instruments,  provided  they  are  co-sureties  in  this 
sense  for  the  debt  of  the  principal ;  and,  further,  that  there  is  no  differ- 
ence if  they  are  bound  in  different  sums,  except  that  contribution  could 
not  be  required  beyond  the  sums  for  which  they  had  become  bound.  I 
argued  that  case,  and  was  much  dissatisfied  with  the  whole  proceeding, 
and  with  the  judgment ;  but  I  have  been  since  convinced  that  the  de- 
cision  was  upon  right  principles.  Lord  Chief  Justice  Eyre,  in  that 
case,  decided  that  this  obligation  of  co-sureties  is  not  founded  in  con- 
tract, but  stands  upon  a  principle  of  equity  ;  and  Sir  Samuel  Romilly 
has  very  ably  put,  what  is  consistent  with  every  idea,  that,  after  that 
principle  of  equity  has  been  universally  acknowledged,  then  persons, 
acting  under  circumstances  to  which  it  applies,  may  properly  be  said 
to  act  under  the  head  of  contract  implied  from  the  universality  of  that 
principle.  Upon  that  ground  stands  the  jurisdiction  assumed  by  courts 
of  law,  —  a  jurisdiction  attended  with  great  difficulty  where  there  are 
many  sureties,  though  not  in  the  simple  case  where  there  are  only  two, 
one  of  whom  may  bring  his  action  for  a  moiety  upon  the  implied  un- 
dertaking. But  whether  this  stands  upon  contract  or  a  principle  of 
equity,  it  is  clear  that  a  party  may  take  care  by  his  engagement  that 
he  shall  be  bound  only  to  a  certain  extent.  That  is  proved  by  the 
case  of  Swain  v.  Wall,1  where,  the  engagement  being  to  pay  in  thirds, 
that  contract  was  held  to  take  them  out  of  the  principle  that  would 
have  required  a  moiety ;  and  also  by  Deering  v.  The  Earl  of  Win- 
chelsea,  where  it  was  admitted  that  Lord  Winchelsea,  though  liable  as 
a  surety,  had  by  contract  withdrawn  himself  from  any  liability",  by  vir- 
tue of  which  he  should  be  charged  beyond  £4,000. 

If,  therefore,  by  his  contract  a  party  may  exempt  himself  from  the 
liability,  or  that  extent  of  liability,  in  which,  without  a  special  engage- 
ment, he  would  be  involved,  it  seems  to  follow  that  he  may  by  special 
engagement  contract  so  as  not  to  be  liable  in  any  degree.  That  lead's 
to  the  true  ground,  the  intention  of  the  party  to  be  bound,  whether  as 
a  co-surety,  or  only  if  the  other  does  not  pay  ;  that  is,  as  surety*  for 
the  surety,  not  as  co-surety  with  him.  As  to  the  bond  itself,  it  is  clear 
upon  the  face  of  this  bond,  and  according  to  its  language,  that  the 
bank  and  Sir  John  Swinburne,  if  at  liberty-  to  do  so,  did  consider  that 
this  sum  of  money*  was  to  be  in  advance,  as  between  Sir  John  Swin- 
burne and  the  bank,  to  the  other  two.  They*  have  no  right  to  complain 
of  it,  for  there  is  no  contract  by  Sir  John  Swinburne  with  the  other 
two :  he  might  limit  his  engagement  with  reference  to  them  as  he 
thought  proper ;  and  the  bond  upon  the  face  of  it  makes  him  surety 
only  for  the  principal  and  the  other  surety7.  But  it  is  clear  upon  the 
parol  evidence ;  and  why  is  not  that  competent  evidence  ?  Evidence 
is  admitted  to  show  who  is  the  principal  and  who  the  surety,  and,  in 
order  to  determine  that,  to  show  to  whom  the  money  was  advanced ; 
and  why  is  it  not  to  be  admitted  to  show  to  whom  the  money  was  ad- 

i  1  Rep.  Ch.  80. 


^^_ 


^^Ll£^^5S£: 


^&u_ 


RLACK. 


cl  the  < 


4§S 

vanced  as  between  Sir  John  Swinburne  and  the  others  ?     But  this  goes 
farther,  for  the  evidence  is  not  in  contradiction  to,  but  in  support  of, 
the  instrument ;  and  whether  the  demand  is  founded  upon  the  equity       ^\ 
onl}-,  or  upon  the  implied  contract,   why  should  not  evidence  be  ady^*r— - -J  -* 
mitted  to  show  that  the  equity  ought  not  to  be  applied  and  the  con- 
tract ought  not  to  be  inferred? 

I  do  not  state  that  the  circumstance  that  Sir  John  Swinburne  entered 
into  the  securit}-  without  the  knowledge  of  Craythorne  would  have  re- 
pelled the  doctrine  of  contribution,  as  that  stands  upon  this :  that  all 
sureties  are  equally  liable  to  the  creditor,  and  it  does  not  rest  with 
him  to  determine  upon  whom  the  burden  shall  be  thrown  exclusively; 
that  equality  is  equity ;  and,  if  he  will  not  make  them  contribute 
equally,  this  Court  will  finally  by  arrangement  secure  that  object. 
But,  then,  the  question  comes  round  whether  that  is  according  to  the 
contract  or  engagement  of  the  surety.  My  opinion  is  wrong  if  Sir 
John  Swinburne  is  a  co-surety.  Having  considered  this  .much,  and 
given  great  attention  to  the  case  in  Freeman,  I  think  he  is  not  a  co-  //^j2^ 

~~0 


surety  ;  but,  as  between  him  and  Craythorne,  the  latter  is  just  as  m u ch 
ajprlncipal  as  Henry  Swinburne.  The  consequence  is  that  the  equity 
does  not  apply,  sir  John  Swinburne  being  liable  only  in  case~tEe~otle; 
two  do  not  pay,  andr^beingjiable  with  theihT 

This  bill,  therefore,  must  be  dismissed,  but  without  costs.1 


=^~22r- 


+-v 


-2<c 


^         In  th 


SHERMAN  vy.  BLACiaf  _         -7-2 —       CvH^*. 

Supreme  Cot^^Jveriviont,  October,  1876.     

•ted  in  49*  Vermont  Repi 


1876. 

s*  "\     fctyfported  in  4$  Vermont   Ttppnrt*  igs  ] 

REDFiELDf  J.2  B}-  the  referee's  reporrflt  appears  that  the  defendant  Ji 
signed  a  bank  note  with  Chai'les  Livermore,  payable  to  the  Ashuelot  v 
Bank,  of  Keene,  N.  H.,  for  $1,500,  at  ninety  da}^s.  On  the  face  of  the 
note,  apparently,  both  were  principals.  In  fact  the  defendant  was 
surety  for  Livermore.  The  bank  refused  to  discount  the  note  without 
the  name  of  some  responsible  citizen  of  New  Hampshire.  Livermore 
then  applied  to  the  plaintiff,  a  resident  citizen  of  Keene,  and  told  him 
that  the  bank  had  refused  to  discount  said  note,  and  asked  the  plaintiff 
"if  he  would  sign  the  note  with  him  and  Black;"  thereupon,  plain- 
tiff signed  the  note,  adding  the  word  "  surety  "  to  his  signature  ;  and 
then  supposed  that  he  was  signing  said  note  as  surety  for  Livermore  and 
Black,  regarding  them  both  as  principals  in  the  note.  This  supposition 
arose  trom  tne  manner  he  was  asked  to  sign  the  note,  and  that,  ap- 
parently, on  the  face  of  the  note,   both  were  principals.     Livermore 

1  Schram  v.  Werner,  85  Hun,  293  ;  Harrison  v.  Lane,  5  Leigh,  414,  Accord.  —  Ed. 

2  Only  the  opinion  of  the  Court  is  given.  —  Ed. 


486  SHERMAN  V.   BLACK.  [CHAP.  III. 

negotiated  with  the  bank  for  renewal ;  and  when  the  note  became  due, 
he  procured  the  signature  of  Black  with  him,  to  a  like  note,  and  sent  it, 
with  the  mone}-  for  the  accruing  interest,  to  the  plaintiff,  requesting  him 
to  sign  it  and  deliver  it  to  the  bank,  and  take  up  the  former  note,  which 
he  did,  adding,  as  before,  to  his  signature  the  word  "  surety. "  The 
bank  about  a  year  before  had  discounted  a  note  signed  only  by  Liver- 
more  and  Black. 

From  this  statement  it  may  be,  as  we  think,  justly  assumed  that  the 
defendant  intrusted  the  note  for  which  this  was  substituted,  with  Liver- 
more  for  discount,  expecting  to  stand  as  the  sole  surety;  and  that,  in 
fact,  plaintiff  undersigned  Livermore  and  defendant  as  their  surety,  not 
knowing,  and  having  no  reason  to  believe,  that  the  defendant  stood  in 
an)'  other  relation  than  the  note  indicated,  a  principal  in  the  note  ;  and 
he  qualified  the  contract  he  entered  into  by  adding  to  his  signature  the 
word  "  surety." 

It  is  well  established,  and  all  the  authorities  concur,  that  an  indorser 
or  surety  may,  at  the  time  of  entering  into  the  contract,  qualify  or 
limit  his  liability  at  his  pleasure.  The  defendant  sent  his  note  into 
the  market,  to  raise  money  by  Livermore,  promising  with  him,  as  joint 
principal,  to  pa}7  the  note  ;  and  as  between  him  and  Livermore,  agree- 
ing to  pa)r  the  note  in  case  Livermore  failed  to  do  so.  Livermore  failed 
to  pay  the  whole  note  ;  and  defendant  is  now  called  upon  to  do  just 
what  his  contract  required,  and  what  he  understood  it  required  when  he 
put  his  note  upon  the  market  to  raise  money  ;  his  risk  has  not  been 
enhanced,  nor  his  duties  changed. 

Testimony  aliunde  is  necessarily  admissible  to  show  the  relation  of 
the  parties  as  between  themselves ;  and  that  testimony  shows  in  mis 
case  that  defendant  had  none  of  the  money,  and  as  between  him  and 
Livermore  was  mere  surety  ;  and  the  same  evidence  discloses  that* the 
plaintiff  signed,  in  fact,  as  suretyfor,  and  not  as~co-surety  with,  the 
defendant.  Had  the  plaintiff  attached  to  his  signature  the  words 
n 'Surety  for  tne  apove,"  or  words  of  like  import,  it  is  not  questioned 
that  he  would  not  be  liable  as  co-surety,  to  contribute. 
""  In  Keith  "v.  Goodwin,1  the  Uourt,  Redfield,  C.  J.,  sa}-s  :  "  When  there 
is  anything  in  the  form  of  the  contract  or  the  nature  of  the  transaction, 
to  show  that  the  subsequent  sureties  did  not  expect  to  be  holden  as  co- 
sureties for  all  the  former  signers,  they  are  entitled  to  full  indemnity 
from  each  of  the  others,  or  all  jointly ;  as,  when  the  surety  signs  ex- 
pressly as  surety  for  all  the  above  signers ;  or  when  he  signs,  saying 
he  is  willing  to  be  responsible  for  all  of  them.  In  such  case  he  is  not 
liable  to  contribution."  In  that  case  the  defendant  Goodwin  stood 
apparently  a  joint  principal  on  the  note,  though  in  fact  a  surety  as 
between  the  signers  ;  and  the  Court  further  says  :  "  And  by  presenting 
the  note  merely,  and  asking  a  guaranty  of  the  plaintiff,  a  virtual  repre- 
sentation was  made  that  defendant  stood  as  joint  principal."  "If  he 
could  be  allowed,  afterward,  to  falsify  this  representation  thus  held  out 

1  31  Vt.  268. 


SECT.  I.] 


SHERMAN   V.    BLACK. 


487 


on  the  face  of  the  paper,  it  might  certainly  work  great  injustice  to  the 
guarantor."  In  the  leading  case  of  Craythorne  v.  Swinburne,  the 
declarations  of~the  defendant  at  the  time  he  signed  the  iiote_jyere 
admitted,  to  show  that  he  signed  as  surety  for  the  former  signers, 
and  not  as  co-surety  with  them. 

~  1  he  case  OT  Adams  v.  Flanagan  1  goes  still  further.  The  plaintiff 
signed  the  note  as  sui-ety,  and  added  the  word  "  surety  "  to  his  signa- 
ture. Afterwards,  Flanagan  signed  it  and  added  the  word  "  surety" 
to  his  name.  The  defendants  were  permitted  to  successfully  resist  the 
claim  for  contribution  b}T  Adams,  who  had  paid  the  debt,  by  showing 
that  he  told  Mills,  the  principal,  at  the  time  of  signing  the  note,  that 
he  signed  the  note  as  surety  for  all,  and  not  as  co-surety  with  them. 
Flanagan,  in  this  case,  had  distinct  knowledge  from  the  face  of  the 
paper  that  Adams  was  surety.'2  Opposed  to  this  doctrine  are  the  cases 
of  Whitehouse  v.  Hanson  3  and  Norton  v.  Coons,4  and  some  others. 

We  have  no  occasion  in  this  case  to  approve  or  disapprove  all  that  ' 
is  said  by  the  Court  in  Keith  v.  Goodwin  and  Adams  v.  Flanagan.  But 
we  think  that,  as  defendant  signed  the  note  apparently  as  principal, 
and  authorized  Livermore  to  go  into  the  market  with  the  note  to  raise 
money,  and  to  accomplish  the  matter  in  hand,  he  procured  the  plaintiff 
to  become  surety  for  the  two  by  virtually  representing  to  him  that  the 
signers  of  the  note  were  both  principals.  The  fact  that  defendant  was 
really  the  suret}'  of  Livermore  will  not  so  operate  as  to  make  the  plain- 
tiff his  co-surety.  By  the  course  of  business,  Livermore  was  authorized 
to  do  all  that  he  has  done  ;  and  the  defendant  should  be  required  to 
stand  by  it,  for  it  requires  of  him  no  more  than  he  voluntarily  agreed  to 
do.  If  it  were  otherwise  it  would  work  a  great  fraud  upon  the  plain-  \ 
tiff.  This  rule  is  entirely  in  accordance  with  the  adjudged  cases  and 
long-settled  doctrine  in  this  State,  and  with  fair  dealing  and  justice. 
Judgment  reversed,  and  judgment  for  plaintiff  on  the  report  for 
the  sum  therein  named  with  interest.5 

1  36  Vt.  400. 

2  Hunt  v.  Chambliss,  15  Miss.  532,  accords  with  Adams  v.  Flanagan.     But  see 
contra,  Whitehouse  v.  Hanson,  42  N.  H.  9  (semble).  —  Ed. 

3  42  N.  H.  9.  4  3  Denio,  130. 
s  Salter  v.  Salter,  6  Bush,  624 ;  Chapeze  v.  Young,  87  Ky.  476,  Accord. 
McGee  v.  Prouty,  9  Met.  547  (semble) ,  Whitehouse  v.  Hanson,  42  N.  H.  9  (semble) ; 

Warner  v.  Price,  3  Wend.  397  (semble)  ;   Harris  v.  Warner,  13  Wend.  547  (semble), 
Contra.  . 

A  fortiori  one  occupying  the  position  of  the  plaintiff  in  the  principal  case  is  not  v*. 
liable  for  contribution  to  a  prior  surety.     Bulkeley  v.  House,  62  Conn.  459  ;  Baldwin 
v.  Fleming,  §0  Ind.  177  ;    Houck  V.  "Graham,  106  Ind.  195,  199  (but  see  Wood  worth 
v.  Bowes,  5  Ind.  276)  ;  Sayles  v.  Sims,  73  N.  Y  551  ;  Robinson  v.  Lyle,  10  Barb.  512 ; 
Coleman  v.  Norman,  10  Heisk.  590  ;  Turner  v.  Overall  (Tennessee,  1897),  39  S.  W.  756. 

Fernald  v.  Dawley,  26  Me.  470,  473  (semble),  is  contra. 

The  doctrine  of  the  principal  case  is  equally  applicable,  although  the  party  who     „ 

signs  with  the  expressed  understanding  that  he  is  to  be  surety  for  and  not  surety  with  ■^"~ 
a  prior  party,  does  not  add  thtj  word  "  surety  ''  to  his  signature.    Paul  v.  Berry,  78  111.       _^?_ 
158;  Kobertson  v.  Deatherage,  82  111.  51 1  y  Bowser  v.  Kendell,  31  Ind.  128;  Bobbitt 
v.  Shryer,  70  Ind.  513;  Williams  v.  Boyce,  11  Mo.  524 ;  McMahan  v.  Geiger,  73  Mo. 


J?~ 


^ '  '         488  sm'donald  v.  maq^uder.  [chap.  hi. 

Cy  J.  #.   MCDONALD,  Plaintiff^n  Error,  <y.  G.  B.   MAGRUDER, 

In  the  Supreme  Court,  Unitei 


States,  January  Term,  1830. 


[Reported  in  3  Peters,  470.] 

Mr.  Chief  Justice  Marshall  delivered  the  opinion  of  the  Court.1 

This  is  a  writ  of  error  to  a  judgment  rendered  by  the  Circuit  Court 
of  the  United  States,  for  the  county  of  Washington,  in  the  District  of 
Columbia,  in  an  action  of  indebitatus  assumpsit,  brought  by  the  first 
indorser  of  a  promissory  note  against  the  second  indorser,  to  recover 
half  its  amount.  The  note  was  made  by  Samuel  Turner,  Jr.,  and  in- 
dorsed George  B.  Magruder,  John  G.  M'Donald.  At  the  trial  of  the 
cause  a  case  was  agreed  by  the  parties,  and  the  judgment  of  the  Circuit 
Court  was  rendered  in  favor  of  the  plaintiff  on  a  verdict  given  by  the 
jury,  subject  to  the  opinion  of  the  Court. 

That  a  prior  indorser  is,  in  the  regular  course  of  business,  liable  to 
his  indorsee,  although  that  indorsee  may  have  afterwards  indorsed  the 
same  note,  is  unquestionable.  When  he  takes  up  the  note  he  becomes 
the  holder  as  entirely  as  if  he  had  never  parted  with  it,  and  may  sue 
the  indorser  for  the  amount.  The  first  indorser  undertakes  that  the 
maker  shall  pay  the  note ;  or  that  he,  if  due  diligence  be  used,  will 
pay  it  for  him.  This  undertaking  makes  him  responsible  to  every 
holder,  and  to  eveiy  person  whose  name  is  on  the  note  subsequent  to 
his  own^and  who  has  been  compelled  to  pay  its  amount. 

This  is  the  regular  course  of  business  where  notes  are  indorsed  for 
value  ;  but  it  is  contended  that  where  less  than  the  amount  is  received, 
the  indorser  is  responsible  to  his  immediate  indorsee  only  for  the  sum 
actually  paid ;  consequently,  if  nothing  is  paid,  the  mere  indorsement 
does  not  bind  the  indorser  to  pay  his  immediate  indorsee  anything. 
If  B  indorses  to  C  the  note  of  A  without  value,  and  A  fails  to  take 
it  up,  it  is  as  between  B  and  C  a  contract  without  consideration,  on 
which  no  action  arises.  This  is  undoubtedly  true  if  C  retains  the  note 
in  his  own  possession  ;  and  may  be  equally  true  if  he  indorses  it  for 
value.     When  he  repays  the  mone}'  he  has  received,  he  is  replaced  in 

145  ;  Darrah  v.  Osborne,  2  Halst.  71  ;  Wells  v.  Miller,  66  N.  Y.  255  ;  Oldham  v.  Brown, 
28  Oh.  St.  41,  in  which  cases  the  prior  party  was  denied  the  right  of  contribution. 

Norton  v.  Coons,  6  N.  Y.  33,  3  Den.  130,  is  contra.  But  this  case  has  been  much 
criticised,  and  can  hardly  be  said  to  be  law  even  in  New  York. 

If  X  signed  as  surety  on  the  assurance  of  the  principal  that  Y  would  also  sign  as 
co-surety,  and  i  subsequently  signed,  expressly  stating  tnat  ne  did  so  as~~sure£y*for 
na  not  as  surety  with  X,  Y  is  not  chargeable  as  co-surety  unless  he  knew  of  Ihe 
principals  assurance  to  X.  Mitchell  v.  English,  17  Orant,  Oh.  303  ;  Bobbitt  v.  SHryer, 
70  Ind.  513;  Adams  v.  Flanagan,  36  Vt.  400;  Melms  v.  Werdehoff,  14  Wis."  18. 
But  see  contra,  Crouse  y.  Wagner,  41  Oh.  St.  471  ;  Whitehouse  v.  Hanson,  42  N.  H.  9. 
—  Ed. 

1  Only  the  opinion  of  the  Court  is  given.  —  Ed 


SECT.  I.]  M'DOXALD   V.    MAGRUDER.  489 

the  situation  in  which  he  would  have  been  had  he  never  parted  with 
the  note.  If  he  puts  it  into  circulation  on  his  own  account,  new  rela- 
tions may  be  created  between  himself  and  his  immediate  indorsee, 
which  may  be  affected  by  circumstances.  In  the  case  under  considera- 
tion the  note  took  the  direction  intended  hy  all  the  parties.  It  was 
indorsed  by  Magruder  for  the  purpose  of  enabling  Turner  to  discount 
it  at  the  bank.  To  insure  this  object,  Turner  applied  to  M'Donald, 
who  placed  his  name  also  on  the  paper.  No  intercourse  took  place 
between  the  indorsers.  No  contract,  express  or  implied,  existed  between 
them  other  than  is  created  by  their  respective  liabilities,  produced  by 
the  act  of  indorsement.  What  are  these  liabilities  ?  The  first  indorser 
gave  his  name  to  the  maker  of  the  note  for  the  purpose  of  using  it  in 
order  to  raise  the  monej'  mentioned  on  its  face.  He  made  himself 
responsible  lor  the  whole  sum  upon  the  sole  credit  of  the  maker.  His 
undertaking  is  undivided^  He  doesliot  understand  that  any  person  is" 
to  share  this  responsibility  with  him. 

But  either  the  bank  is  unwilling  to  discount  the  note  on  the  credit  of 
the  maker  and  his  single  indorser,  or  the  maker  supposes  his  object 
will  be  insured  b}T  the  additional  credit  given  by  another  name.  He 
presents  the  note  therefore  to  M'Donald,  and  asks  his  name  also. 
M'Donald  accedes  to  his  request,  and  puts  his  name  on  the  instrument. 
If  the  maker  passes  the  note  for  value,  the  liability  of  M'Donald  to  the 
holder  is  the  same  as  if  that  value  had  been  received  by  M'Donald 
himself.  Why  is  this?  No  consideration  is  received  by  M'Donald, 
and  this  fact  is  known  to  the  holder  and  discounter  of  the  note.  But 
a  consideration  is  paid  b}'  the  holder  to  the  maker,  and  paid  on  the 
credit  of  M'Donald's  name.  He  cannot  set  up  the  want  of  a  considera- 
tion received  hy  himself ;  he  is  not  permitted  to  say  that  the  promise 
is  made  without  consideration  ;  because  money  paid  by  the  promisee 
to  another  is  as  valid  a  consideration  as  if  paid  to  the  promisor 
himself. 

In  what  does  the  claim  of  the  second  on  the  first  indorser  differ  from 
that  of  the  holder  on  the  second  indorser?  Neither  has  paid  value  to 
his  immediate  indorser  ;  but  the  holder  has  paid  value  to  the  maker  on 
the  credit  of  all  the  names  to  the  instrument.  The  second  indorser, 
if  he  takes  up  the  note,  has  paid  value  to  the  holder  in  virtue  of 
the  liability  created  b}r  his  indorsement.  If  this  liability  was  founded 
equally  on  the  credit  of  the  maker  and  of  the  first  indorser,  if  his 
undertaking  on  the  credit  of  both  subjects  him  to  the  loss  consequent 
on  the  paj'ment  of  the  note,  how  can  the  contract  between  him  and 
his  immediate  indorser  be  said  to  be  without  consideration  ? 

If  it  be  true,  as  we  think  it  is,  that  Magruder,  when  he  indorsed  the 
note  and  returned  it  to  the  maker  to  be  discounted,  made  himself 
responsible  for  its  amount  on  the  failure  of  the  maker,  if  this  responsi- 
bilit}'  was  then  complete,  how  can  it  be  diminished  by  the  circumstance 
that  M'Donald  became  a  subsequent  indorser?  How  can  the  legal 
liabilit}*  of  a  first  indorser  to  the  second,  who  has  been  compelled  to 


490  m'donald  v.  magruder.  [chap,  hi 

take  up  the  note,  be  exchanged  otherwise  than  b}r  an  express  or  implied 
contract  between  the  parties? 

This  question  has  arisen  and  been  decided  in  the  courts  of  several 
States.  Wood  v.  Repold  *  was  a  bill  drawn  by  A.  Brown,  Jr.,  at  Balti- 
more, on  Messrs.  Goold  &  Son,  of  New  York,  in  favor  of  G.  Wood  & 
Co.,  and  indorsed  by  G.  Wood  &  Co.,  and  afterwards  by  Repold,  the 
plaintiff.  The  bill  was  drawn  and  indorsed  for  the  purpose  of  raising 
monev  for  the  drawer,  and  was  discounted  at  the  bank  of  Baltimore. 
On  being  protested  for  non-payment,  it  was  taken  up  by  Repold,  and 
this  suit  brought  against  the  first  indorser.  Payment  was  resisted 
because  the  indorsement  was  without  consideration,  for  the  accommo- 
dation of  the  drawer ;  but  the  Court  sustained  the  action.  The  same 
question  arose  in  Brown  v.  Mott,2  on  a  promissory  note,  and  was  de- 
cided in  the  same  manner.  In  that  case  the  Court  said,  that  if  he  had 
taken  it  up  at  a  reduced  price,  it  would  seem  that  he  could  only  recover 
the  amount  paid.  Undoubtedly  if  M'Donald  had  been  compelled  to 
pay  a  moiety  of  this  note,  he  could  have  recovered  only  that  moiety 
from  Magruder. 

The  case  of  Douglass  v.  Waddle 3  was  determined  differently.  This 
case  was  undoubtedly  decided  on  general  principles ;  but  the  custom 
of  the  country  and  a  statute  of  the  State  are  referred  to  by  the  Court 
as  entitled  to  considerable  influence.  The  weight  of  authority  as  well 
as  of  usage  is,  we  think,  in  favor  of  the  liability  of  the  first  indorser. 

The  claim  of  Magruder  has  also  been  maintained  on  the  principle 
that  the}'  are  co-sureties,  and  that  he  who  has  paid  the  whole  note  may 
demand  contribution  from  the  other. 

The  principle  is  unquestionably  sound  if  the  case  can  be  brought 
within  it.  Co-sureties  are  bound  to  contribute  equally  to  the  debt  they 
have  jointly  undertaken  to  pay  ;  but  the  undertaking  must  be  joint,  not 
separate  and  successive.  Magruder  and  M'Donald  might  have  become 
joint  indorsers.  Their  promise  might  have  been  a  joint  promise.  In 
that  event  each  would  have  been  liable  to  the  other  for  a  moiety.  But 
their  promise  is  not  joint.  They  have  indorsed  separately  and  succes- 
sively, in  the  usual  mode.  No  contract,  no  communication,  has  taken 
place  between  them  which  might  vary  the  legal  liabilities  these  indorse- 
ments are  known  to  create.  Those  legal  liabilities,  therefore,  remain  in 
full  force. 

Upon  this  question  of  contribution  the  counsel  for  the  defendants  in 
error  rely  on  two  cases.  The  first,  Cowell  v.  Edwards,  was  a  suit  by 
one  surety  on  a  bond  against  his  co-surety  for  contribution.  It  was 
intimated  by  the  Court  that  each  surety  was  liable  for  his  aliquot  part, 
but  not  liable  at  law  to  any  contribution  on  account  of  the  insolvency 
of  some  of  the  sureties.  The  party  who  had  paid  more  than  his  just 
proportion  of  the  debt  could  obtain  relief  in  equity  only. 

The  second  case,  Sir  Edward  Deering  v.  The  Earl  of  Winchelsea, 
Sir  John  Rous,  and  the  Attorney  General,  was  a  suit  in  Chancery,  in 

1  3  Harris  &  Johns.  125.  2  7  Johns.  361.  3  1  Hammond,  413. 


SECT.  I.]  M'DONALD   V.    MAGRUDER.  491 

the  Exchequer.  Thomas  Deering  had  been  appointed  receiver  of  fines, 
&c,  and  had  given  three  bonds  conditioned  for  faithful  accounting,  &c. 
In  one  of  these  the  plaintiff  was  surety,  in  another.  Lord  Winchelsea, 
and  in  the  third,  Sir  John  Rous.  Judgment  was  obtained  on  the  bond 
in  which  the  plaintiff  was  surety,  and  this  suit  was" brought  against  the 
sureties  to  the  two  other  bonds  for  contribution.  It  was  resisted  on 
the  ground  that  there  was  no  contract  between  the  parties,  the}-  having 
entered  into  special  obligations.  The  Lord  Chief  Baron  was  disposed 
to  consider  the  right  to  contribution  as  founded  rather  on  the  equity 
of  the  parties  than  on  contract,  and  the  Court  decreed  contribution. 

In  this  case  the  parties  were  equally  bound,  were  equall}-  sureties  for 
the  same  purpose,  and  were  equalby  liable  for  the  same  debt.  Neither 
had  an}'  claim  upon  the  other  superior  to  what  that  other  had  on  him. 
The  parties  stood  in  the  same  relation,  not  only  to  the  crown,  to  whom 
they  were  all  responsible,  and  to  the  person  for  whom  they  were  sureties, 
but  to  each  other.  Under  these  circumstances  contribution  may  well 
be  decreed  ex  equali  jure.  But,  in  the  case  at  bar,  the  parties  do  not 
stand  in  the  same  relation  to  each  othel\  The~second  indorser  gives 
Ins  name  on~the  faith  ofthe  firstPindorser  as  well  as  of  the  maker.  /^k2LU2^- 
The  first  indorser  gives  his  name  on  the  faith  of  the  maker  only.  " 
Unquestionably  these  liabilities  may  be  changed  by  contract ;   btrt  no  """// 

contract  existing  between  these  parties,  it  is  not  a  case  to  which  the 
principle  of  contribution  applies. 

JNo  notice  has  been  taken  of  the  form  of  the  action.  It  is  admitted 
that  Magruder,  having  paid  the  whole  note,  may  recover  a  moiety  from 
M'Donald,  if  their  undertaking  is  to  be  considered  as  joint,  if  he,  as 
first  indorser,  is  not  responsible  to  M'Donald  for  any  part  of  it  which 
M'Donald  may  have  paid. 

The  judgment  is  to  be  reversed,  and  the  cause  remanded,  with 
directions  to  set  aside  the  verdict,  and  enter  judgment  as  on  a 
nonsuit.1 

1  McCarty  v.  Roots,  21  How.  432 ;  Robinson  v.  Kilbreth,  1  Bond,  592 ;  Gillespie  v. 
Campbell,  39  Fed.  R.  724 ;  Braham  v.  Ragland,  3  Stew.  247  ;  Sherwood  v.  Rhodes, 
5  Ala.  683  ;  Abercrombie  v.  Conner,  10  Ala.  293  ;  Moody  v.  Findley,  43  Ala.  167  ;  Pome- 
roy  v.  Clark,  1  MacArth.  606 ;  Kirschner  v.  Conklin,  40  Conn.  77 ;  Stiles  v.  Eastman, 
1  Ga.  205  ;  Brown  v.  Knower,  2  111.  469  ;  Hamilton  v.  Johnston,  82  111.  39  ;  Wilson  v. 
Stanton,  6  Blackf.  507  ;  Core  v.  Wilson,  40  Ind.  204  ;  Nurre  v.  Chittenden,  56  Ind.  463 ; 
Armstrong  v.  Harshman,  61  Ind.  52  ;  Hixon  v.  Reed,  2  Litt.  174  ;  Eldridge  v.  Duncan, 
1  B.  Mon.  101  ;  Scott  v.  Doneghy,  17  B.  Mon.  321 ;  Denton  v.  Lytle,  4  Bush,  597  ;  Stone 
v.  Vincent,  18  Mart.  517;  Knox  v.  Dixon,  4  La.  466;  Gasquet  v.  Oakey,  15  La.  537; 
Coolidge  v.  Wiggin,  62  Me.  568  ;  Wood  o.  Repold,  3  Har.  &  J.  125  ;  Rhinehart  v.  Schall, 
-69  Md.  352 ;  Sweet  v.  McAllister,  4  All.  353 ;  Woodward  v.  Severance,  7  All.  340 ; 
Shaw  v.  Knox,  98  Mass.  214;  Mulcare  v.  Welch,  160  Mass.  58;  Moore  v.  Cushing,  162 
Mass.  594;  Lewis  v.  Monahan  (Massachusetts,  1899),  53  N.  E.  R.  150;  McGurk  v. 
Huggett,  56  Mich.  187;  Harrah  v.  Doherty,  111  Mich.  175;  McNeilly  v.  Patchin,  23 
Mo.  40 ;  McCune  v.  Belt,  45  Mo.  174 ;  Stillwell  v.  How,  46  Mo.  589  ;  Kuntz  v.  Tempel, 
48  Mo.  71  ;  Hillegar  v.  Stephenson,  75  Mo.  118;  Johnson  v.  Crane,  16  N.  H.  68 ;  White- 
house  v.  Hanson,  42  N.  H.  9 ;  Laubach  v.  Pursell,  35  N.  J.  434  ;  Heintzelman  v.  Lamo 
roax,  3  Nev.  377 ;  Brown  v.  Mott,  7  Johns.  361  ;  Kelly  v.  Burroughs,  102  N.  Y.  93; 
Bradford  v.  Corry,  5  Barb.  461  ;  Moynihan  v.  McKeon,  16  N.  Y.  Misc.  R.  343 ;  Love  v. 


A 


EEYNOL]       «l   WHEELE] 


77 


*L    WHEELER.    «v 


[chap,  iil 


THE    COMMON 


'Pleas,"  J£Jne?^86^2  "^7. 


-OV*-" 


"7^ 


[Reported  in  10  Common  Bench  Reports,  New  Series,  561.] 

One  Cheeseman,  a  contractor  at  Brighton,  being  in  want  of  money, 
applied  to  Reynolds,  the  plaintiff,  to  accommodate  him  with  his  accept- 
ance for  £150,  and,  upon  his  consenting  to  do  so,  a  bill  for  that  amount 
was  drawn  by  Cheeseman  upon  and  accepted  by  Reynolds.  Cheese- 
man's  bankers  declining  to  discount  the  bill  without  having  another 
name  to  it,  Wheeler,  at  Cheeseman's  request,  indorsed  it.  On  its  ar- 
riving at  maturity,  Cheeseman  prevailed  upon  the  holders  to  renew  the 
bill;  and  the  new  bill  was  drawn  by  Reynolds  upon  Cheeseman,  and 
indorsed  by  Wheeler.  Reynolds  having  been  compelled  to  pay  this 
second  bill,  brought  this  action  against  Wheeler  to  recover  contribu- 

Wall,  1  Hawks,  313  ;  Smith  v.  Smith,  I  Dev.  Eq.  173;  Gomez  v.  Lazarus,  1  Dev.  Eq. 
205 ;  Dawson  v.  Pettway,  4  Dev.  &  B.  396  (but  see  Daniel  v.  McCrea,  2  Hawks,  590 , 
Kichards  v.  Simms,  1  Dev.  &  B.  48) ;  Williams  v.  Bosson,  1 1  Oh.  62 ;  Barnet  v.  Young, 
29  Oh.  St.  7  (but  see  Douglass  v.  Waddle,  1  Oh.  423)  ;  Cogswell  v.  Hayden,  5  Oreg. 
22;  Youngs  v.  Ball,  9  Watts,  139  ;  Wolf  v.  Hostetter,  182  Pa.  292  ;  Crompton  v.  Spen- 
cer (Rhode  Island,  1897),  38  A.  R.  1002;  Aiken  v.  Barkley,  2  Speers,  747;  Israel  v. 
Ayer,  2  S.  Ca.  n.  s.  344 ;  McNeill  v.  Elam,  Peck,  268 ;  Marr  v.  Johnson,  9  Yerg.  1 ; 
Briggs  v.  Boyd,  37  Vt.  534  (but  see  Pitkin  v.  Flanagan,  23  Vt.  160) ;  Farmers'  Bank  v. 
Van  Meter,  4  Rand,  553 ;  U.  S.  Bank  v.  Beirne,  1  Grat.  234 ;  Hogue  v.  Davis,  8  Grat.  4  ,• 
Willis  v.  Willis,  42  W.  Va.  522,  Accord. 

Successive  parties  to  a  bill  or  note  will  be  treated  as  co-sureties,  if  there  was  agree- 
ment to  that  effect.  Accordingly  in  the  following  cases  the  right  of  a  subsequent 
party  against  a  prior  party  was  limited  to  contribution.  Rhodes  v.  Sherrocl,  9  ATa. 
63 ;  Preston  v.  Gould,  64  Iowa,  44  ;  Denton  v.Tytle,  4  Bush,  597  ;  Easterly  v.  Barber, 
66  N.  Y.  433 ;  Fraley  v.  Starr,  16  N.  Y.  W.  D.  338 ;  Kelly  v.  Few,  18  Oh.  441 ;  Mont 
gomery  v.  Page,  29  Oreg.  320;  Ross  v.  Esty,  66  Pa.  481. 

In  the  following  cases  contribution  was  allowed  to  prior  party  against  a  subsequent 
party  to  the  instrument  Fhilhps  v.  Preston,  5  How.  278 ;  Drummond  v.  Yager,  10 
HI.  Ap.  380;  EdelenTT  White,  6  Bush,  408;  Smith  v.  Morrill,  54  Me.  48;  Weston  v. 
Chamberlin,  7  Cush.  404 ;  Clapp  ;;.  Rice,  13  Gray,  403,  406 ;  Farwell  v.  Ensign,  66 
Mich.  600;  Dunn  v.  Wade,  23  Mo.  207 ;  Paul  v.  Rider,  58  N.  H.  119 ;  Kiel  v.  Choate, 
92  Wis.  517.  But  see  contra,  Johnson  v.  Ramsay,  43  N.  J.  279;  Kling  v.  Kehoe,  58 
N.  J.  529. 

In  the  absence  of  an  agreement  tn  that,  effect,  n,  guarantor  is  not  a  co-surety  with  the 
surety  maker  of  a  note.  Hamilton  v.  Johnston,  82  111.  39  ;  Longley  v.  Griggs,  lOTick. 
l<2"Tr-Chapman  v.  Garber,  46  Neb.  16;  Keith  v.  Goodwin,  31  Vt.  268.  In  Phillips 
v.  Plato,  42  Hun,  189,  one  who  guaranteed  a  note  indorsed  by  the  payee  for  the  ac- 
commodation of  the  maker,  was  held  not  to  be  a  co-surety  with  such  indorser. 

An  aval,  or  anomalous  iudorser,  is  not,  in  the  absence  of  an  agreement,  a  co-surety 
with  a  surety  maker.  Hamilton  v.  Johnston,  82  111.  39  (aval-guarantor)  ;'Nurre  v. 
CJhittenden,  56  Ind.  463  (aval-indorser) ;  Houck  v.  Graham,  123  Ind.  277,  106  Ind.  195. 
But  see  Flint  v.  Day,  9  Vt.  345  (questioned  in  Keith  v.  Day,  31  Vt.  268,  276,  and  in 
Adams  v.  Flanagan,  36  Vt.  400,  409). 

Two  successive  avals,  or  anomalous  indorsers,  are  presumptively  co-sureties.  Ma- 
chado'w.  Fernandez,  74  Cal.  362 ;  Simmons  v.  Camp,  66  Ga.  726,  62  Ga.  73 ;  Golsen  w. 
Brand,  75  111.  148 ;  Shufelt  v.  Moore,  93  Mich.  564 ;  Logan  v.  Ogden,  101  Tenn.  392. 
But  see  contra,  Thompson  v.  Taylor,  12  R.  I.  109. — Ed. 


SECT.  I.]  EEYNOLDS   V.    WHEELER.  493 

tion,  and,  at  the  trial  before  Wightman,  J.,  at  the  last  assizes  for  Sus- 
sex, obtained  a  verdict  for  £75,  leave  being  reserved  to  the  defendant 
to  move  to  enter  a  verdict  for  him,  or  a  nonsuit,  if  the  Court  should  be 
of  opinion  that,  there  being  no  joint  liability  in  the  plaintiff  and  the 
defendant,  there  was  no  implied  liability  to  contribution. 

Jlovill,  Q.  C,  in  Easter  Term  last  obtained  a  rule  nisi  accordingly. 

Tompson  Chitty  now  showed  cause.1 

Erle,  C.  J.  I  am  of  opinion  that  this  rule  should  be  discharged. 
The  substance  of  the  transaction  is  this :  Cheeseman  was  in  want  of 
money,  and  applied  to  Reynolds  and  to  Wheeler  to  lend  him  their 
names  in  order  to  obtain  it.  If  the  money  had  been  raised  by  the  joint 
and  several  note  or  bond  of  the  three,  it  could  not  for  a  moment  have 
been  contended  that  Reynolds,  paying  the  whole,  would  not  have  been 
entitled  to  call  upon  Wheeler  for  contribution.  The  machinery  adopted 
here  was  the  drawing  of  a  bill  by  Cheeseman  upon  Reynolds,  and  the 
indorsement  of  it  by  Wheeler.  As  between  these  three  parties  and 
the  holders,  the  acceptor  would  be  primarily  liable,  and,  on  his  failure 
to  pay,  recourse  would  be  had  to  the  drawer  and  the  indorser.  But 
their  relation  to  the  holder  has  no  bearing  on  their  relation  to  one  an- 
other. Reyjiolds  and  Wheeler  each  became  surety  for  the  same  debt 
or  liability  of  their  principal,  Cheeseman.  Reynolds,  therefore,  clearly 
had  a  right  to  call  iTpOl'i  Wheeler  lor  contribution. 

'  Williams,  J.  1  am  of  the  same  opinion.  There  was  evidence  from 
which  a  promise  on  the  part  of  the  defendant  to  pay  to  the  plaintiff 
contribution  in  respect  of  what  he  might  have  been  called  upon  to  pay 
on  Cheeseman's  account  might  be  implied.  There  is  some  little  diffi- 
culty in  understanding  how  a  contract  for  contribution  can  be  implied 
under  such  circumstances  as  these.  Parke,  B.,  deals  with  that  matter 
in  the  case  of  Kemp  v.  Finden,2  where  he  says:  "In  Craythorne  v. 
Swinburne,  the  right  of  a  surety  to  call  upon  his  co-surety  for  contri- 
bution is  treated  by  Lord  Eldon  as  depending  rather  upon  a  principle 
of  equit3'  than  upon  contract,  unless  in  this  sense  that  a  contract  may 
be  inferred  upon  the  implied  knowledge  by  all  persons  of  that  princi- 
ple." That  has  been  followed  by  a  host  of  authorities,  which  have 
established  the  principle  that,  where  two  or  more  are  sureties  for  the 
debt  of  another,  and  one  of  them  has  been  called  upon  to  pay,  and  has 
paid,  more  than  his  share,  he  ma}T  sue  his  co-sureties  for  reimburse- 
ment to  the  extent  of  their  respective  proportions.  If  the  relation  of 
surety  subsists,  he  is  entitled  to  contribution,  and  we  are  entitled  to 
disregard  the  form  of  the  instrument.  The  recent  decisions  as  to 
suretyship  show  that,  not  only  in  actions  like  the  present,  but  also  in 
cases  where  the  question  is  whether  the  surety  has  been  discharged  or 
not,  the  form  of  the  instrument  may  be  wholly  disregarded. 

The  rest  of  the  Court  concurring.  Mule  discharged} 

1  The  arguments  of  counsel  are  omitted.  —  Ed.  2  12  M.  &  W.  421,  424. 

3  Macdonald  v.  Whitfield,  8  App.  Cas.  (P.  C.)  733,  27  Can.  S.  C.  94,  s.  c;  Clip- 
perton  v.  Spettigue,  15  Grant,  Ch.  269;  Cockburn  v.  Johnston,  15  Grant,  Ch.  577; 


494  CHURCH   V.    SWOPE.  [CHAP.  Ill, 


CHURCH  v.  SWOPE. 
In  the  Supreme  Court,  Ohio,  January  Term,  1882. 

[Reported  in  38  Ohio  State  Reports,  493.] 

Error  to  the  District  Court  of  Huron  Count}-. 

The  original  action  was  brought  by  the  firm  of  Swope  &  Hughes, 
against  William  W.  Bissell,  individually,  and  Charles  H.  Church, 
Joshua  B.  Bissell,  and  William  W.  Bissell,  composing  the  firm  of 
Church,  Bissell,  &  Co.,  to  recover  money  paid  by  the  plaintiffs  as 
drawees  of  a  bill  of  exchange,  at  the  request  of  the  defendants.  The 
following  is  a  copy  of  the  bill  of  exchange  :  — 

"$350.00.     No.  1092.  Church,  Bissell,  &  Co.,  Produce  Dealers. 

"New  London,  O.,  Dec.  8,  1874. 
"  Pay  to  the  order  of  M.  H.  Smith,  cashier,  three  hundred  and  fifty 
dollars,  value  received,  and  charge  to  account  of 

"W.  W.  Bissell. 
"  To  Swope  &  Hughes,  )  _t 

Buffalo,  N.  Y.  1  No  Protest 

Written  on  the  back  was,  "  Church,  Bissell,  &  Co. 

"M.  H.  Smith,  C'r." 

This  bill,  without  the  indorsement  of  "  M.  H.  Smith,  c'r,"  was  dis- 
counted at  the  Bank  of  New  London,  of  which  Smith  was  cashier,  and 
the  proceeds  were  placed  to  the  credit  of  Church,  Bissell,  &  Co.  By  an 
arrangement  between  Church,  Bissell,  &  Co.  and  W.  W.  Bissell,  the 
proceeds  were  used  by  the  former  for  the  latter's  benefit.  At  the  time 
of  drawing  the  bill  it  was  expected  that  the  drawees  would  be  put  it 
funds  to  pay  it  by  a  lot  of  sheep,  which  W.  W.  Bissell  was  about  to 
ship  to  them  for  sale.  Bissell  accompanied  the  sheep,  and  had  them 
taken  to  Albany,  New  York,  instead  of  stopping  with  them  at  Buffalo. 
After  having  sold  the  sheep  at  Albany,  he  returned  with  the  proceeds 
to  New  London,  and  paid  Church,  Bissell,  &  Co.,  as  he  testifies,  the 
money  to  be  remitted  to  Swope  &  Hughes,  to  refund  to  them  the 
amount  they  had  paid  in  honoring  the  bill,  which  remittance  they 
refused  to  make,  and  credited  the  amount  thus  paid  to  his  account. 

The  testimony  on  behalf  of  Church  is  to  the  effect  that  the  payment 
thus  made  was  only  $340.  Testimony  was  also  given,  on  behalf  of 
plaintiffs,  tending  to  show,  that  on  a  settlement  between  W.  W.  Bissell, 
and  Church,  Bissell,  &  Co.,  the  latter  recognized  their  liability  to  pay 
Swope  &  Hughes,  and  agreed  to  do  so. 

Michell  v.  Davis,  17  Grant,  Ch.  303  (semble) ;  McKelvey  v.  Davis,  17  Grant,  Ch.  355 
(but  see  Jauson  v.  Paxton,  23  Up.  Can.  C.  P.  439;  Fisken  v.  Meehan,  40  Up.  Can. 
Q.  B.  146) ;  Douglas  v.  Waddle,  1  Oh.  413  (as  to  indorsers  of  a  note.  But  see  contra, 
as  to  parties  to  a  bill  of  exchange,  Williams  v.  Bosson,  1 1  Oh.  62 ;  Barnet  v.  Young, 
29  Oh.  St.  7),  Accord.  —  Ed. 


SECT.  I.]  CHURCH   V.    SWOPE.  495 

There  was  no  evidence  of  prior  dealings  between  the  defendants  and 
plaintiffs,  nor  on  whose  credit,  or  request,  the  bill  was  paid  b}-  the 
plaintiffs,  except  as  is  to  be  implied  from  the  instrument  itself. 

The  case  was  tried  to  the  Court,  which  found  for  the  plaintiffs.  A 
motion  for  a  new  trial  was  made  and  overruled,  and  a  bill  of  excep- 
tions taken  embodying  the  evidence.  Judgment  was  rendered  for  the 
plaintiffs,  which,  on  error,  was  affirmed  by  the  District  Court.  It  is 
now  sought  to  reverse  these  judgments. 

G.  T.  Stewart,  for  plaintiffs  in  error. 

Franklin  Sawyer,  for  defendant  in  error. 

White,  J.  We  find  no  error  in  the  Court  rendering  judgment  for  the 
plaintiffs. 

Where  a  drawee  is  without  funds  of  the  drawer  of  a  bill  of  exchange, 
and  pays  the  bill,  he  is  entitled  to  be  reimbursed  by  the  drawer  for  the 
money  thus  paid  ;  and  if  there  are  several  drawers,  part  of  whom  are 
sureties  for  the  others,  all  are  alike  liable  to  reimburse  the  drawee.1 

The  principle  is  thus  stated  in  Nelson  v.  Richardson.2  The  surety 
drawer  of  a  bill  of  exchange  becomes  chargeable  with  every  obligation 
and  liability  which  the  law  imposes  upon  the  principal,  as  well  those  that 
are  implied  by  law  as  those  that  are  expressed  ;  and  this  is  so  in  regard 
to  all  the  parties,  the  drawee  or  acceptor  no  less  than  the  payee  indorsee 
or  holder  of  the  bill.  When  the  drawee  pays  the  bill  without  funds  of 
the  drawers,  the  relation  between  the  parties  is  reversed  ;  the  drawee, 
instead  of  being  a  debtor,  becomes  the  creditor  of  the  drawer  for  the 
money  advanced,  and  may  recover  the  same  of  such  surety  drawer,  not, 
indeed,  upon  the  bill  itself,  but  upon  his  implied  promise  to  reimburse 
the  drawee.  To  the  same  effect  are  Dickerson  v.  Turner,3  Swilley  v. 
Lyon.4 

The  question  in  the  present  case  is,  In  what  character  did  Church 
Bissell,  &  Co.  sign  the  bill?  They,  by  signing  their  name  upon  the 
bill  at  the  time  of  its  execution,  filled  up  as  it  was,  became  parties  to 
the  request  upon  the  drawees  to  pay  the  amount  named  in  the  bill  to 
Smith,  the  payee.  The  payee  can  only  regard  them  as  drawers  of  the 
bill,  chargeable  alike  with  W.  W.  Bissell  as  such  drawers.  By  signing 
on  the  back,  they  may  have  evinced,  as  the  fact  was,  that  they  were 
sureties  of  Bissell.  Nevertheless  they  were  drawers,  and,  being  draw- 
ers as  respects  the  payee,  they  must  also  be  drawers  as  respects  the 
drawees.  The  essential  element  of  a  drawer  is  that  he  is  an  original 
party  to  the  request  upon  the  drawee  to  pay  the  bill.  If  W.  W.  Bissell 
is  regarded  as  sole  drawer  of  the  bill,  Church,  Bissell,  &  Co.  would  be 
strangers  to  it,  and  could  not  be  indorsers  of  the  bill,  to  the  payee ; 

1  Swilley  v.  Lyon,  18  Ala.  552;  Dickerson  v.  Turner,  15  Ind.  4 ;  Nelson  v.  Richard 
gon,  4  Sneed,  307,  Accord. 

Turner  v.  Browder,  5  Bush,  216;    Griffith  v.  Reed,   21  Wend.   502;    Suydam  v. 
Westfall,   4   Hill,   211    (but   see   s.  c.  2    Den.    211);   Wing   v.  Terry,  5  Hill,  160 
Wright  v.  Garlinghouse,  26  N.  Y.  539,  Contra.  —  Ed. 

2  4  Sneed,  307.  8  15  Ind.  4. 

4  18  Ala.  552.     See,  also,  Story  on  Bills,  §  420,  Daniel  on  Neg.  Ins.  §  95. 


496  EX    PARTE   WACKERBATH.  [CHAP.  III. 

hence  their  true  relation  to  the  bill  must  be  that  of  drawers,  and  thus 
equally  bound  with  Bissell  to  furnish  funds  to  meet  it.  It  can  be  no 
more  said  that  the  drawees  would  have  paid  the  bill  without  the  names 
of  Church,  Bissell,  &  Co.  than  it  can  be  said  that  the  bank  would 
have  discounted  the  bill  without  their  names. 

The  fact  that  the  name  of  Church,  Bissell,  &  Co.  was  written  on  the 
back  of  the  bill  instead  of  on  the  face,  does  not  preclude  their  being 
regarded  as  drawers.     Penny  v.  Innes.1  Judgment  affirmed. 


Ex  parte  WACKERBATH. 
In  Chancery,  before  Lord   Loughborough,  C,  August  11,  1800. 

[Reported  in  5  Vesey,  574.] 

Keeckhoeffer  &  Co.,  of  Hamburgh,  drew  three  bills  for  £800, 
£700,  and  £600  upon  Cox  and  Heisch,  of  London,  payable  three 
months  after  date,  which  were  accepted,  and  became  due  upon  the 
25th  of  September,  1799.  Upon  the  13th  of  September  Cox  and 
Heisch  stopped  pa}Tment,  and  committed  acts  of  bankruptcy ;  and  on 
the  23d  of  September  a  commission  issued  against  them.  The  bills 
being  protested  by  the  holders  for  better  security,  Christin  and  Bo  wen, 
the  correspondents  of  the  drawers,  accepted  the  bills  for  the  honor  of 
the  drawers ;  and  when  due,  payment  being  refused  upon  their  being 
presented  at  the  bankrupts',  they  were  taken  up  by  Christin  and  Bowen. 
The  drawers  were  indebted  to  the  bankrupts  in  a  large  sum,  much  more 
than  the  amount  of  the  bills.  Christin  and  Bowen  were  holders  of  an- 
other bill  drawn  b}r  the  bankrupts  and  accepted  by  Schult.  Upon  the 
24th  of  June,  1800,  they  applied  to  prove  under  the  commission,  in- 
cluding £2,150  paid  on  taking  up  the  said  bills  for  the  honor  of  the 
drawer. 

The  assignees  resisted  the  claim  on  the  ground  that  they  ought  to 
resort  to  the  drawers  for  payment,  especially  as  the  drawers  could  not 
themselves  have  proved  the  bills  if  in  their  possession  ;  and,  also, 
that  if  the  bills  had  been  sent  back  to  the  drawers  at  the  time  they 
were  protested  for  better  security,  the}-  would  have  been  immediately 
taken  up  by  the  drawers,  who  did  not  stop  payment  till  the  28th  of 
September. 

The  proof  being  admitted  to  the  full  extent  of  the  claim,  the  petition 
was  presented  by  the  assignees,  praying  that  the  sum  of  £2,150  may 
be  expunged,  and  that  the  proof  may  stand  only  for  the  sum  of  £662 
9s.  8d. 

On  a  former  day  it  was  proposed  that  this  question  should  be  tried 
at  law,  but  the  Lord  Chancellor  said  he  would  consider  of  it. 

1  1  Cr.  M.  &  R.  439. 


SECT.  I.]  EX    PARTE    WACKKKBATH.  497 

Lord  Chancellor  [Loughborough].  I  have  talked  to  one  or  two 
persons  in  trade  upon  this,  who  answered  that  the  persons  accepting 
for  the  honor  of  the  drawer  have  a  right  to  come  upon  the  acceptor.  I 
put  the  case  that  the  drawer  had  no  effects  in  the  hands  of  the  acceptor. 
The  answer  is,  they  accept  for  the  honor  of  the  drawer ;  but  they  ac- 
cept an  accepted  bill.1  The  justice  of  the  case  is,  that,  if  there  were 
no  effects,  the}'  should  go,  in  the  first  place,  against  the  drawer ;  but 
they  should  not  be  altogether  without  reined}-.  Therefore,  I  propose 
to  order  that  the  proof  shall  stand  ;  but  they  shall  not  receive  a  divi- 
dend, except  upon  £662  9s.  8d.,  until  an  inquiry  has  been  had  whether 
the  drawers  had  effects  in  the  hands  of  the  bankrupts,  Cox  and  Ileisch, 
and  if  no  effects,  then  an  inquiry  whether  Christin  and  Bowen  had 
effects  of  the  drawers  at  the  time,  and  whether  any  have  since  come  to 
their  hands. 

1  In  re  Overend,  6  Eq.  344  (overruling  Ex  parte  Lambert,  13  Ves.  179),  Accord. 
Gazzam  v.  Armstrong,  3  Dana,  554  ;  McDowell  v.  Cork,  14  Miss.  420,  Contra.  —  Ed. 


Subrogation  between  co-obligors  equally  liable  as  between  themselves.  —  If  one  of  two 
or  more  obligors,  who  as  between  themselves  are  to  share  the  burden  equally,  pays  the 
creditor  the  full  amount  of  the  claim,  he  is  subrogated  to  the  creditor's  rights  and 
securities  so  far  as  may  be  necessary  to  reimburse  him  for  all  that  he  has  paid  beyond 
his  own  share.  Pratt  v.  Law,  9  Cranch,  456,  5  Wheat.  429,  s.  c. ;  Reber  v.  Gundy, 
13  Fed.  R.  53;  Dowdy  v.  Blake,  50  Ark.  205;  Sumner  v.  Rhodes,  14  Conn.  135; 
Simpson  v.  Gardiner,  97  111.  237  ;  Schoenewald  v.  Dieden,  8  111.  Ap.  389  ;  Hall  v.  Hall, 
34  Ind.  314;  Koboliska  v.  Swehla,  107  Iowa,  124;  Smith  v.  Latimer,  15  B.  Mon.  75; 
Whitehead's  Succ,  3  La.  An.  396 ;  Henderson  v.  McDuffie,  5  N.  H.  38 ;  Crafts  v.  Mott, 
4  N.  Y.  603  (semble);  Cornell  v.  Prescott,  2  Barb.  16;  Vincent  v.  Logsdon,  17  Oreg. 
284;  Gearhart  v.  Jordan,  11  Pa.  325;  Watson's  App.,  90  Pa.  426;  Ackerman's  App., 
106  Pa.  1  (overruling  contrary  intimations  in  earlier  Pennsylvania  cases.  But  see  In  re 
Hoge,  188  Pa.  527) ;  Haverford  v.  Fire  Ass'n,  180  Pa.  522;  Stokes  v.  Hodges,  11  Rich. 
Eq.  135  ;  Greenland  v.  Pettit,  87  Tenn.  467 ;  Stebbins  v.  Willard,  53  Vt.  665 ;  Tomp- 
kins  v.  Mitchell,  2  Rand.  428;  Wheatley  v.  Calhoun,  12  Leigh,  264;  Dobyns  v.  Raw- 
ley,  76  Va.  537. 

In  some  jurisdictions  the  right  of  subrogation  in  such  cases  has  been  denied  or 
questioned.  Bartlett  v.  McRae,  4  Ala.  688 ;  Hogan  v.  Reynolds,  21  Ala.  56  ;  Clark  v. 
Warren,  55  Ga.  575 ;  Laval  v.  Rowley,  17  Ind.  36 ;  Shields  v.  Moore,  84  Ind.  440  ;  Klip, 
pel  v.  Shields,  90  Ind.  81  ;  Montgomery  v.  Vickery,  110  Ind.  211 ;  Frank  v.  Traylor, 
130  Ind.  145;  Walsh  v.  McBride,  72  Md.  45  ;  Hammatt  v.  Wyman,  9  Mass.  138; 
Brackett  v.  Winslow,  17  Mass.  153  ;  Bryant  v.  Smith,  10  Cush.  169  ;  Adams  v.  Drake, 
11  Cush.  504;  Stanley  v.  Nutter,  16  N.  H.  22;  Harbeck  v.  Vanderbilt,  20  N.  Y.  395 
{semble) ;  Booth  v.  Farmers'  Bank,  74  N.  Y.  228  (semble) ;  Towe  v.  Fulton,  7  Jones 
(N.  C),  216;  Baldwin  v.  Merrill,  8  Humph.  132  ;  Maxwell  v.  Owen,  7  Coldw.  630.  But 
in  nearly  all  these  cases  it  was  a  question  of  relief  in  a  common-law  court. 

Subrogation  of  a  married  woman,  a  surety  as  to  her  separate  property. —  If  property 
held  to  the  separate  use  of  a  married  woman  is  pledged  to  the  creditor  of  the  principal 
and  applied  by  the  creditor  in  payment  of  the  debt  of  the  principal,  p he  is  subrogated 
to  the  creditor's  claim  against  the  principal.     Scheidler  v.  Weishlee,  16  Pa.  134.  —  Ed. 


32 


498  LAYER   v.   NELSON.  [CHAP.  IIL 

SECTION  II. 

Indemnity. 

FORD   v.    STOBRIDGE. 
In  Chancery,  before  Lord  Coventry,  1632. 

[Reported  in  Nelson,  Chancery,  24.] 

The  plaintiff  was  bound  as  surety  for  the  defendant,  and  the  debt 
was  recovered  against  him,  and  he,  having  no  counter-bond,  brought 
his  bill  to  recover  the  debt  and  damages  against  the  defendant, 
which  was  decreed  accordingly.      Quod  nota.  ^ 

^/^7  ^y77  ~^^  s^hi^wus^^-^^-  vu, 

In  the  King's  Bench,  Michaelmas  Term,  1662. 

fl  ,,      fi      sS  \   -  r  [Reported  in  1  Levinz,  71.1]  '        ^"""— — 

V"^  Assumpsit,  that  whereas  Sanders  was  indebted  to  divers  persons, 

and  the  plaintiff  obliged  for  him,  and  forced  to  pay  them;  the  de- 
fendant being  Sanders's  executor,  in  consideration  the  plaintiff  would 
forbear  to  sue  him  for  the  money,  promised  to  pay  him.  After  a 
verdict  for  the  plaintiff  on  the  issue  noi%  assumpsit,  it  was  moved  in 
arrest  of  judgment,  that  here  was  no  consideration ;  for  it  does  not 
appear  that  Sanders  had  promised  or  was  obliged  to 'save  him  harm- 
less; and  Borden  and  Thyn's  case  in  Yelverton,  40,  and  Smith  and 
John's  case,  Owen,  132,  were  cited.  But  by  the  court  there  was 
•  equity,  that  Sanders  should  save  the  plaintiff  harmless,  and  a  suit 
/fi~^^(  in  equity  is  a  suit,  or  perhaps  he  might  be~  charged  by  (a  writ)  de 
■ptegns  acquietandis,  and  therefore  they  held  the  consideration  good, 


•  jy^yi^4^  anc*   §ave  judgment   for  *~  the   plaintin,  except  cause  (shown  to  the 
*X  ^     nontrnrv^    nn    Mnnrlnv   iipyK    &n_ 

&1 \~& 


.^    contrary)  on  Monday  next,  &c 


-,*#>> 


LAYER   v.    NELSON. 
In  Chancery,  before  Lord  Jeffreys,  C,  May  3,   1687. 

[Reported  in  1   Vernon,  456.] 

Where  one  obligee  that  is  a  surety  is  sued  alone,  by  the  custom  of 
the  city  of  London  he  shall  make  his  co-sureties  contrib"ute~r-so  wh ere 
a  surety  pays  a  debt,  and  has  no  counter- bond,  by  the  custoTrt  of  the 
city  of  London  he  shall  maintain  an  action  against  the  principal. 

1  1  Sid.  89,  1  Keb.  346,  s.  c.  —  Ed. 


SECT.  II.] 


APPLETON  V.   BASCOM, 

3CKER  a.   POPE. 


499 


At  Nisi  Prius,  before  Lord  Mansfield,  C.  J.,  July  9,   1757. 


^Ua^ 


S~& 


[Reported  in  1  Setwyn,  Nisi  Prius  (\3th  ed.),  91.] 

This  was  an  action  brought  by  an  administrator  de  bonis  non  of  a      ^, 
surety,  who,  at  defendant's  request,  had  joined  with  another  friend  of  O-^- 
defendant's  in  giving  a  bond  for  the  payment  of  the  price  of  some     * 
goods   that   were   sold   to   defendant;    and  the  surety   having   been 
obliged  to  pay  the  money,   the  administrator  declared    against   the 
defendant  for  so  much  money  paid  to  his  use. 

Lord  Mansfield  directed  the  jury  to  find  for  the  plaintiff;  observ     . 
ing,  that  where  a  debtor  desires  another  person  to  be  bound  with  him   j    ^£j^> 
or  for  him,  and  the  surety  is  afterwards  obliged  to  pay  the  debt,  this  I    "  . — — 
is  a  sufficient  consideration  to  raise  a  promise  in  law,  and  to  charge  I 
the  principal  in  an  action  for  money  paid  to  his  use.     He  added,  that 
he  had  conferred  with  most  of  the  judges  upon  it,  and  they  agreed  in  C 

that  opinion.1  -»9---?  "X    _  .     &U+ 


tZyuL^L 


APPLETON  and  Another  v.    T.    BASCOM  and  Others. 
In  the  Supreme  Judicial  GSotjrt,  Massachusetts,  October  Term, 


^7  •  jMt  •  j^[Rn 


ed  in  3  Metcalf,  169.] 


Thrs  was  an  action  of  debt  on  a  bond  for  the  liberty  of  the  prison 
limits,  and  was  submitted  to  the  court  on  the  following  facts:  Tin> 
othy  Bascom,  one  of  the  defendants,  was  administrator  of  the  estate 
of  Clement  Bascom,  and  the  plaintiffs  were  his  sureties  on  his  admin- 
istration bond,  which  they  executed  with  him  on  the  3d  of  November, 
1835.  On  the  21st  of  April,  1840,  the  plaintiffs  jointly  paid  §230 
for  said  Timothy's  default,  which  they  were  bound  to  pay  by  reason 
of  having  been  his  sureties  on  said  bond. 

At  the  December  term,  1840,  of  the  Court  of  Common  Pleas,  the 
plaintiffs  recovered  judgment  against  said  Timothy,  in  an  action  for 

1  In  1821  Lord  Eldon  said :  "  Until  I  became  acquainted  with  that  case  [Toussaint  v. 
Martinnant  (1787),  2  T.  E.  105],  I  thought  the  remedy  must  be  in  equity."  Stirling  v. 
Forrester,  3  Bligh,  575,  590. 

If  the  surety  is  the  executor  of  the  principal  he  may  retain  from  the  principal's 
assets  the  allumut  paid  in  his  behalf,  and  thus  obtain  a  preference  orerTjther  creditors  ^" 
oi  the  deceAPed.     Boyd  v.  Rrooks,  34  Beav.  7  (overruling  Anon.,  Godb.  149,  4  Leon. 
236T! " 

If  the  surety,  at  the  time  of  entering  into  the  suretyship  obligation,  take  a  counter 
bond  of  indemnity  irom  the1  principal,  Ins  only  remedy  at  common  law  is  upon  the 
counter-hond.  The  express  contract  excludes  any  implied  promise  of  indemnity. 
Toussaint  v.  Martinnant,  2  T.  R.  100;  Roosevelt  v.  Mark,  6  Johns.  Ch.  266.  —  EdT 


500  APPLETON   V.    BASCOM.  [CHAP.  III. 

money  paid,  the  amount  which  they  had  paid,  as  aforesaid,  by  rea- 
son of  his  default.  In  that  action,  they  filed  a  specification  of  their 
claim,  setting  forth  that  they  demanded  $230  paid  by  them  on  account 
of  their  having  signed  a  bond  as  sureties  of  the  said  Timothy  as 
administrator  of  Clement  Bascom.  Execution  issued  on  said  judg- 
ment, and  said  Timothy  was  committed  to  the  jail  at  Lowell,  on  the 
23d  of  February,  1841,  and  on  the  same  day  he,  and  the  other  defend- 
ants, as  his  sureties,  executed  the  bond  on  which  the  present  action 
was  brought.  Immediately  after  the  execution  of  the  bond,  said 
Timothy  went  without  the  exterior  limits  of  the  city  of  Lowell, 
without  the  consent  of  the  plaintiffs,  and  without  being  discharged  by 
law.     He  afterwards  took  the  poor  debtors'  oath.1 

Wilde,  J.  This  is  an  action  of  debt  on  a  bond  given  for  the 
liberty  of  the  prison  limits,  and  the  question  is,  whether  the  principal 
in  the  bond,  after  the  giving  of  said  bond,  committed  an  escape  by 
going  without  the  prison  limits.  And  this  depends  on  ascertaining 
the  time  when  the  contract  was  made,  on  which  the  judgment  was 
recovered,  upon  which  the  execution  issued,  by  virtue  of  which  the 
said  principal  in  the  bond  was  committed  to  prison.  The  said  judg- 
ment was  recovered  in  an  action  for  money  paid  by  the  plaintiffs,  and 
which  they  were  obliged  to  pay,  for  said  principal,  by  reason  of  his 
breach  of  the  condition  of  an  administration  bond,  which  they  had 
executed  as  his  sureties. 

The  action  was  founded  on' an  implied  promise;  and  the  question 
is  reduced  to  this,  whether  the  promise  was  implied  by  law  at  the 
time  when  the  plaintiffs  became  sureties,  or  not  until  they  paid  the 
money,  when  their  right  of  action  against  the  defendant  first  accrued. 
And  we  think  it  is  well  settled,  that  when  a  surety  becomes  bound  for 
his  principal  and  at  his  request,  the  law  implies  a  promise  of  fndem- 
nity  by  the  principal  to  the  surety  to  repay  the  latter  all  the  money  he 
may  be  compelled  to  pay  the  creditor  in  consequence  of  his  assumed 
liability.  So  the  law  is  laid  down  in  Wood  v.  Leland ; 2  and  so  it 
was  decided  in  Gibbs  v.  Bryant,3  in  Toussaint  v.  Martinnant,4  in 
Howe  v.  Ward,5  and  in  many  other  cases.  In  Gibbs  v.  Bryant 
there  had  been  given  a  written  promise  of  indemnity,  and  the  court 
say  that  "the  written  contract  produced  contained  nothing  more  than 
what  the  law  would  imply. "  And  so  the  law  has  been  well  settled 
for  a  long  time,  although  in  ancient  times  no  action  at  law  could  be 
maintained  where  a  surety  had  paid  the  debt  of  his  principal ;  the  only 
remedy  being  to  be  had  in  a  court  of  equity.  But  very  many  equity 
principles  have  been  adopted  by  courts  of  law  in  modern  times, 
allowing  actions  to  be  maintained  on  implied  promises  by  the  party 
to  do  what  justice  and  equity  require  to  be  done,  where  there  is  no 
express  contract.     And  the  implied  promise  of  indemnity  in  the  pres- 

1  The  arguments  of  counsel  are  omitted.  —  Ed. 

2  1  Met.  389.  3  1  Pick.  121. 

*  2  T.  R.  104.  5  4  Greenl.  200. 


SECT.  II.] 


APPLETON  V.   BASCOM. 


501 


ent  case  must  be  considered  as  made  at  the  time  when  the  plaintiffs 
became  responsible  to  the  creditor  on  the  bond.  The  plaintiffs'  lia- 
bility was  the  consideration  of  the  principal's  implied  promise  of  in- 
demnity, and  the  promise  must  be  considered  as  made  at  the  time 
when  that  liability  was  assumed.  And  the  plaintiffs,  when  they  paid 
the  money,  might  have  declared  on  said  implied  promise,  or  for 
money  paid,  in  common  form,  as  the  declaration  was.  The  time  of 
making  the  contract  is  not  to  be  determined  by  the  form  of  the  action. 
The  other  objection  made  by  the  defendants'  counsel  is,  that  the 
law  does  not  imply  a  promise  to  the  plaintiffs  jointly;  and  the  case 
of  Gould  v.  Gould  :  seems  to  countenance  this  objection.  But  a  more 
reasonable  doctrine  is  maintained  in  other  cases.  Osborne  v.  Harper; 2 
Pearson  v.  Parker; 3  Jewett  v.  Cornforth.4  According  to  the  decisions 
in  these  cast's,  when  money  is  paid  by  two  or  more  sureties  jointly^ for 
the  principal,  or  when  the  money  paid  is  raised  on  their  joint  credit, 
their  proper  remedy  for  reimbursement  is  a  joint  action ; 5  but  if  they 
pay  separately,  then  their  proper  remedy  is  by  separate  action,  and 
a  joint  action  cannot  be  maintained.6  In  either  case,  however,  the 
action,  whether  joint  or  several,  is  founded  on  the  promise  of  indem- 
nity expressly  or  impliedly  made  at  the  time  when  the  sureties  first 
became  bound.  When  a  promise  is  implied  by  law,  such  a  promise 
is  implied  as  will  give  to  the  party  who  may  suffer  damage  by  the 
breach  of  it  a  suitable  and  proper  remedy.  We  consider,  therefore, 
the  promise  of  Bascom,  to  indemnify  his  sureties,  as  made  to  them 
jointly  and  severally;  and  as  it  appears  that  they  paid  the  money, 
which  they  became  liable  to  pay,  jointly,  they  were  well  entitled  to  a 
joint  action  against  him  for  reimbursement. 

Judgment  for  the  plaiiitiffs.7 

1  8  Cow.  168.  2  5  East,  225. 

3  3  N.  H.  366.  4  3  Greenl.  107. 

5  Osborne  v.  Harper,  5  East,  224  ;  Dussol  v.  Bruguiere,  50  Cal.  456 ;  Hull  v.  Myers, 
90  Ga.  674,  686  (semble);  Jewett  v.  Cornforth,  3  Me.  107;  Lombard  v.  Cobb,  14  Me. 
222,  224  (semble) ;  Clapp  v.  Rice,  15  Gray,  557  ;  Pearson  v.  Parker,  3  N.  H.  366  ;  Com- 
monw.  v.  Cox,  36  Pa.  442.  —  Accord. 

Kelby  v.  Skel,  5  Esp.  194;  Gould  v.  Gould,  8  Cow.  168,  contra. 

But  one  who  pays  jointly  with  others  may  sue  alone  for  contribution  from  a 
co-surety   who   has   not   paid.     Hi 
2B.  Mon.  JW8.  —  Ed. — 


[ull 


Myers,   90  GaT  674 ;    Atkinson  v.   Thaye?,    — - 


6  Graham  v.  Robertson,  2  T.  R.  282  ;  Brand  v.  Boulcott,  3  B.  &  P.  235  ;  Lombard  v. 
Cobb,  14  Me.  222;  Prescott  v.  Newell,  39  Vt.  82,  Accord. 

But  the  paving  sureties  may  join  as  plaintiffs  in  a  suit  in  equity  for  contribution 
against  those  who  have  not  paid  Smith  v.  Kumsey,  33  Mich.  183  •  Young  v.  Lyons, 
8  Gill,  lt>2;  Fletcher  v.  Jackson,  23  Vt.  581.— Ed.  " 

7  Rice  ».  Southgate,  16  Gray,  142;  Elwood  v.  Deifendorf,  5  Barb.  398,  Accord. 

Similarly  a  surety  is  creditor  of  principal  within  Statute  of  Elizabeth  as  to  convey- 
ances in  fraud  of  creditors  trom  tne  time  be  becomes  surety!  Keel  v.  Larkin,  72  Ala. 
493  ;  Uragg  v.  Tatterson,  8^  Ala.  '13$  ;  Choteau  v.  Jones,  11  HI.  300 ;  Hatfield  v.  Merod, 
82  HI.  113;  Sargent  v.  Salmond,  29  Me.  539;  Williams  v.  Banks,  11  Md.  198,  242; 
Pennington  v.  Seal,  49  Miss.  518,  525;  Loughridge  v.  Bowland,  52  Miss.  546;  Car- 
lisle v.  Rich,  8  N.  H.  44  (semble).     But  see  contra,  Williams  v.  Tipton,  5  Humph.  66. 

So,  also,  if  a  testator  is  a  co-surety  with  one  of  his  legatees,  and  the  latter  assign^- 


V 


*  £/©02  BARCLAY    AND    PROCTOR    V.    GOO0H.  [CHAR  III. 

v       BARCLAY  and   PROCTOR  v.    GOOCH. 
At  Nisi  Prius,  before  Lord  Kenyon,  C.  J.,  July  11,  1797. 

[Reported  in  2  Espinasse,  571.] 

This  was  an  action  of  assumpsit  brought  to  recover  a  sum  of  £50 
on  the  ground  of  its  being  money  paid  to  the  use  of  the  defendant. 

The  plaintiffs  were  brewers,  and  the  defendant  was  a  publican,  who 
rented  one  of  their  houses,  at  which  a  benefit  club  was  held ;  the 
members  of  the  club  distrusting  the  credit  of  Gooch  (the  then  land- 
lord), the  plaintiffs  became  his  security  for  the  amount  of  the 
subscription-money  contained  in  the  box ;  this  amounted  to  £50. 

Gooch  became  insolvent,  and  the  club  called  upon  the  plaintiffs 
for  the  money  as  his  security,  and  took  their  note  of  hand  for  it  pay- 
able with  interest. 

The  question  was,  Whether  this  was  a  payment  of  money  to  the  use 
of  the  defendant,  on  which  the  plaintiffs  could  recover  on  that  count 
of  the  declaration  ? 

Mingay,  for  the  defendant,  contended,  that  the  giving  a  note  for 
money  due  by  the  defendant  to  third  persons  was  not  sufficient  to 
maintain  an  action  for  money  paid,  laid  out,  and  expended  to  defend- 
ant's use. 

Lord  Kenyon  held,  that  the  club  having  consented  to  take  the  note 
from  the  plaintiffs,  it  was  as  payment  to  them  of  the  money  due  by 
the  defendant;  it  was  payment  of  money  to  his  use,  and  so  the  action 
was  maintainable. 

The  plaintiffs  accordingly  had  a  verdict. 

Erskine  and  Praed,  for  the  plaintiffs. 

Mingay,  for  the  defendant. 

In  the  next  term,  Mingay  moved  for  a  new  trial,  but  the  Court 
agreed  with  his  Lordship  and  refused  a  rule.1 

his  legacy  before  the  estate  of  the  testator  pays  the  creditor,  the  assignee  takes  subject 
to  the  right  of  the  estate  to  reduce  the  legacy  by  the  amount  due  from  the  legatee 
by  way  of  contribution,  for  the  equity  to  make  this  reduction  arose  contingently 
when  the  relation  of  suretyship  was  assumed  by  the  parties.  Baily's  Est.,  156  Pa. 
634.  — Ed. 

1  McKenna  v.  Haruell,  13  Ir.  L.  Rep.  206  (but  see  Fahey  v.  Frawley,  26 
L.  11.  Ir.  78,  84,  90,  91);  Pinkstou  v.  Taliaferro,  9  Ala.  547;  Owen  v.  McGehee, 
61  Ala.  440;  Knighton  v.  Curry,  62  Ala.  404;  Neale  v.  Newland,  4  Ark.  506; 
Jordan  v.  Adams,  7  Ark.  348;  Anthony  v.  Percifull,  8  Ark.  494;  Bone  v.  Torry, 
16  Ark.  83;  Stone  v.  Hammell,  83  Cal.  547  (semble) ;  Stanley  v.  McElrath,  86  Cal. 
449;  Minns  v.  McDowell,  4  Ga.  182;  Ralston  v.  Wood,  15  111.  159;  Keller  v.  Boat- 
man, 49  Ind.  104 ;  White  v.  Carlton,  52  Ind.  371  ;  Nixon  v.  Beard,  111  Ind.  137  ;  Reiter 
v.  Cumback,  1  Ind.  Ap.  41 ;  Sapp  v.  Aiken,  68  Iowa,  699 ;  Rizer  v.  Callen,  27  Kan. 
339 ;  Robertson  v.  Maxcey,  6  Dana,  101 ;  Atkinson  v.  Thayer,  2  B.  Mon.  348  ;  Stub- 
bins  v.  Mitchell,  82  Ky.  535;  Greene  v.  Anderson  (Kentucky,  1897),  43  S.  W.  195; 
Cornwall  v.  Gould,  4  Pick.  444 ;  Chandler  v.  Brainard,  14  Pick.  285  ;  Doolittle  v. 
Dwight,  2  Met.  561 ;  Hearne  v.  Keath,  63  Mo.  84  (semble) ;  Chapman  v.  Garber,  46  Neb. 


SECT.  II.]        BARCLAY  AND  PROCTOR  V.   GOOCH.  503 

i6  (sembk) ;  Pearson  v.  Parker,  3  N.  H.  366 ;  Witherby  v.  Mann,  11  Johns.  518 ;  Rod 
man  v.  Hcdden,  10  Wend.  498 ;  Howe  v.  Buffalo  Co.,  37  N.  Y.  297;  Craig  v.  Craig, 
5  Rawle,  91 ;  Morrison  v.  Berkey,  7  S.  &  R.  238, 246  (semble) ;  Peters  v.  Barnhill,  1  Hill 
(S.  C),  236;  Boulware  v.  Robinson,  8  Tex.  327  (semble) ;  Bell  v.  Boyd,  76  Tex.  133 
(semble),  Accord. 

Brisendine  v.  Martin,  1  Ired.  286 ;  Nowland  v.  Martin,  1  Ired.  307,  Contra. 

Barclay  v.  Gooch  was  cited  without  dissent  in  Rodgers  v.  Maw,  15  M.  &  W.  445,  449 ; 
but  see  Taylor  v.  Iliggins,  3  East,  169  ;  Maxwell  v.  Jameson,  2  B.  &  Al.  51. 

In  Brisendine  v.  Martin,  supra,  Ruffin,  C.  J.,  said:  — 

"  In  the  instances  of  bank  notes,  property,  or  even  passing  a  bill  or  note  made  by  a 
third  person  and  belonging  to  the  surety,  the  party  parts  from  a  thing  that  is  valuable 
in  itself.  But  when  he  gives  his  own  bond  or  note,  he  is,  in  fact,  nothing  out  of  pocket 
until  he  pays  it.  He  has  merely  given  a  new  security  for  the  debt,  and  may  never 
pay  it.  The  discharge  of  the  principal  from  the  original  demand  is  not  sufficient  to 
support  the  action;  for  that  applies  equally  to  a  voluntary  release  given  by  the  cred- 
itor at  the  instance  of  the  surety,  and  in  that  case  the  action  certainly  would  not  lie. 
Now,  there  are  many  ways  in  which  it  may  happen  that  the  present  plaintiff  may  es- 
cape from  paying  this  debt.  He  may  not  be  called  on  for  it  by  the  creditor ;  or  he 
may  become  insolvent ;  or  his  note  may  be  void,  as  founded  on  or  connected  with  an 
usurious  contract,  for  example :  so  that  it  is  quite  possible  he  may  evade  the  payment. 
While  that  is  so,  however  the  parties  may  have  treated  the  note  in  giving  and  re- 
ceiving it,  the  law  cannot  deem  it  equivalent  to  money.  The  plaintiff  is,  as  yet,  none 
the  poorer  by  the  defendant,  and  until  he  shall  be,  we  think  the  action  for  money  paid 
cannot  lie.  It  is  against  elementary  principles  that  it  should.  If,  indeed,  there  had 
been  with  us  a  series  of  adjudged  cases,  as  iu  New  York,  or  even  one  judgment  of  this 
Court,  we  should  probably  have  been  willing,  if  not  felt  ourselves  bound,  to  follow  the 
precedent.  But  we  do  not  know  of  any  such  case,  and  we  do  not  feel  authorized, 
against  principle,  to  make  the  precedent.  At, one  time  it  was  held  by  Lord  Kenyon, 
at  Nisi  Prius,  and,  it  would  seem,  also  by  the  Court  of  King's  Bench,  that  a  promis- 
sory note  of  the  party's  own,  if  taken  in  payment,  might  be  considered  as  money. 
Barclay  v.  Gooch,  2  Esp.  N.  P.  Rep.  571.  But  that  case  has  not  been  followed  ;  and 
whenever  it  has  been  since  mentioned,  it  has  been  disapproved.  It  was  questioned  and 
disregarded  in  Taylor  v.  Higgins,  3  East,  169.  In  Maxwell  v.  Jameson,  2  Barn.  & 
Alder.  51,  the  surety  took  up  the  note  of  his  principal  by  giving  his  own  bond  to  the 
creditor ;  but  he  was  not  allowed  to  recover  for  money  paid.  In  that  case  the  Court 
considered  Barclay  v.  Gooch  and  Taylor  v.  Higgins  inconsistent  with  each  other,  and 
therefore  followed  the  last,  especially  as  it  was  consistent  with  principle." 

A  surety  who  gives  his  own  bond,  or  non-negotiable  note,  in  satisfaction  of  the 
principal's  obligation,  cannot,  oeiore  payment  oi  tne  pond  or  non-negotiable  note,  v., 
charge  tne  principal  for  indemnity,  nor  the  co-surety  tor  contribution.  Taylor  v.  Hig"^" 
gins,  3  East,  169 ;  Maxwell  v.  Jameson,  2  B.  &  Al.  51 ;  Bennett  v.  Buchanan,  3  Ind. 
47  ;  Romine  v.  Romine,  59  Ind.  346  ;  Cummings  v.  Hackley,  8  Johns.  202  ;  Brisen- 
dine v.  Martin,  1  Ired.  286 ;  Morrison  v.  Berkey,  7  S.  &  R.  238  ;  Peters  v.  Barnhill, 
1  H111  (S.  C),  236,  237  (semble) ;  Boulware  v.  Robinson,  8  Tex.  327.  But  see  contra, 
Robertson  v.  Maxcey,  6  Dana,  101  ;  Burns  v.  Parish,  3  B.  Mon.  8.  ^^- 

If  land,  goods,  or  the  obligations  of  a  third  person  be  transferred  by  the  surety  or  £- 
taken  from  mm  adversely  in  satistaction  of  the  principal's  obligation,  the  surety  is  ""^^ 
allowed  to  recover  the  valtte  ot  the  property  so  appropriated  from  the  principal  or  a 
proportionate  snare  thereof  from  a  co-surety.  Rodgers  v.  Maw,  15  M.  &  W.  444; 
Hommell  v.  Uamewell,  5  Blackf.  5;  Crozier  v~7 Grayson,  4  J.  J.  Marsh.  514,  517  ;  Lord 
v.  Staples,  23  N.  H.  448  ;  Ainslie  v.  Wilson,  7  Cow.  662 ;  Bonney  v.  Seely,  2  Wend. 
481 ;  Hulett  v.  Soullard,  26  Vt.  295;  Fahey  v.  Frawley,  26  L.  R.  Ir.  78  (mortgage)  ; 
McVicar  v.  Royce,  17  Up.  Can.  Q.  B.  529.  In  Barber  v.  Gillsou,  18  Nev.  89,  a  surety 
transferring  to  the  creditor  a  note  which  he  held  against  the  principal  was  permitted 
So  charge  the  latter  with  the  face  value  of  the  note  irrespective  of  its  collectible 
Value.  —  Ed. 


fe~7    *~*^$f-*    ■  ^-^    **-  ?AENEfiV.   MOBBISOff. 


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In  the  SupremS^udicial  Court,  Mi 


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v.    RALPH    G.    MORRISON. 

LCHt^ETTs,  January  Term} 

1862. 

[Reported  in  3  Allen,  566.] 

Contract  for  contribution  of  one-half  of  the  amount  paid  by  the 
^~P  <_—  plaintiff   to   take   up  the   following   note:    "For  value  received,  we 
jointly  and  severally  promise  to  pay  to  Leonard  Morse  or  order  the 
sum  of  two  hundred  and  seventy-two  dollars,  two  years  after  date, 
without  interest.     Natick,  July  17,  1854.    Andrew  J.  Brown,  Joseph 
yU-  *  !*X  Kemp,  Joel  W.  Warner,  Ralph  G.  Morrison." 

^jr     £j-     ^        At  the  trial  in  the  Superior  Court  the  plaintiff   testified   that  he 

signed  the  note  as  a  surety,  at  the  request  of  Brown;  that  the  defend- 

h^_        J^*«—  ant  was  not  present,  and  he  never  had  any  conversation  with  the 

>  4  *  ^defendant  as  to  signing  the  note;  that  he  did  not  know  how  much 

money  Morse  gave  for  the  note,  but  he  paid  the  balance  due  upon  it, 

f     f    '  after  deducting   some    indorsements,    in    April,  1857.     Morse,    the 

payee,  testified  that  he  gave  Brown  and  Kemp  $200  for  the  note,  $72 

being  included  in  the  note  for  interest. 

Upon  these  facts,  the  case  was  reported  by  consent  for  the  deter- 
mination of  this  Court. 

J.  W.  Bacon,  for  the  plaintiff. 

T.  H.  Sweetser  and  E.  F.  Dewing,  for  the  defendant. 
Bigelow,  C.  J.  The  plaintiff  and  defendant  were  co-sureties 
on  the  note.  They  were  both  bound  by  the  same  contract  for  the 
payment  of  the  same  debt.  It  is  wholly  immaterial_that  they  signed 
at  different  times  and  without  any  agreement  to  become  joint  sure- 
ties. The  flu  hi  ot  contribution  does  not  arise  out  of  any  contract  or 
agreement  between  co-sureties  to  indemnify  each  other,  but  on  the 
principle  of  equity,  which  courts  of  law  will  enforce,  that  where  two 
persons  are  suojeci  to  a  common  burden,  it  shall  be  borne  equally~be- 
tween  them.  In  such  cases,  the  law  raises  an  implied  promise  from 
the  mutual  relation  of  the  parties.  Hence  it  follows  that  it  does 
not  make  any  difference  as  to  the  right  to  claim  contribution,  that 
each  of  the  sureties  was  ignorant  that  the  other  was  bound  with  him 
for  the  payment  of  the  same  debt.  The  liability  to  contribute  may 
even  exist,  although  the  sureties  are  bound  by  distinct  and  separate 
instruments.  It  is  sufficient  that  it  appears  that  they  were  under 
obligation  to  pay  the  same  debt  as  sureties  for  a  third  person.  The 
evidence  in  this  case  shows  that  the  debt  was  contracted  by  Brown 
and  Kemp,  who  received  the  money  lent  on  the  note,  and  that  Warner 
and  Morrison  were  jointly  bound  to  the  payee  as  sureties  for  the  loan. 
M'Gee  v.  Prouty ; a  Deering  v.  Winchelsea;  Burge  on  Suretyship,  384. 
As  the  plaintiff  has  paid  the  whole  amount  due  on  the  note,  the 

1  9  Met.  547. 


fi+1 


SECT.  II.]  WARNEE   V.    MORRISON.  505 

defendant  is  liable  to  contribute  one  moiety  of  that  sum.     It  is  no 

answer  to  this  claim  that  there  was  a  legal  defence  to  the  note.     It     „ 

does  not  appear  that  the  plaintiff  had  knowledge  that  there  was  any  *■"- 
usurious  and  corrupt  agreement  between  the  payee  of  the  note  and  >  / 
theprincipals.  AVithout such  knowledge,  he  could  make  no  defence. 
If  the  holder  of  the  note  had  sued  him,  he  could  not  have  success- 
fully resisted  his  liability  for  the  balance  due  upon  it,  unless  he  knew 
that  a  forfeiture  of  part  of  the  debt  had  been  incurred  by  usury. 
His  voluntary  payment  of  the  note  after  its  maturity  was  therefore 
in  compliance  with  the  terms  of  the  contract  into  which  he  had 
entered,  and  creates  a  valid  claim  for  contribution.  A  surety,  hav- 
ing no  defence,  is  bound  to  pay  the  debt.  He  is  not  obliged  to  incur 
the  costs  of  defending  an  action.  If  he  does,  he  cannot  recover  such 
costs  of  his  co-surety,  unless  authorized  by  him  to  make  a  defence 
to  the  suit.  Gillett  v.  Rippon;1  Knight  v.  Hughes;2  Bleaden  v. 
Charles.3  A  fortiori,  he  has  clone  nothing  to  forfeit  his  right  to 
claim  contribution,  when  he  has  paid  a  debt  to  which  he  knew  of  no 
defence.  If  the  defendant  was  aware  of  the  existence  of  any  ground 
on  which  the  payment  of  debt  could  be  successfully  resisted,  he  was  • 
bound  to  communicate  it  to  the  plaintiff,  and  give  him  notice  to  refuse 
to  pay  the  note  and  to  defend  any  action  which  might  be  brought  to 
enforce  it.  Having  omitted  to  do  so,  he  cannot  now  set  up  the  fact 
that  a  portion  of  the  debt  was  forfeited  under  the  statute  against 
usury  as  a  ground  of  defence  against  a  claim  for  contribution. 

Judgment  for  the  plaintiff.* 

i  Mood.  &  Malk.  406. 

2  Mood.  &  Malk.  247,  and  3  C.  &  P.  467.  3  7  B;ng   246> 

*  Carr  v.  Burns,  6  Ala.  780  (failure  of  consideration);  Hichborn  v.  Fletcher,  66 
Me.  209  (time  given  to  principal)  ;  Godfrey  v.  Hennelly,  17  Vict.  L.  R.  70  (failure 
to  give  notice  of  dishonor),  Accord. 

A  surety  who  paid  in  ignorance  of  his  principal's  defence  against  the  creditor  _.  / 

was  allowed  to  recover  indemnity  in__Gasquet  v.  Oakey,  19  La.  76  (failure  of  consid-      ^J^^^yi 
erafcion)  ;  Hyde  v.  Miller,  N.  Y.  Ap.  Div.  (November,  1899),  60  N.  Y.  Sup.  974  ;  Rus-  ' 

sell  v.  Failer,  1  Oh.  St.  327  (semble,  usury);  Stinson  v.  Brennan,  Cheves,  15  (failure 
of  consideration). 

If  a  surety  pays  with  knowledge  of  the  facts  barring  an  action  by  the  creditor  ^ — ■ 

against  the  principal  or  co-surety,  he  cannot  recover  indemnity  or  contribution.    White-  V^ 

head  n.'Peck,  1  Ga,  140  (usury) ;  Craven  v.  Freeman,  82  N.  Ca.  361  (surety  a  discharged        ^?  -u— ^ 

bankrupt,  co-surety  equitably  released  by  creditor) ;  Russell  v.  Failor,  1  Oh.  St.  327 

(usury) ;  Davis  v.  Bauer,  41  Oh.  St.  257  (alteration)  ;  Worthington  v.  Peck,  24  Ont.  R. 

535  (time  given  to  principal). 

Ford  v.  Keith,  1  Mass.  139  (usury),  coyitra,  will  hardly  be  followed.  But  see  Kerr's 
Est.,  17  Pa.  Co.  R.  193  (failure  to  give  notice  of  dishonor). 

If  the  surety's  liability  is  by  the  terms  of  the  instrument  made  conditional  upon  the 
principal's  default,  and  no  default  1ms  occurred,  the  surety  who  pays  the  creditoFhas 
no  right  to  recover  indemnity  of  the  principal.  Halsey  v.  Murray,  112  Ala?  185; 
Smith  v.  Staples,  49  Conn.  87  ;  Bancroft  v!~Abbott,  3  All.  524. 

A  surety  paid  a  judgment  debt  against  his  principal,  but  the  judgment  was  after- 
wards reversed.  He  was  not  allowed  to  recover  the  money  from  the  creditor,  but 
should  have  sought  reimbursement  from  the  principal.  Garr  v.  Martin,  20  N.  Y.  306. 
See  Keener,  Quasi-Cont.  419.  —  Ed. 


506  ,       BEAL   17.    BROWN. /^[CH 

_£_.       NATHANIEL   BEAL   v.    WILLIAM    BROW^. 


trot 


REM 


e  Judicial  Court,  SIassachusetts,  October   Term, 

1866. 

[Reported  in  13  J//en,  114.] 

Contract  upon  an  account  annexed.  The  defendant,  admitting 
the  correctness  of  the  plaintiff's  account,  claimed  in  set-off  a  larger 
sum  for  money  paid  for  the  plaintiff,  on  a  verbal  guaranty  of  a  debt 
from  the  plaintiff  to  B.  F.  Poland.1 

Bigelow,  C.  J.  There  was  direct  and  positive  evidence  that  the 
defendant,  at  the  plaintiff's  request,  entered  into  a  verbal  guaranty 
of  a  debt  due  from  the  plaintiff,  in  pursuance  of  which  the  former 
subsequently  paid  the  debt.  This  evidence,  if  believed,  would  have 
required  the  jury  to  find  that  the  money  charged  in  the  accouut  in 
set-off  was  paid  at  the  special  instance  and  request  of  the  plaintiff, 
and  that  the  item  of  money  so  paid  was  a  valid  set-off  to  the  plain- 
tiff's claim.  Of  the  credibility  of  this  evidence,  it  was  the  exclusive 
province  of  the  jury  to  judge;  and  it  was  erroneous  to  withdraw  it 
from  their  consideration. 

The  Statute  of  Frauds  cannot  avail  the  plaintiff  as  an  answer  to  the 
set-off.  Although  the  verbal  guaranty  was  within  it,  and  might  have 
been  avoided  if  the  defendant  had  seen  fit  to  rely  upon  the  statute 
when  called  on  by  the  plaintiff's  creditor  for  the  payment  of  the  debt, 
the  defendant  was  not  bound  to  set  it  up.  He  had  a  right  to  perform 
his  parol  undertaking.  It  was  a  contract  made  on  a  good  consid- 
eration, which  the  statute  does  not  declare  void  or  illegal,  but  only 
provides  that  no  action  shall  be  maintained  upon  it  against  thT 
guarantor^  But  this  enactment  is  exclusively  for  the  benefit  of  the 
guarantor,  and  is  designed  to  protect  him  from  the  danger  of  being 
made  liable  for  the  debts  of  another  by  false  testimony.     He  ma 


elect  to  fulfil  his  verbal  promise,  and,  if  he  does  so  and  pays  money 
in  pursuance  thereof,  the  principal  debtor  is  liable  for  the  amount 
as  for  money  paid  at  his  instance  and  request.  The  Statute  of  Frauds 
can  have  no  operation  as  between  the  original  debtor  and  his  guaran- 
toK  Cahill  v.  Bigelow.2  Nor  can  the  plaintiff  resist  the  defendant's 
claim  in  set-off  on  the  ground  that  he  forbade  the  payment  of  the 
debt  by  the  defendant.  Even  if  such  prohibition  could  be  allowed  to 
have  any  effect,  if  seasonably  made,  the  evidence  shows  that  it  was 
not  made  until  the  defendant  had  become  absolutely  bound  by  his 
written  promise  for  the  payment  of  the  debt. 

Exceptions  sustained* 


1  The  statement  of  the  case  is  omitted.  —  Ed. 
«  18  Pick.  369,  372. 


SECT.   II.]  TOM    V.    GOODRICH.  507 

TOM   v.    O.    GOODRICH    and   Others. 
In  the  Supreme  Court  of  Judicature,  New  York,  May,   1807. 

[Hi ported  in  2  Johnson,  213.] 

This  was  an  action  of  assumpsit.  The  declaration  contained  three 
counts:  1st.  For  money  paid,  laid  out,  and  expended  by  the  plaintiff 
for  the  use  of  O.  Barber,  O.  Goodrich,  A.  Hosford,  A.  Hosford,  Jr., 
and  G.  W.  Barber,  in  the  lifetime  of  the  deceased  partners.  2d.  For 
money  had  and  received  by  the  same  persons  to  the  use  of  the  plain- 
tiff. 3d.  For  money  lent  and  advanced.  The  defendant  pleaded  the 
general  issue,  and  gave  notice  that  he  should  offer  in  evidence  that, 
being  a  citizen  of  Connecticut,  and  residing  in  that  State,  he  was  dis- 
charged by  the  general  assembly  of  that  State  in  October,  1799,  from 
all  the  debts  owing  by  him  individually,  and  as  one  of  the  said 
copartnership. 

The  cause  was  tried  at  the  New  York  sittings,  the  19th  June,  1806, 
before  Mr.  Justice  Thompson. 

From  the  evidence  produced  at  the  trial  it  appeared  that  the  above- 
mentioned  partners  carried  on  business  in  New  York,  as  merchants, 
under  the  firm  of  George  W.  Barber  &  Co.,  from  June,  1796,  till 
some  time  in  the  year  1799.  During  that  period  Oliver  Barber  and 
George  W.  Barber  were  the  active  partners,  and  conducted  all  the 
business  in  the  city  of  New  York,  where  they  resided.  The  other 
partners  resided  in  Connecticut. 

On  the  8th  July,  the  2d  August,  and  the  22d  October,  1796,  the 
said  copartnership  imported  goods,  the  property  of  the  copartnership, 
into  the  city  of  New  York,  on  which  duties  were  payable  to  the 
United  States,  and  which  were  regularly  entered  by  George  W. 
Barber,  in  the  name  of  the  copartnership,  at  the  custom-house,  in 
New  York.  On  the  8th  July,  the  2d  August,  and  the  22d  October, 
1796,  George  W.  Barber  as  principal,  and  the  plaintiff  as  his  surety, 
executed  four  several  bonds  to  the  United  States  for  the  payment  of 
the  duties  on  the  goods  so  imported,  for  George  W.  Barber  &  Co. 
George  W.  Barber  died  in  January,  1799,  and  A.  Hosford,  the  7th 
April,  1804.  The  plaintiff,  as  surety,  paid  to  the  United  States,  in 
February,  1800,  five  hundred  and  one  dollars  and  seventy  cents,  and 
in  August,  1804,  three  thousand  three  hundred  and  thirty  dollars  and 
seventy-one  cents,  on  account  of  the  said  bonds. 

On  the  evidence  of  these  facts,  the  defendants'  counsel  moved  for 
a  nonsuit,  which  was  overruled  by  the  judge,  and  the  jury  found  a 
verdict  for  the  plaintiff. 

A  motion  was  made  on  behalf  of  the  defendants  to  set  aside  the 
verdict,  and  for  a  new  trial.1 

1  The  arguments  of  counsel  are  omitted.  —  Ei>. 


508  TOM  V.   GOODRICH.  [CHAP.  III. 

Tompkins,  J.  In  this  case  two  questions  arise  for  our  determina- 
tion. 1.  Whether  the  promise  in  the  declaration  ought  to  have  been 
stated  to  have  been  made  by  those  partners  only  who  were  living  at 
the  time  the  plaintiff  paid  the  custom-house  bond?  2.  Whether  the 
defendants  are  at  all  liable  to  the  plaintiff  in  this  action? 

There  can  be  little  doubt  that  no  right  of  action,  for  money  paid, 
laid  out,  and  expended,  arises  in  favor  of  a  surety,  against  the 
principal,  until  the  former  has  actually  paid  the  debt,  or  his  body 
has  been  taken  in  execution,  upon  a  judgment  therefor.  Chilton  v. 
Whiffin  and  Cromwell.1 

Before  the  plaintiff  paid  the  first  custom-house  bond  (at  which 
time,  if  ever,  his  right  of  action  against  the  partnership  accrued), 
George  W.  Barber  died;  and  previous  to  the  second  payment,  as 
surety  for  the  said  George  W.  Barber,  Aaron  Hosford  also  died.  The 
declaration  is  upon  the  assumpsit  of  all  the  partners  living  at  the 
time  the  bonds  were  executed.  In  the  case  of  Spalding  and  Another 
v.  Muse  and  Others,2  it  was  decided  that  in  an  action  for  money  had 
and  received,  to  the  use  of  the  plaintiffs,  by  three  defendants,  the 
former  could  not  give  evidence  of  money  had  and  received  to  their 
use  by  the  three  defendants  and  another  person  who  had  since  died. 
This  doctrine  proceeded  upon  the  undeniable  principle,  that  to  entitle 
himself  to  recover  upon  a  promise,  the  plaintiff  must  prove  a  promise, 
either  express  or  implied,  by  the  parties  who  are  alleged  in  the  decla- 
ration to  have  made  it.  The  same  doctrine  has  been  recognized  in 
this  Court,  in  the  case  of  Holmes  &  Drake  v.  De  Camp.3  There  can 
be  no  substantial  reason  for  applying  a  different  principle  in  the 
action  for  money  paid,  laid  out,  and  expended,  or  in  a  case  where  the 
promise  proved  is  by  three  persons  only,  when  the  promise  laid  in 
the  declaration  is  by  those  three  persons  and  others  whom  they  have 
survived.  A  plea  in  abatement  is  not  necessary,  where  the  contract 
is  stated  to  have  been  jointly  made  by  more  persons  than  are  proved, 
upon  the  trial,  to  have  assumed;  but  the  plaintiff,  in  such  case,  must 
fail  upon  the  general  issue  of  non  assumpsit  simul  cum. 

As  the  objection  to  the  plaintiff's  right  to  retain  the  verdict,  upon 
the  ground  of  a  variance  between  the  contract  proved  and  the  one 
stated  in  the  declaration,  might  be  obviated  by  an  amendment,  it 
becomes  necessary  to  decide  whether  the  defendants  are  at  all  liable 
to  the  plaintiff  for  the  money  paid  by  him  as  security  for  George  W. 
Barber,  one  of  the  partners.  In  my  opinion  they  are  not.  The  law 
does  not  imply  a  promise  by  all  the  persons  who  may  be  benefited,  in 
consequence  of  payment  by  a  surety,  but  only  by  the  person  whose 
debt  is  thereby  discharged.  In  this  case,  upon  the  acceptance  by 
the  custom-house  officer  of  the  bond  of  the  plaintiff  and  Barber,  the 
claim  of  the  United  States  for  the  duties  secured  thereby  became  con- 
fined to  that  bond,  and  the  debt,  if  any  previously  existed  in  favor 
of  the  United  States  against  all  the  partners  for  those  duties,  was 

i  3  Wilson,  13.  2  6  Term  Rep.  363.  s  1  Johns.  34. 


SECT.  II.]  BURNS   AND   McCONNOUGHY   V.    TARISH.  509 

extinguished.  The  previous  debt  to  the  United  States  then  became 
the  debt  of  Barber  only;  and  when  the  plaintiff  became  his  surety, 
the  promise  of  indemnity  and  the  promise  upon  the  payment  of  the 
money  were  implied  against  Barber  only. 

I  am,  therefore,  of  opinion,  that  the  motion  for  a  new  trial  ought 
to  be  granted;  but  that  liberty  be  given  to  the  plaintiff  to  amend  his 
declaration  upon  payment  of  the  costs  subsequent  to  the  declaration. 

Thompson,  J.,  was  of  the  same  opinion. 

Kent,  C.  J.  I  am  of  the  same  opinion,  and  would  only  add,  on 
the  merits  of  the  case,  that,  as  George  Barber  gave  the  bond  to  the 
United  States,  and  became  thereby  responsible  to  the  exclusion  of 
his  partners,  the  United  States  could  look  only  to  him.  The  plaintiff 
executed  the  bond  as  his  surety,  and  cannot  charge  any  other  person 
as  principal.  There  is  no  privity  between  the  parties  but  what  arises 
from  the  bond.  It  would  be  refining  upon  the  doctrine  of  implied 
assumpsits,  and  going  beyond  every  case,  to  consider  the  surety  in  a 
bond,  as  having,  by  that  act,  a  remedy  at  law  against  other  persons, 
for  whom  the  principal  in  the  bond  may  have  acted  as  trustee. 
George  Barber,  the  principal  here,  was,  as  it  is  stated,  a  surety  for 
the  debt  of  his  firm,  and  that  debt  might  perhaps  have  arisen  by  their 
being  sureties  for  other  persons  still  behind  them.  We  can  only 
look  to  the  principal  and  surety  in  the  bond  to  the  United  States, 
and  to  the  obligations  resulting  from  that  relation,  because  the  money 
was  paid  by  the  plaintiff  in  discharge  of  that  bond,  and  in  exonera- 
tion of  the  personal  representatives  of  George  Barber,  who  alone 
were  legally  responsible  for  that  debt.  It  may  be  that  George  Barber 
had  received  a  full  indemnity  from  his  partner  when  he  gave  the  bond. 
We  cannot,  in  this  action,  unravel  the  accounts  between  George 
Barber  and  his  partners;  and  to  push  the  implied  assumpsit  beyond 
the  party  to  the  bond  may  lead  to  great  difficulties  and  produce 
injustice.  New  trial  granted.1 


BURNS   &   McCONNOUGHY   v.   PARISH. 
In  the  Court  of  Appeals,  Kentucky,  September  9,   1842. 

[Reported  in  3  B.  Monroe,  8.] 

This  action  of  assumpsit  was  brought  by  Parish  against  Burns  & 
McConnoughy,  for  money  averred  to  have  been  paid  for  their  use  and 

1  Moore  v.  Stevens,  60  Miss.  809  ;  Krafts  v.  Creighton,  3  Rich.  273,  Accord. 

Durant  v.  Rogers,  87  111.  508;  Sheby  v.  Champlin,  4  Johns.  461,  468;  Donegan 
v.  Moran,  53  Hun,  21 ;  Wharton  v.  Woodburn,  4  Dev.  &  B.  507  ;  Purviance  v.  Suther- 
land, 2  Oh.  St.  478  (compare  Russell  v.  Annable,  109  Mass.  72) ;  Lowry  v.  Hardwick, 
4  Humph.  188;  Weaver  v.  Tapscott,  9  Leigh,  424,  Contra. 

See  Bowman  v.  Blodgett,  2  Met.  308,  311  ;  Walden  v.  Sherburne,  15  Johns.  409 
423;  Donegan  v.  Moran,  53  Hun,  21.  —  Ed. 


510  BUENS   AND    McCONNOUGHY   V.    PARISH.  [CHAP.  IIL 

at  their  request,  under  the  following  circumstances:  Burns  &  McCon- 
noughy  being  partners  in  a  mill  and  farm,  a  note  was  executed  by 
McConnoughy  individually,  with  Parish  as  his  surety,  for  the  hire 
of  a  negro  man,  for  the  year  1838,  for  the  use  of  the  firm  of  Burns  & 
McConnoughy;  the  said  negro  man  having  been,  at  the  date  of  the 
note,  in  the  joint  service  and  employment  of  the  firm,  and  having  so 
remained  throughout  the  year,  aud  the  hiring  having  been  with  the 
concurrence  of  Burns,  and,  so  far  as  appears,  without  any  obligation 
on  the  part  of  McConnoughy  to  furnish  a  laborer  for  the  firm.  On 
the  note  executed  by  McConnoughy  and  Parish  a  judgment  was 
obtained  against  both,  which  was  afterwards  replevied  by  Parish  as 
sole  principal,  with  a  security  of  his  own,  McConnoughy  being  no 
party  to  the  replevy  bond.  Parish  subsequently  paid  about  $75, 
more  than  half  of  the  debt,  and  the  creditor  gave  him  indulgence  on 
the  replevy  bond  for  the  residue.  Whereupon  he  brought  this  action 
and  obtained  a  judgment  against  Burns  &  McConnoughy,  for  an 
amount  including,  as  well  that  part  of  the  replevy  bond  which  re- 
mained unpaid,  as  the  $75  which  he  had  actually  paid. 

The  first  question  arising  on  these  facts  is,  whether  the  action  could 
be  maintained  against  both  the  defendants?  And  as  the  note  was 
given  by  one  of  the  partners  for  the  hire  of  a  negro,  who  was  hired 
for  the  benefit  of  the  firm,  with  the  knowledge  and  consent  of  both 
partners,  and  the  entire  consideration  of  the  note  went  to  the  benefit 
of  the  firm,  and  was  so  intended  by  both  of  its  members,  we  think 
it  entirely  clear,  that  although  Burns  was  not  bound  by  the  note,  and 
the  payment  may,  in  the  first  instance,  have  inured  to  the  benefit  of 
McConnoughy  alone,  it  inured  ultimately  and  actually  to  the  benefit  of 
the  firm,  and  that  being  made  by  Parish  as  the  security  of  one  of  the 
partners,  and  therefore  at  his  implied  request,  it  was  made  virtually 
at  the  request  of  both  partners,  for  whose  benefit  it  operated,  and 
was  sufficient  to  raise  an  assumpsit  on  their  part  to  reimburse  the 
payment.1  Were  it  even  conceded  that  in  consequence  of  the  sepa- 
rate note  of  McCounoughy  having  been  taken  for  the  hire,  the  legal 
liability  of  Burns  for  that  debt  was  merged.  Still  we  are  not  pre- 
pared to  admit  that  if  Parish  knew  all  these  facts  at  the  time  of 
becoming  McConnoughy's  security,  he  might  not,  on  making  pay- 
ment, sue  both  partners  jointly,  on  the  ground  that  in  truth  and  sub- 
stance he  had  paid,  at  the  request  of  one,  for  that  which,  with  a 
concurrence  of  both,  had  been  acquired  and  used  for  their  joint  ben- 
efit. In  the  absence  of  any  proof  of  such  knowledge,  we  have  no 
doubt  of  his  right  to  maintain  the  action  against  both  as  jointly 
liable. 

1  Burns  v.  Parish,  3  B.  Mon.  8;  Hikes  v.  Crawford,  4  Bush,  19,  6  Bush,  441 ; 
Hopkins  v.  Thomas,  61  Mich.  389;  Garner  v.  Hutchius,  46  Mo.  399;  Allen  v.  Coit, 
6  Hill,  318;  Springs  v.  McCoy,  122  N.  Ca.  628;  McKee  v.  Hamilton,  33  Oh.  St.  7  (dis- 
tinguishing Peterson  v.  Roach,  32  Oh.  St.  374) ;  Hill  v.  Voorhies,  22  Pa.  68,  Accord. 

Smith  v.  Sherman,  2  Cranch,  C.  C.  651;  Dryer  v.  Sander,  48  Mo.  400;  Uhler  v 
Browning,  4  Dutch.  79,  Contra.  —  Ed. 


SECT.  II.] 


SIBLEY  V.   McALLASTER. 


511 


A  second  question  arising  on  the  facts  is,  whether  the  plaintiff  was 
entitled  to  recover  for  more  than  he  had  paid  in  money.  It  has  been 
heretofore  decided,  that  when  a  security,  against  whom  a  separate 
judgment  has  been  obtained,  replevies  and  thus  extinguishes  the 
judgment,  he  may  proceed  against  his  principal  as  if  he  had  actually 
paid  money.  And  as  by  the  creditor's  acceptance  of  the  separate 
replevy  bond  of  the  surety  in  this  case,  that  bond  operated  as  a  merger 
and  satisfaction  of  the  joint  judgment,  tbe  case  is  brought  within  the 
same  principle,  and  the  surety  was  entitled  to  recover  the  entire 
amount  of  the  replevy  bond. 

Wherefore,  as  the  opinion  of  the  Circuit  Court  in  giving  and  refus- 
ing instructions  were  accordant  with  the  principles  herein  asserted, 
the  judgment  is  affirmed. 

J.  Trimble,  for  plaintiffs. 

„        ^STEPHEN   SIBLEY  v.  HUGH   McALnAai^.^--- 
In  the  Superior  Court  of  Judicature,  NewHampshire,  ' 
Jb*+-*-kL.   <-xv      *-"■ "^-  ^December  Term,  1836.  ^f^    '   _/.   «■*£    ^-c^*- 

^jpi      \ReVorted  in  8  iptmUEfampsjure  R£por(^;3S9.}^   _^       {/ 


This  was  an  action  of  assumpsit,  for  $750  mone}-  paid,  laid  out,  and 
expended. 

The  cause  was  tried  at  February  Term,  1835,  on  the  general  issue, 
and  a  verdict  taken,  by  consent,  for  the  plaintiff,  subject  to  the  opinion 
of  the  Court  upon  the  following  case. 

Ebenezer  Lerned,  the  defendant's  testator,  on  the  25th  July,  1827, 
gave  to  the  Hopkinton  Acaderm-  his  note  of  hand  for  $500,  which  was 
signed  by  the  plaintiff  as  Lerned's  suretj-. 

Lerned  died  on  the  6th  October,  1831,  having  made  his  will  and 
appointed  the  defendant  executor.  The  will  was  duly  proved  and 
allowed,  and  the  defendant  took  upon  himself  the  burden  of  executing 
it,  on  the  25th  October,  in  the  same  year. 

In  April,  1832,  the  secretary  of  the  Hopkinton  Academy  spoke  of 
the  note  to  the  executor,  who  said  that  he  understood  there  was  such  a 
note. 

It  did  not  appear  that  the  note  was  exhibited  to  the  defendant  at 
any  time  within  two  years  after  the  will  was  proved  and  allowed. 

On  the  25th  March,  1834,  the  plaintiff  paid  the  note,  and  on  the  27th 
of  the  same  month  demanded  the  amount  thus  paid,  of  the  defendant. 

H.  Chase  and  I.  Bartlett,  for  the  plaintiff. 

J.  Harris,  for  the  defendant. 

Richardson,  C.  J.,  delivered  the  opinion  of  the  Court. 

Conceding,  for  the  present,  that  the  note  not  having  been  presented 
to  the  executor  within  two  years  after  the  grant  of  administration,  no 


512  SIBLEY    V.    McALLASTEK.  [CHAP.  III. 

action  could  have  been  maintained  against  him  upon  the  note,  we  shall 
proceed  to  consider  whether,  notwithstanding  this,  the  surety  still 
remained  liable? 

It  is  well  settled  that  a  discharge  of  the  principal  under  a  bankrupt 
_____Jaw_does  not  discharge  the  surety^  J^'lagg  v.  Tyler  ; *  Welsh  v.  Welsh  ;  3" 
^/^Martin  v.  Brecknell ; 3  The  London  Assurance  Company  v.  Buckle.4 

And  a  creditor  is  under  no  obligation  to  prove  his  debt  under  a  com- 
mission  of  bankruptcy  of  the  principal,  unless  the  surety  gives  to  the 
creditor  an  indemnity  for  the  expense.  4  Johns.  C.  K.  132  ;  10  Vesey, 
414  ;  6'  id.  734  ;  ll  Johns.  C.  R.  562. 

The  surety  is  the  person  who  trusts  the  principal,  and  it  is  his  busi- 
ness to  see  that  the  principal  pays.     A  creditor  is  in  no  case  bound  to 
■ — -^give  notice  to  the  surety  that  the  debt  is  not  paid.     Hunt  v.  Brigham  ; 5 
f    Sailly  v.  Elmore  ; 6  Wright  v.  Simpson  ; 7  King  v.  Baldwin. 

Such  being  the  general  rules  of  law,  it  is  very  apparent  that  if  the 
principal  die,  and  his  estate  be  administered  in  the  insolvent  course, 
the  creditor  is  under  no  obligation  to  present  his  claim  to  the  commis- 
sioners, and  procure  what  he  may  from  that  estate.  He  has  a  right, 
in  such  a  case,  to  look  to  the  surety  for  the  whole  amount. 

It  is  the  business  of  the  surety  to  procure  the  creditor  to  lay  his 
claim  before  the  commissioners,  or  to  pay  the  claim  and  then  lay  his 
own  claim  before  the  commissioners  for  the  money  he  may  have  paid 
to  the  creditor. 

In  England  and  New  York  a  surety  may,  upon  certain  terms,  com- 
pel a  creditor  to  proceed  against  the  principal.  The  law  is  otherwise 
here.  But  this  circumstance  is  immaterial  in  this  case.  In  this  State 
the  surety  may  pay  the  debt  when  he  pleases,  and  proceed  against  the 
principal  himself. 

We  are,  therefore,  of  opinion  that  although  no  action  could  have 
been  maintained  against  the  executor  upon  the  note  at  the  time  the 
plaintiff  paid  it,  still  the  plaintiff  remained  liable  upon  the  note,  and 
that  he  is  entitled  to  recover  in  this  case  whatever  he  paid  to  discharge 
himself  from  that  liability.  Judgment  on  the  verdict.6 

1  6  Mass.  R.  33.  2  4  M.  &  S.  334.  3  2  M.  &  S.  39. 

4  4  J.  B.  Moore,  153.  5  2  Pick.  585.  6  2  Paige's  R.  500. 

"'  6  Vesey,  734. 

8  McBoon  v.  Governor,  6  Port.  (Ala.)  32;  Hooks  v.  Branch  Bank,  8  Ala.  580; 
Sichel  v.  Carrillo,  42  Cal.  493  (semble) ;  Reid  v.  Flippen,  47  Ga.  273  (qualifying 
Turner  v.  McCarter,  42  Ga.  491);  Gieseke  v.  Johnson,  115  Ind.  308,  311 ;  Walker 
v.  Lathrop,  6  Iowa,  516;  Braught  v.  Griffith,  16  Iowa,  26,  33;  Godfrey  v.  Rice,  59 
Me.  308 ;  Hall  v.  Cresswell,  12  Gill  &  J.  36  ;  Bullock  v.  Campbell,  9  Gill,"  182  ;  Berns- 
back  v.  Reiner,  8  Minn.  59  ;  Scott  r.  Nichols,  27  Miss.  94  ;  Miller  v.  Woodward,  8  Mo. 
169;  Marshall  v.  Hudson,  9  Yerg.  57;  Brooks  v.  Brooks,  12  Heisk.  12  (semble); 
Beville  v.  Boyd,  16  Tex.  Civ.  App.  491,  495-496  (semble)  ;  Norton  v.  Hall,  41  Vt.  471, 
foAccord. 

On  the  same  principle  a  surety,  who  pays  before  his  own  liability  is  barred  by 

/7/*/^f       the  Statute  of  Limitations,  may  recover  contribution  from  a  co-surety  although"  the 

t  jHfedilor's  I'lalin  against  the  latter  was  barred  when  the  surety  paid.    "CawThorne  v. 

^-^""     /  Vv  eissinger,  b  Ala.  714,  716;  Broughton  v.  Robinson,  11  Ala.  922 ;  TTatterlin  v.  Spinks, 


SECT.  II.]  SIBLEY   V.    McALLASTER.  513 

16  Ala.  467;  Preslar  v.  Stalhvorth,  37  Ala.  402;  Williams  v.  Ewing,  31  Ark.  229; 
May  v.  Vann,  13  Fla.  553  ;  Crosby  v.  Wyatt,  23  Me.  156;  Hill  ?;.  Morse,  61  Me.  541  ; 
Wood  v.  Leland,  1  Met.  387  ;  Clapp  v.  Rice,  15  Gray,  557  (semble);  Burton  v.  Ruther- 
ford, 49  Mo.  255  (snuble)  ;  Crosby  v.  Wyatt,  10  N.  II.  318;  1'easlee  v.  Breed,  10  N.  11. 
489;  Boardman  v.  Page,  11  N.  II.  431;  Camp  v.  Bostwick,  20  Oh.  St.  337  (compare 
Williamson  v.  Rees,  15  I  >h.  572,  as  explained  in  17  Oil.  354)  ;  Martin  i-.Frantz,  127  Pa. 
3S9;  Knottsi>.  Butler,  10  Rich.  Eq.  143;  Maxey  v.  Carter,  10  Yerg.  521  ;  Reeves  v. 
Pulliam,  7  Baxt.  119,  9  Baxt.  153;  Glasscock  v.  Hamilton,  62  Tex.  143;  Farris  v 
Cockerell,  88  Tex.  428,  434  ;  Aldrich  v.  Aldrich,  56  Vt.  324. 

But  see  contra,  Slielton  v.  Farmer,  9  Baxt.  314 ;  Cochran  v.  Walker,  82  Ky.  220. 

The  doctrine  of  the  principal  case  is  recognized  in  the  following  cases,  in  which  it 

was  decided  that  the  Statute  of  Limitations  would  bar  the  surety's  right  of  indemnity 

after  the  lapse  of  the  statutory  period  subsequently  to  the  payment  by  the  surety  to  ^-"'-^* 
the  creditor.  Buell  v.  Burlinghain,  11  Colo.  164  ;  Hall  v.  Myers,  90  Ga.  674  ;  Sexton 
v.  Sexton,  35  Ind.  88  ;  Wilson  v.  Crawford,  47  Iowa,  469  ;  Preston  v.  Gould,  64  Iowa, 
44;  Hooper  v.  Hooper,  81  Md.  155  ;  Magee  v.  Leggett,  48  Miss.  139;  Conn  v.  Coburn, 
7  N.  H.  368;  Thompson  v.  Stevens,  2  N.  &  McC.  493  ;  Ponder  t\  Carter,  12  Ired.  242; 
Hammond  v.  Myers,  30  Tex.  375. 

Payment  before  maturity.  —  If  a  surety  pays  the  creditor  before  the  claim  is  due,.-his. 
payment  is  treated,  when  the  claim  matures,  as  a  payment  at  maturity.  Golsen  v. 
Brand775  111.  148  ;  Jackson  v.  Adamson,  7  Blackf.  597;  White  v.  Millet,  47  Ind.  385 ; 
Ross  v.  Menefee,  125  Ind.  432  ;  Tillotson  v.  Rose,  11  Met.  299  ;  Felton  v.  Bissell,  25 
Minn.  20  ;  Barber  v.  Gilson,  18  Nev.  89  ;  Armstrong  v.  Gilchrist,  2  Johns.  Cas.  424  ; 
Williams  v.  Williams,  5  Oh.  444  ;  Craig  v.  Craig,  5  Rawle,  91.  —  Ed. 


Whether  Principal  may  waive  benefit  of  Statute  of  Limitations  to 
prejudice  of  Surety.  —  In  Whitcomb  v.  Whiting,  2  Doug.  652,  it  was  decided 
that  one  of  two  or  more  co-obligors  might  revive  a  claim  upon  a  debt  barred  by  the 
Statute  of  Limitations,  not  only  against  himself,  but  also  against  his  fellows.  And  by 
this  doctrine  the  liability  of  a  surety  was  continued  or  revived  by  a  new  promise  or 
partial  payment  of  the  principal  co-obligor.  Burleigh  v.  Stott,  8  B.  &  C.  36  ;  Wyatt  v. 
Hodson,  8  Bing.  308  ;  Dowling  v.  Ford,  1 1  M.  &  W.  329.  But  the  authority  of  these 
decisions  was  destroyed  by  legislation,  so  that  now  a  promise  or  partial  payment  by 
one  co-iiliTTgc ,r  will  not,  in  England,  affect  the  operation  of  the  Statute  of  Limitations 
in  favor  ot  any  otner  co-oDligor.     Cockerill  v.  Sparkes,  1  II.  &  C.  699. 

Lord  Mansfield's  notion  that  each  co-obligor  has  an  implied  authority  to  waive 
the  benefit  of  the  Statute  of  Limitations  for  his  fellows  was  followed  in  many  of  the 
early  decisions  in  this  country.  But  those  decisions  have  been  generally  superseded 
either  by  subsequent  cases  or  by  legislation,  so  that  the  prevailing  rule  here  is  the 
same  as  the  modern  English  rule.  Miller  v.  Miller,  McArth.  &  Mack.  109  ;  Kallenbach 
v.  Dickinson,  100  111.  427  ;  Bottles  v.  Miller,  112  Ind.  584;  Mozingo  v.  Ross,  150  Ind. 
688 ;  Steele  v.  Souder,  20  Kan.  39  ;  Davis  v.  Clark,  58  Kan.  454  ;  Quinby  v.  Putnam, 
28  Me.  419  (statutory) ;  Peirce  v.  Tobey,  5  Met.  168  (statutory) ;  Mainzinger  v.  Mohr, 
41  Mich.  685;  Willoughby  v.  Irish,  35  Minn.  63;  Pfenninger  v.  Kokesch,  68  Minn. 
81 ;  Exeter  Bank  v.  Sullivan,  6  N.  H.  124;  Whipple  v.  Stevens,  22  N.  H.  219;  Shoe- 
maker v.  Benedict,  11  N.  Y.  176  ;  Winchell  v.  Hicks,  18  N.  Y.  558  ;  McMullen  v.  Raf- 
fertv,  89  N.  Y.  456  ;  Hance  v.  Hair,  25  Oh.  St.  349;  Coleman  v.  Fobes,  22  Pa.  156; 
Walters  v.  Craft,  23  S.  Ca.  578 ;  Carlton  v.  Ludlow  Mill,  27  Vt.  496  (statutory) ;  Nat. 
Bank  v.  Delavan,  53  Wis.  31  (statutory);  Coleman  v.  Ward,  85  Wis.  328  (statutory). 

But  in  a  few  jurisdictions  it  is  still  the  law  that  a  partial  payment  by  a  principal 
obligor,  made  before  the  full  statutory  period  has  elapsed,  will  set  the  statute  running 
afresh  from  that  time  as  to  the  surety  co-obligor.  Cross  v.  Allen,  141  U.  S.  528  (sem- 
ble) ;  Clark  v.  Sigourney,  17  Conn.  511  ;  Cox  v.  Bailey,  9  Ga.  467;  Tillinghast  v. 
Nourse,  14  Ga.  641  ;  Rogers  v.  Gibbs,  24  La.  An.  467  (semble)  ;  Hooper  v.  Hooper,  81 
Md.  155  (semble)  ;  Block  v.  Dorman,  51  Mo.  31  ;  Corlies  v.  Fleming,  30  N.  J.  349; 
Copeland  v.  Collins,  122  N.  Ca.  619  ;  Woonsocket  Inst.  v.  Ballou,  16  R.  I.  355. 

If  on  the  other  hand  the  claim  is  once  barred,  a  subsequent  payment  by  the  print* 

33 


514  STONE    V.   HAMMELL.  [CHAP.  III. 


H.    P.    STONE,  Respondent,    v.   J.    HAMMELL,  Appellant. 
In  the  Supreme  Court,  California,  April  2,  1890. 

[Reported  in  83  California  Reports,  547.] 

McFarland,  J.1  After  further  consideration  upon  argument  on 
rehearing,  we  are  satisfied  that  the  judgment  in  this  case  should  be 
reversed. 

The  plaintiff  with  three  other  persons  —  Newell,  Hamilton,  and  Hay- 
man  —  were  sureties  on  a  promissory  note  made  try  defendant,  Hammell, 
to  one  Byron  Stevens  for  three  thousand  dollars,  dated  July  1,  1877, 
and  pa}able  one  year  after  date.  Plaintiff  claims  that  one  of  said  sure- 
ties, Newell,  paid  on  said  note  something  over  two  thousand  dollars, 
and  that  plaintiff  paid  to  Newell,  as  his  pro  rata  contributive  share,  one 
thousand  dollars  ;  and  this  action  was  brought  to  recover  said  one  thou- 
sand dollars  of  defendant,  the  principal  on  the  note. 

The  last  payment  made  by  Newell  on  the  note  to  Stevens,  as  averred 
and  found,  was  on  January  10,  1881  ;  and  as  his  cause  of  action  for  the 
payments  which  he  had  made  was  not  "founded  on  a  written  instru- 
ment," it  was  barred  in  two  years,  —  that  is,  on  January  10,  1883. 
Chipman  v.  Morrill.2  But  plaintiff  did  not  give  his  notes  to  Newell 
until  March  1,  1884.  At  that  time  defendant  was  under  no  legal  obli- 
gation to  any  one  which  plaintiff  could  discharge  b}'  giving  said  notes. 
The  original  note  given  to  Stevens  had  itself  been  long  since  outlawed. 
Therefore  by  giving  said  notes  plaintiff  acquired  no  cause  of  action 
against  the  defendant  herein. 

We  think,  also,  that  the  cause  of  action  averred  in  the  complaint 
would  have  been  barred  by  the  Statute  of  Limitations,  which  was  pleaded 

cipal  obligor  will  not,  even  in  these  jurisdictions,  revive  the  claim  against  the  surety 
co-obligor.  Bordell  v.  Peay,  20  Ark.  293;  Hooper  v.  Hooper,  81  Md.  155,  173;  Long 
v.  Miller,  93  N.  Ca.  227  ;  Goudy  v.  Gillam,  6  Rich.  28. 

The  early  English  doctrine  being  based  upon  implied  authority  of  parties  to  a  joint 
obligation,  a  partial  payment  of  a  joint  and  several  debt  by  the  principal  after  the 
death  of  the  surety  did  not  interrupt  the  running  of  the  Statute  of  Limitations  in 
favor  of  the  surety.  For  by  the  death  of  the  surety  they  ceased  to  be  joint  contrac- 
tors. The  executor  of  the  deceased  and  the  survivors  were  liable  only  as  several 
debtors.  Atkin  v.  Tredgold,  2  B.  &  C.  23 ;  Disborough  r.  Bidleman,  1  Zab.  677, 
Spencer,  275,  s.  c. ;  Lane  v.  Doty,  4  Barb.  530.  And  for  the  same  reason  a  partial 
payment  by  the  executor  of  the  principal  in  a  joint  and  several  debt  will  not  take  the 
obligation  out  of  the  statute  as  to  the  surviving  surety.  Slator  v.  Lawson,  1  B.  &  Ad- 
396  ;  Hathaway  v.  Haskell,  9  Pick.  42  ;  Smith  v.  Townsend,  9  Rich.  44. 

A  fortiori  a  partial  payment  by  a  principal  who  was  never  a  co-obligor  with  tli£ 
surety  cannot  continue  or  revive  the  liability  of  the  latter^^;_where_the  surety  is  an_ 
accommodation  indorser  nr  s\  guarantor.     Hunter  v.  Robertson,  30  Ga.  479  ;  Maddox 
v.  Duncan,  143  Mo.  613;  Meade~v.  Mcuowell,  5  Binn.  195.     But  see  contra,  Hooper 
v.  Hooper,  81  Md.  155,  173  (semble).  —  Ed. 

1  Only  so  much  of  the  opinion  as  relates  to  the  Statute  of  Limitations  is  given.  -— 
Ed. 

2  20  Cal.  136. 


SECT.  II.]  MACE   V.    WELLS.  515 

by  defendant,  even  though  plaintiff,  on  March  1,  1884,  had  actually 
paid  Newell  the  one  thousand  dollars  in  money.  Plaintiff  seeks  to  avoid 
the  running  of  the  statute  through  the  fact  that  within  a  month  after  the 
original  note  to  Stevens  matured  he  left  the  State,  and  resided  out  of 
the  State  for  several  years.  His  contention  is,  that  as  Newell's  cause 
of  action  against  him  for  contribution  would  not  be  barred  while  he 
remained  out  of  the  State,  therefore  his  cause  of  action  which  he  had 
against  defendant,  or  which  he  proposed  at  some  future  time  to  have  by 
paying  his  contributive  share  to  Newell,  would  not  be  barred  during  his 
absence  from  the  State,  though  such  absence  should  be  for  fifty  years. 
He  contends  that  by  returning  at  any  time,  and  subjecting  himself  to 
Newell's  claim  and  paying  it,  he  could  recover  his  part  of  it  against 
defendant,  although  in  the  hands  of  Newell  it  had  been  outlawed  for  a 
quarter  of  a  century.  We  do  not  think  that  the  law  of  limitation  of 
actions  contemplates  any  such  anomaly.  When  a  man  leaves  the  State, 
the  Statute  of  Limitations  does  not  run  during  his  absence  as  to  any  cause 
of  action  against  him  ;  but  his  absence  does  not  prevent  the  statute 
from  running  as  to  any  cause  of  action  in  his  favor.  At  any  time 
within  two  years  after  Newell  had  paid  the  original  note  plaintiff  could 
have  paid  his  contributive  share  to  Newell  and  maintained  an  action  for 
it  against  defendant.  But  he  could  not  wait  until  the  whole  of  Newell's 
cause  of  action  against  defendant  was  barred,  and  then  revive  one  half 
of  the  claim  by  coming  back  years  afterward  and  making  a  real  or  pre- 
tended payment  of  it  to  Newell.  The  whole  claim  was,  as  to  defendant, 
dead  ;  and  the  breath  of  life  could  not  be  blown  into  one  half  of  it  by 
any  such  legal  hocus-pocus. 

For  the  reasons  above  stated,  the  judgment  and  order  appealed  from 
are  reversed,  and  the  cause  remanded  for  such  further  proceedings  as 
respondent  may  be  advised  to  take. 


TIMOTHY   L.    MACE,   Plaintiff  in  Error,  v.  JARED  WELLS. 
"^t   *?* — 4.n*U J  '5^3  +~**Z    ^>  77    *-*&  -^^-j^a 

IiL  the  Supreme  «Cqurt,  United  St^te^/January  Term,   184T). 

-      2^0  -^  "S     \  Reported  tnAHoward.272.]      _  *<—       ^Z^ 

Mr.  Justice  McLean  delivered  the  opinion  of  the  GJourt.1  tf      7' 

This  case  is  brought  before  the  Court  by  a  writ  of  error  to  the  Supreme  2  -^  -C 
Court  of  the  State  of  Vermont,2  under  the  twenty-fifth  section  of  the    ^         ^ 
Judiciary  Act  of  1789.  ^-t^w*/ 

Wells,  as  the  surety  of  Mace,  becafae  bound  in  two  joint  and  several    if. 
notes,  both  of  which  were  due  before  the  passage  of  the  bankrupt  \siw^/^^yv< 
in  August,  1841.     In  July,  1841,  Wells  paid  one  of  these  notes.    Mace   ^ySC++ut 

1  Only  the  opinion  of  the  Court  is  given.  2  17  Vt.  503.  —  Ed. 


516  MACE   V.    WELLS.  [CHAP.  IIL 

was  discharged,  under  the  bankrupt  law,  on  the  22d  of  March,  1843. 
In  March,  1844,  Wells  paid  the  other  note,  and  then  sued  Mace  for  the 
recovery  of  the  money  on  both  notes.  The  facts  being  submitted  to  the 
county  court,  judgment  was  entered  for  the  plaintiff  for  the  amount  of 
the  note  last  paid  ;  which  judgment  was  affirmed  by  the  Supreme  Court 
■f  the  (State. 

The  fourth  section  of  the  bankrupt  law  provides  that  a  "discharge 
iid  certificate,  when  duly  granted,  shall  in  all  courts  of  justice  be  deemed 
a  full  and  complete  discharge  of  all  debts,  contracts,  and  other  engage- 
ments of  such  bankrupt  which  are  provable  under  this  act,"  &c. 

By  the  fifth  section  of  the  act  it  is  provided  that  'k  all  creditors  whose 
debts  are  not  due  and  payable  until  a  future  day,  all  annuitants,  holders 
of  bottomry  and  respondentia  bonds,  holders  of  policies  of  insurance, 
sureties,  indorsers,  bail,  or  other  persons  having  uncertain  or  contingent 
demands  against  such  bankrupt,  shall  be  permitted  to  come  in  and  prove 
such  debts  or  claims  under  this  act,  and  shall  have  a  right,  when  their 
debts  and  claims  become  absolute,  to  have  the  same  allowed  them,"  &c. 

Wells,  as  surety,  was  within  this  section,  and  might  have  proved  his 
demand  against  the  bankrupt.  He  had  not  paid  the  last  note,  but  he 
was  liable  to  pay  it,  as  surety,  and  that  gave  him  a  right  to  prove  the 
claim  under  the  fifth  section.  And  the  fourth  section  declares,  that  from 
all  such  demands  the  bankrupt  shall  be  discharged.  This  is  the  whole 
case.  It  seems  to  be  clear  of  doubt.  The  judgment  of  the  State  court 
is  reversed.1 

l  Liebke  v.  Thomas,  116  U.  S.  605  ;  In  re  Perkins,  10  TST.  B.  E.  529 ;  Kyle  v.  Bostick, 
10  Ala.  589  ;  Lipscomb  v.  Grace,  26  Ark.  231  (overruling  Payne  v.  Joyner,  6  Ark. 
241)  ;  Post  v.  Losey,  111  Ind.  74  (real  surety) ;  Noland  v.  Wayne,  31  La.  An.  401 ;  Fer- 
nald  v.  Clark,  84  Me.  234;  Hunt  v.  Taylor,  108  Mass.  508 ;  Fisher  v.  Tifft,  127  Mass. 
313  (explaining  Morton  v.  Richards,  13  Gray,  15);  Fairbanks  v.  Lambert,  137  Mass. 
373;  Crafts  v.  Mott,  4  N.  Y.  603;  Morse  v.  Hovey,  1  Saudf.  Ch.  187;  Tubbs  v.  Wil- 
liams, 9  Ired.  1  ;  Fulwood  v.  Bushfield,  14  Pa.  90  (overruling  earlier  Pennsylvania 
cases);  Stone  v.  Miller,  16  Pa.  450;  Fisher  v.  Tifft,  12  R.  I.  56;  Hardy  v.  Carter, 
8  Humph.  153,  Accord. 

Under  the  English  Bankruptcy  Acts  of  1 809  a.nd  1  S9.fi  the  certificate  of  discharge  in 
bankruptcy  of  a  principal  barred  the  surety's  right  of  indemnity  for  payment  of  claims 
winch  were  provable  (see  note  to  next  case,  infra,  518)  against  the  bankrupt  by  the  cred- 
itor. Ex  partd  Lflbhon,  17  Ves.  334;  Stedman  v.  Martinnant,  13  East,  427  ;  Wood  v 
Hodgson,  2  M.  &  Sel.  195  ;  Ex  parte  Young,  3  V.  &  B.  40,  2  Rose,  46,  s.  c. ;  Ex  parte 
Ogilby,  3  V.  &  B.  133 ;  Vansandau  v.  Corsbie,  3  B.  &  Al.  13,  affirming  s.  c.  8  Taunt. 
550;  Westcott  v.  Hodges,  5  B.  &  Al.  12  ;  Moody  v.  King,  2  B.  &  C.  558;  Ex  parte 
Carpenter,  Mont.  &  M.  1 ;  Bassett  v.  Dodgin,  9  Bing.  653  ;  Haigh  v.  Jackson,  3  M.  &  W. 
598 ;  Filbey  v.  Lawford,  3  M.  &  G.  468  (explaining  Yallop  v.  Ebers,  1  B.  &  Ad.  700) ; 
Jackson  v.  Magee,  3  Q.  B.  48 ;  and  the  rule  is  the  same  under  the  later  English  Bank* 
ruptcy  Acts.  —  Ed. 


SECT.  II.]  "  THAYER   V.   DANIELS.         .         ^  ,517 

*—£_  ^U-    '^r^~    -l^^-to  ^^^^  yiUyr^t^    ri^~u&  4 


WELCOME   A.   THAYER  v.   JOHN   M.    DANIELS.     /^~+^1    A 
In  the  Supreme  Judicial   Court,  Massachusetts,  October  Term,    v 

1872.  S&~& 

[Reported  in  110  Massachusetts  Reports,  345.]  —   »— 

^  / 

Contract.     The  declaration  alleged   that   the  defendant  as  prin- 
cipal, and  the  plaintiff  as  surety,  signed  a  note  for  $500,  dated  Sep-     J?  Jp~ 
tember  28,  1861,  and  payable  on  demand  to  Nathan  George  or  order, 
with  interest.  Jk^ttA^- 

At  the  trial  in  the  Superior  Court,  before  Bacon,  J.,  it  appeared 
that  the  plaintiff  executed  the  note  without  any  consideration,  and 
for  the  accommodation  of  the  defendant;  that  the  defendant  on 
February  11,  1862,  filed  his  petition  for  the  benefit  of  the  insolvent 
law ;  that  a  warrant  was  duly  issued ;  that  at  the  third  meeting  of  the 
creditors  George  proved  the  note  against  the  defendant's  estate;  that 
a  small  dividend  was  then  declared ;  that  afterwards,  in  August, 
1862,  the  defendant  was  duly  discharged  from  his  debts;  and 
that  on  May  1,  1865,  the  plaintiff  paid  to  George  on  the  note  $500, 
which  was  less  than  the  amount  then  due  upon  it,  and  took  it  up. 
The  defendant  asked  the  judge  to  rule  that  the  Statute  of  Limitations 
began  to  run  against  the  plaintiff's  cause  of  action  from  the  time  the 
note  fell  due ;  and  that  the  discharge  in  bankruptcy  was  a  bar  to  the 
action;  but  the  judge  refused  so  to  rule,  and  ruled  that  on  the  fore- 
going facts  the  plaintiff  was  entitled  to  recover.  The  jury  returned  a 
verdict  for  the  plaintiff,  and  the  defendant  alleged  exceptions.1 

P.  E.  Aldrich  (S.  A.  Burgess,  with  him),  for  the  defendant. 

T.  G.  Kent,  for  the  plaintiff. 

Ames,  J.     There  was  an  implied  promise,  on  the  part  of  the  de- 
fendant, as  principal,  to  indemnify  the  surety,  and  to  repay  to  him 
all  the  money  that  he  might  be  compelled,  in  consequence  of  his  lia-      ^    ^ 
bility  as  surety,  to  pay  to  the  creditor.     Until  the  surety  has  been  /A**^^ 
compelled  to  make  such  payment,  there  is  no  breach  of  this  implied  —  z>    sC 
promise.     The  cause  of  action  accrues  then  for  the  first  time,  and  '         t— C 
the  Statute  of  Limitations  then  begins  to  run.      Of  course  the  excep- 
tion  that  the  claim  of  the  plaintiff  is  barred  by  that  statute  cannot 
be  maintained.     Appleton  v.  Bascom;  Hall  v.  Thayer.2 

At  the  time  when  the  defendant  petitioned  for  the  benefit  of  the 
insolvent  law,  the  plaintiff's  cause  of  action  against  him  had  not 
accrued.  Nothing  was  due  at  that  time  from  the  insolvent  to  the 
plaintiff,  and  whether  anything  would  become  due  depended  upon 
the  contingency  of  his  being  compelled  to  pay,  and  actually  paying, 
the  note,  in  whole  or  in  part.     If  the  plaintiff  had  taken  up  the  note, 

}  The  statement  of  facts  is  slightly  curtailed.  —  Ed.  2  12  Met.  130. 


518  THAYER   V.    DANIELS.  [CHAP.  III. 

or  made  a  payment  upon  it,  at  any  time  before  the  making  of  the 
first  dividend,  his  claim  for  the  money  so  paid  would  have  been  prov- 
able against  the  estate  of  the  insolvent,  under  the  Gen.  Sts.  e.  118, 
§  25,  and  would  therefore  have  been  barred  by  the  discharge.  But 
it  appears  from  the  report  that  no  money  was  paid  by  the  plaintiff 
as  surety,  and  no  cause  of  action  accrued  to  him  against  the  insol- 
vent, until  long  after  the  first  and  only  dividend  was  paid  from  his 
estate. 

/The  case  of  Mace  v.  Wells,  which  is  relied  upon  by  the  defendant, 
arose  under  the  Bankrupt  Act  of  1841,  a  statute  which  differed  from 
our  insolvent  law,  in  allowing  sureties  and  other  parties  under  a  con- 
tingent liability  to  prove  such  contingent  liabilities  as  claims  upon 
the  estate,  and  "when  their  debts  and  claims  become  absolute,"  to 
\have  them  allowed. 

The  defendants  also  insist  that  the  debt  itself  was  provable  and  was 
therefore  discharged ;  but  this  is  not  true  as  to  the  contingent  claim 
of  the  surety.  He  had  no  claim  that  was  provable  under  the  statute, 
at  the  date  of  the  discharge. 

Two  other  cases  relied  upon  by  the  defendant,  Wood  v.  Dodgson * 
and  Vansandau  v.  Corsbie,2  were  decided  under  English  statutes 
which  in  express  terms  make  the  contingent  liability  of  a  surety  a 
provable  claim  against  the  bankrupt's  estate.  In  the  first  of  these 
cases  the  Court  say  that  the  statute  was  intended  to  benefit  the  sure- 
ties, by  allowing  them  to  share  in  the  dividend  before  the  estate  is 
all  gone,  and  before  the  actual  payment  of  their  liabilities.  Neither 
of  these  decisions  is  applicable  to  a  case  under  our  insolvent  laws. 

Exceptions  overruled.^ 

l  2  M.  &  S.  195.  2  8  Taunt.  550. 

3  Aiuslie  v.  Wilson,  7  Cow.  662  ;  Buel  v.  Gordon,  6  Johns.  126,  Accord. 

Under  the  English  Bankrupt  Acts  of  the  last  century  only  debts  due  at  time  of  the 
act  of  bankruptcy  were  provable.  A  surety  who  had  not  paid  the  creditor  at  that 
time  had,  therefore,  no  provable  claim  against  the  principal,  and  hence  the  bankrupt's 
certificate  did  not  bar  surety's  right  to  recover  reimbursement  from  principal  for  any 
money  paid  by  surety  to  creditor  after  the  act  of  bankruptcy.  Chilton  v.  Whiffin, 
3  Wils.  13 ;  Goddard  v.  Vanderheyden,  3  Wils.  262,  2  Bl.  794,  s.  c. ;  Young  v.  Hock- 
ley, 3  Wils.  346  ;  Vanderheyden  v.  De  Paiba,  3  Wils.  528 ;  Heskuysou  v.  Woodbridge, 
1  Doug.  166,  n.  (55)  ;  Taylor  v.  Mills,  Cowp.  525;  Alsop  v.  Price,  1  Doug.  160;  Paul 
v.  Jones,  1  T.  R.  599;  Ex  parte  Lloyd,  1  Rose,  4  ;  Wright  v.  Hunter,  1  East,  20.  Un- 
der Bankrupt  Act  49  Geo.  III.  c.  121,  a  surety  had  the  right  to  prove  directly  or 
indirectly  for  any  debt  of  the  bankrupt  to  the  creditor  which  was  in  existence  at  the 
time  of  commission  issued.  If  the  creditor's  claim  was  not  a  debt  when  the  principal 
became  bankrupt,  the  surety  had  no  provable  claim  against  the  principal,  and  there- 
fore might,  on  subsequently  paying  the  creditor,  recover  from  the  bankrupt  even  after 
his  discharge.  Page  v.  Russell,  2  M.  &  Sel.  551  ;  Welsh  v.  Welsh,  4  M.  &  Sel.  333  ; 
Hewes  v.  Mott,  6  Taunt.  329  ;  M'Dougal  v.  Paton,  8  Taunt.  584  ;  Taylor  v.  Young, 
3  B.  &  Al.  521  ;  Newington  v.  Keeys,  4  B.  &  Al.  493  ;  Watkins  v.  Flannagan,  1  Gl.  &  J. 
199  ;  Watkins  v.  Flannagan,  1  Bing.  413  (affirming  s.  c.  3  B.  &  Al.  186)  ;  Freeman  v. 
Burgess,  6  L.  J.  C.  P.  34.  Similarly  a  discharge  of  the  principal  debtor  under  the 
Lords  Act  did  not  relieve  him  from  liability  to  reimburse  a  surety  for  a  subsequent 
payment  to  the  creditor.     Macdonald  v.  Bovington,  4  T.  R.  825.  —  Ed. 


n  o  J^xcneffuer  lienor y 

aid  to   tile   defei 


use. 


Flea,   non 


in  Trinit^      (r'S 


/Z~~L 


£/* 


JtniP.siT   for   money~"paid 
assumpsit. 

At  the  trial,  before  Parke,  B.,  at  the  Middlesex  Sittings 
Term,  1849,  it  appeared  that  the  action  was  brought  to  recover  the 
sum  of  £25  paid  by  the  plaintiff  under  the  following  circumstances 
The  plaintiff  drew  and  indorsed  a  bill  of   exchange   for  £100   for 
the  defendant's  accommodation.     It  was  delivered  to  the  defendant, 
and  he  negotiated  it;  when  due  it  was  not  paid  by  the  defendant, 
but   the   plaintiff   paid  £25  to  the  holder,  in  part,  and  that  sum  he    £^$ 
sought  to  recover  from  the  defendant  in  this  form  of  action.     The 
bill,   not  being  taken  up,   remained  in  the  hands  of    the  holder,   in 
order  that  he  might  recover  the  remainder  from  the  defendant  and 
other   parties,  and    there   was    no  proof   of   due  presentment  to  the 
defendant,  nor  of  notice  of  dishonor.     The  learned  judge  directed  a 
verdict  for  the  plaintiff,  reserving  leave  for  the  defendant  to  move  to 
enter  a  nonsuit.1 

The  judgment  of  the  Court  was  now  delivered  by 

Parke,  B.  It  must  be  taken  for  the  purposes  of  this  suit,  that  the 
plaintiff  has  paid  the  money  without  being  compellable  at  law  to  do 
so.  Now,  to  make  a  person  liable  in  this  form  of  action  for  money 
paid  to  the  defendant's  use,  the  plaintiff  must  not  merely  show,  that 
the  money  paid  pro  tanto  discharges  the  liability  of  the  defendant  to 
the  holder  of  the  bill,  but  also  that  it  was  paid  at  the  request,  express 
or  implied,  of  the  defendant.  Here  the  money  paid  clearly  dis- 
charges pro  tanto  the  liability  of  the  defendant,  as  acceptor,  to  the 
holder;  and  it  is  also  clear,  that  there  was  no  express  request  from 
the  defendant  to  the  plaintiff  to.  pay  the  money. 

It  remains,  therefore,  to  be  seen  whether  there  was,  from  the  cir- 
cumstances, an  implied  request  for  him  to  do  so.  Now  there  is  no 
doubt,  that,  if  a  person  lends  his  name  to  another  for  his  accommo- 
dation, the  party  accommodated  undertakes  to  pay  the  bill  at  matur- 
ity, and  further,  to  indemnify  the  person  accommodating  him,  in 
case  that  person  is  compelled  to  pay  the  bill  for  him  (Byles  on  Bills, 
p.  94)  ;  and  this,  no  doubt,  is  an  implied  authority  to  such  person 
to  pay  it,  if  he  be  in  that  situation  that  he  may  be  compelled  by  law 
to  pay  the  bill,  though  the  holder  do  not  actually  compel  him  to  do 
so;  and  after  payment  he  may  sue  the  party  accommodated  for 
money  paid  on  his  account;  for  such  payment  is,  in  truth,  under  the 
implied  authority  given  by  the  contract  of  accommodation  between  the 

1  The  arguments  and  a  small  part  of  the  opinion  are  omitted.  —  En. 


r*t 


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t 


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S* 


520  SLEIGH   V.   SLEIGH.  [CHAP.  IIL 

parties;  and  whether  this  be  a  payment  of  the  whole  bill,  or  of  only 
a  part  of  it,  makes  no  difference.  But  the  defendant,  as  the  person 
accommodated,  has  not,  we  think,  undertaken  to  indemnify  the 
plaintiff  against  the  consequences  of  any  payment  which  the  plaintiff 
may  voluntarily  make  vVith  knowledge  of  the  circumstances.  Whether 
it  is  so  m  cases  in  which  the  legaT~obligation  has  been  discharged  by 
circumstances  unknown  to  him,  as,  for  instance,  by  the  creditor  hav- 
ing given  time  to  the  principal  debtor  without  his  knowledge,  it  is 
unnecessary  to  determine;  but  where  a  payment  is  made,  as  in  this 
case,  with  the  knowledge  onjthe  part  of  the  plaintiff  that  he  was  not 
bound  to  pay,  for  tne  want  of  a  notice  of  dishonor,  to  which  he  was 
unquestionably  entitled,  we  think  the  payment  is  not  made  with  the 
implied  authority  of  tne  detendant.  ItTis  very  true,  that,  if  the 
plaintiff  here  had  voluntarily  paid  the  whole  bill,  he  might  have  sued 
the  defendant;  but  this  is  on  another  principle,  viz.,  that  the  plaintiff 
becomes  the  holder  of  the  bill  after  it  is  paid  by  him ;  and  a  holder  so 
situated  may,  according  to  the  law  merchant,  sue  the  acceptor  upon 
the  bill  itself;  for  the  holder  may  always  waive  the  want  of  due  pre- 
sentment and  notice,  and  sue  the  acceptor,  who  is  not  discharged  by 
the  want  of  it,  but  not  a  collateral  party,  who  is  discharged  by  the 
same  laches.  But  the  holder  in  such  case  does  not  sue  him  as  for  the 
money  paid  to  his  use,  nor  is  a  request,  express,  or  implied,  in  such  a 
case  at  all  material  to  his  recovering  the  amount.  But  here  the  plain- 
tiff cannot  sue  on  the  bill;  for,  not  having  paid  it,  he  is  not  the 
holder;  and  ne  nas  on  these  tacts  only  paia  money  to  the  holder  vol- 
untarily, and  without  request,  express  or  implied,  from  the  defendant. 
We  are,  therefore,  of  opinion  that  the  defendant  is  entitled  to~a  rule 
absolute  to  enter  a  nonsuit.  Rule  absolute.1 

1  Stanley  v.  McElrath,  86  Cal.  449  ;  Houcktf.  Graham,  106  Tnd.  195  (alteratioii.had 
released  the  surety,  but  not  the  principal)  ;  McClatchie  v.  Durham,  44  Mich.  435 
(Statute  of  Limitations  had  run  in  favor  of  surety  maker,  but  not  in  favor  of  principal 
maKer) ;  Tmlway  o.  AntisTIel,  86  Mich.  82  (semble),  Accord. 

TSTsurety,  who  pays  a  claim  which  he  might  have  resisted  as  barred  by  the  Statute 
of  Limitations,  cannot  "charge  a  co-surety  for  contribution.  Dussol  ■y.Bruguiere,  50 
Cal.  4t)b,  4D9  ;  lviachado  v.  Fernandez,  74  Cal.  362,  363"7  Kimble  v.  Cummins,  3  Met. 
(Ky.)  327;  Hatchett  v.  Pegram,  21  La.  An.  722;  Godfrey  v.  Rice,  59  Me.  308,  309; 
Hooper  v.  Hooper,  81  Md.  155,  174;  Bamsback  v.  Reimer,  8  Minn.  59  (semble) ;  Single- 
ton v.  Townsend,  45  Mo.  379,  380  ;  Green  v.  Milbank,  56  How.  Pr.  382,  389  ;  Wheat- 
field  v.  Brush  Valley,  25  Pa.  112  ;  Cocke  v.  Hoffman,  5  Lea,  105 ;  Glasscock  v.  Smith, 
62  Tex.  143,  158  (semble);  Turner  v.  Thorn,  89  Va.  745. 

But  see  contra,  Jones  v.  Blanton,  6  Ired.  Eq.  115;  Bright  v.  Lennon,  83  N.  Ca.  183 
(but  compare  Reeves  v.  Bell,  2  Jones,  254,  and  Craven  v.  Freeman,  82  N.  Ca.  361,  362- 
363) ;  Mills  v.  Hyde,  19  Vt.  59  (but  see  Aldrich  v.  Aldrich,  56  Vt.  324,327).  In  Norton 
V.  Hall,  41  Vt.  471,  a  surety  paid  a  note  after  the  remedy  upon  it  was  barred  as  to  the 
principal,  and  would  have  been  barred  as  to  himself  but  for  an  agreement  between  the 
creditor  and  himself  extending  the  time  of  payment.  The  principal  was  compelled  to 
indemnify  the  surety.  In  Odlin  v.  Greenleaf,  3  N.  H.  270,  271,  it  was  left  an  open  ques- 
tion whether  a  surety  who  paid  a  note,  upon  which  all  rights  of  action  were  barred  by 
the  Statute  of  Limitations,  was  entitled  to  reimbursement  from  the  principal.  —  Ed. 


S.ECT.  II.]  AYMIS   V.   BURNS. 

A.YERS  ^nd  Another  v.    BURNS,    Administrate  -v 

^Pftt.      W^_     *-~-*L_    ^-i*~f~Ts^-  s^t~~~2*9    ^^U^      O-CS^-J 

In  the  Supreme,  Court,  Inbiak^November  Terbt^J.882. 

^      "vy^—^v*         rfT^^Zudinll Indiana Reporfs^^f/'    ft**      &'       £L~dfc 


From  the  Hendricks  Circuit  Court.  tj^-^)  £    +& 

C.  Foley,  for  appellants.  /  .^^^^^p 

L.  M.  Campbell  and  J.  T.  Burns,  for  appellee.  {/ 

Howk,  J.  This  was  a  suit  by  the  appellee,  administrator  of  the 
estate  of  Mary  Ayers,  deceased,  against  the  appellants,  Gardner 
Ayers,  an  infant,  and  Jonathan  H.  Johnson,  guardian  of  such  infant's 
person"  and  estate. 

Gardner  Ayers  being  under  indictment  for  the  murder  of  his  father, 
Mary  Ayers,  his  mother,  joined  with  him  in  the  execution  of  two 
notes,  for  $250  each,  to  his  attorneys  employed  to  defend  him.  The 
plaintiff,  as  administrator  of  Mary  Ayers,  was  obliged  to  pay  those 
notes,  and  now  seeks  to  recover  the  amount  paid  from  Gardner  Ayers 
and  from  the  assets  of  the  latter  in  the  hands  of  his  guardian.  On 
these  facts  the  Court  below  sustained  the  plaintiff's  claim.1 

We  are  of  the  opinion  that  the  facts  found  by  the  Court  did  not 
authorize  its  conclusions  of  law.     The  suit  is  founded  upon  an  im- 
plied contract  of  the  appellant  Ayers  to  repay  the  money  which  the 
administrator  of  his  surety  had  been  compelled  to  pay  on  his  promis-    /f^^J^ 
sory  notes.     Such  an  implied  contract,  if  it  existed,  was  not  binding,  y 
and  could  not  be  enforced" against  him  during  his  infancy.     Indeed,  it  / 

may  well  be  doubted  if  his  promissory  notes,  even  though  given  for 
necessaries,  could  have  been  enforced  against  him  during  infancy 
in  suits  thereon  by  the  payees  thereof.  In  Henderson  v.  Fox2  it 
was  said:  "The  rule  deducible  from  all  the  authorities  is,  that  the 
only  contract  binding  on  an  infant  is  the  implied  contract  for  neces- 
saries. Express  contracts,  as  by  bond  or  note,  are  not  as  such  bind- 
ing, and  cannot  be  enforced,  without  ratification,  even  if  given  for 
necessaries.  For  whether  the  articles  furnished  were,  in  the  particu- 
lar case,  necessaries,  is  a  question  of  law  to  be  determined  by  the 
Court.  And  if  deemed  necessaries,  then  their  quantity,  quality,  and 
reasonable  price  is  for  the  consideration  of  the  jury.  But  if,  on 
the  contrary,  the  express  contracts  of  infants,  even  when  necessaries, 
so  called,  were  the  consideration,  could  be  enforced,  these  important 
questions  might  be  improvidently  settled  by  the  infant  himself, 
beyond  the  supervision  of  the  courts."3 

We  have  found  no  authority,  in  the  reported  decisions  of  this  Court, 
or  of  other  courts  of  last  resort,  for  holding  that  an  infant  is  liable 
upon  such  an  implied  contract  or  promise  as  the  one  in  suit  in  the 

1  The  opinion  of  the  Court  is  abridged.  —  Ed.  2  5  Ind.  489. 

3  See  Williamson  v.  Watts,  1  Ames,  Cas.  B.  &  N.  463  and  n.  1.  —  Ed. 


?'V*W 


522  HODGES   V.   AEMSTRONG.  [CHAP.  III. 

case  at  bar.  We  are  constrained  to  hold,  therefore,  as  we  do,  that 
the  Court  erred  in  its  conclusions  of  law  upon  the  facts  specially 
found,  and  that,  for  this  error,  the  judgment  below  must  be  reversed. 
We  are  not  prepared  to  say  that  the  appellee  might  not  recover  of 
the  infant,  in  a  proper  case,  such  reasonable  sum  as  would  be  equal 
to  the  just  value  of  the  attorneys'  services  in  the  defence  of  such 
infant.  But,  in  this  case,  there  was  no  finding  by  the  Court  of  the 
just  value  of  the  attorneys'  services,  which  were  found  to  be  neces- 
sary, or,  indeed,  that  they  were  of  any  value.  What  we  decide  is 
that  the  special  finding  of  facts  by  the  Court,  in  this  case,  did  not 
authorize  its  conclusions  of  law.1 


JOHN   HODGES  v.   F.    ARMSTRONG,   Administrator. 
In  the  Supreme  Court,  North  Carolina,  December,  1831. 

[Reported  in  3  Devereux,  253.] 

Assumpsit  for  money  paid  to  the  use  of  the  defendant,  tried  before 
his  Honor,  Judge  Daniel,  at  Cumberland,  on  the  last  spring  circuit. 
On  the  trial,  upon  non  assumpsit  pleaded,  the  case  was  as  follows:  — 

The  plaintiff  was  the  surety  of  the  defendant's  intestate  and  of  one 
William  Hodges,  upon  a  bond  payable  to  one  McArthur;  before  the 
bond  became  due  the  principal  debtors  died,  and  the  plaintiff  admin- 
istered upon  the  estate  of  William  Hodges,  and  the  defendant  upon 
that  of  Armstrong;  suit  was  brought  by  McArthur  against  the  plain- 
tiff and  defendant  in  their  representative  characters,  and  against  the 
plaintiff  upon  his  personal  obligation.  On  the  trial,  the  plaintiff,  as 
administrator,  established  the  plea  of  fully  administered;  and  judg- 
ment was  taken  against  the  present  defendant,  de  bonis  intestati,  and 
against  the  plaintiff,  as  administrator,  quando,  and  in  his  own  right 
absolutely.  To  protect  himself,  the  plaintiff,  through  the  interven- 
tion of  a  third  person,  paid  the  amount  of  the  judgment  to  McArthur's 
attorney,  and  procured  an  assignment  of  it  to  be  made  to  a  trustee 
for  his  benefit,  and  issued  a  scire  facias  to  obtain  execution  against 
the  present  defendant,  de  bonis  propriis  ;  but  the  payment  by  the 
plaintiff  having  been  held  to  be  a  satisfaction  of  the  judgment,  he 

1  But  see  Conn  v.  Coburn,  7  N.  H.  368,  in  which  case  the  distinction  taken  by  the 
Indiana  Court  would  seem  to  have  been  overlooked ;  and  compare  Clarke  v.  Leslie, 
5  Esp.  28  ;  Kilgore  v.  Rich,  83  Me.  305 ;  Swift  v.  Bennett,  10  Cush.  436 ;  Randall  v. 
Sweet,  1  Den.  460,  in  which  cases  one  who  paid,  without  assuming  any  liability  to  pay, 
for  necessaries  furnished  to  an  infaut  was  permitted  to  recover  the  amount  paid  from 
the  infaut. 

If  by  a  statute  an  infant  is  made  liable  to  the  creditor  for  certain  contracts,  he  is 
also  bound  to  indemnify  one  who  is  his  surety  in  such  contracts,  e.  g.  a  recognizance; 
Fagin  v.  Cioggin,  12  HI'  1.  398.  —  En.  ' 


SECT.  II.]  HODGES    V.   ARMSTRONG.  523 

failed  in  that  action  and  then  commenced  the  present.  Upon  these 
facts  it  was  objected  that  the  plaintiff  could  not  recover,  because  he 
had  not  paid  the  money  to  the  use  of  the  defendant,  but  had  purchased 
a  judgment  against  the  defendant,  and  that  his  proper  redress  was 
either  by  scl.  fa.  or  debt  upon  that  judgment.  But  the  presiding 
judge  ruled  that  the  payment  was  one  which  would  support  the 
action.1 

W.  H.    Haywood,  for  the  defendant. 

Gaston,  for  the  plaintiff. 

Ruffin,  J.  As  a  surety  cannot  maintain  an  action  against  his 
principal  merely  upon  the  rendering  of  a  judgment  against  the  former, 
it  was  material  and  necessary  that  the  plaiutiff  in  this  case  should 
show  a  satisfaction  of  the  judgment  by  a  payment  made  by  himself. 
To  make  that  fact  appear,  he  proved  that  he  deposited  the  money  with 
a  friend,  to  be  delivered  to  the  original  creditor,  with  express  direc- 
tions not  to  pay  it  in  discharge  and  satisfaction  of  the  judgment, 
but  to  take  an  assignment  thereof,  for  the  purpose  of  keeping  it  in 
force  against  the  defendant.  The  agent  complied  with  the  instruc- 
tions, and  took  from  McArthur  an  assignment  to  himself,  in  trust 
for  the  plaintiff.  This  transaction  was  held  in  the  Superior  Court  to 
be  a  payment.  This  Court  entertains  a  different  opinion.  There 
was  no  satisfaction  of  the  judgment  acknowledged  of  record;  no 
release  of  it;  nor  any  receipt  of  money  as  and  for  a  payment  of  it. 
No  payment  was  intended.  Both  the  testimony  of  the  witness  and 
the  deed  of  assignment  prove  that  the  contrary  was  intended.  The 
question  then  is,  whether,  against  the  intention  of  the  parties,  the 
payment  shall  be  deemed  to  be  in  satisfaction,  because  the  money 
belonged  to  one  of  the  defendants  in  that  suit.  We  think  not.  It  is 
a  common  mode  whereby  a  surety  indemnifies  himself.  He  may 
relinquish  it  by  making  payment  in  satisfaction.  But  he  may  make 
the  payment,  not  in  satisfaction,  and  take  an  assignment.  If  the 
surety  is  not  a  party  to  that  suit,  he  may  take  the  assignment  to  him- 
self. This  is  generally  done  by  an  indorser,  who  is  not  sued  jointly 
with  the  maker.  It  is  greatly  for  the  benefit  of  sureties  that  it  should 
be  so;  for  many  of  the  rights  of  the  surety  are  secured  only  through 
this  principle  of  subrogating  him  to  the  securities  of  the  creditors, 
and  entitling  him  to  an  assignment  of  them.  Hence,  if  the  creditor 
does  any  act  which  puts  it  out  of  his  power  to  make  an  assignment 
to  the  surety,  the  latter  is  discharged.  By  taking  an  assignment, 
the  judgment  is  preserved,  and  satisfaction  may  be  obtained  from  the 
principal  by  immediate  process;  which  is  of  great  consequence  in  a 
case  of  insolvency  or  the  death  of  the  principal.  If  the  judgment 
be  joint  against  the  surety  and  the  principal,  the  former  does  not 
thereby  lose  his  right  to  an  assignment.  If  he  did,  all  claim  to  the 
benevolence  of  the  creditor  would  fall  with  it.  He  cannot  indeed 
take  the  assignment,  in  that  case,  to  himself,  for  that  would  be  an 

1  A  part  of  the  case  foreign  to  suretyship  is  omitted.  —  Ed. 


524  PIEfiCE    V.    WILLIAMS.  [CHAP.  III. 

extinction  of  the  judgment.  But  he  may  take  it  to  another  person. 
In  law,  the  plaintiff  alone  is  the  owner  of  the  debt.  The  assignee 
can  act  in  his  name  alone.  And  a  court  of  law  can  take  no  notice  of 
the  trust,  upon  which  the  assignee  or  the  plaintiff  keeps  up  the  judg- 
ment. But  if  we  could,  we  would  not  make  the  legal  right  unite  with 
that  of  the  cestui  que  trust.  It  is  like  the  owner  of  an  inheritance 
taking  a  conveyance  to  a  trustee  of  an  outstanding  satisfied  term- 
The  interposition  of  the  trustee  keeps  the  legal  and  equitable  estates 
apart,  even  in  equity  —  much  more  at  law. 

There  is  no  doubt  that  McArthur  may  yet  acknowledge  satisfaction 
of  record,  or  the  assignee  may  do  it  in  his  name,  provided  the  terms 
of  the  assignment  authorize  it.  But  until  that  be  done,  or  the  judg- 
ment be  otherwise  discharged,  in  such  wise  as  to  bar  a  suit  on  it  at 
law,  it  remains  in  force.  While  it  does,  the  surety  cannot  maintain 
an  action,  of  which  the  gist  is  the  satisfaction  of  that  judgment. 

Per  Curiam.  Judgment  reversed.1 


PIERCE   v.   WILLIAMS. 
In  the  Exchequer,  June  21,  1854. 

[Reported  in  23  Law  Journal  Reports,  Exchequer,  322.] 

This  was  an  action,  by  the  plaintiff,  to  recover  certain  moneys  and 
costs  that  he  had  been  called  upon  to  pay  for  the  defendant  under  a 
guaranty  entered  into  for  him,  by  which  the  plaintiff  guaranteed  to 
the  National  Provincial  Bank  of  England  "  that  the  defendant  should 
upon  demand  from  time  to  time  pay  to  them  what  was  due."  A 
demand  had  been  made  upon  the  defendant  by  the  National  Provin- 
cial  Bank  for  the  amount  due,  and  upon  non-payment  they  issued  a 
writ  against  the  plaintiff  for  the  amount,  the  writ  being  the  first  noti- 
fication to  him  of  the  amount  being  due  and  unpaid  by  the  defendant. 
The  plaintiff  allowed  judgment  to  go  by  default,  and  execution  was 
subsequently  levied  for  the  amount  of  the  debt  and  costs.  He  then 
brought  the  present  action,  and  at  the  trial,  before  Williams,  J.,  at 
Beaumaris,  at  the  Spring  Assizes,  recovered  a  verdict  for  the  full 
amount  of  the  debt  and  costs  that  had  been  levied  under  the  execution. 

A  rule  nisi  was  subsequently  obtained  to  reduce  the  damages  by  the 
amount  of  the  costs,  against  which 

Mclntyre  showed  cause.  The  principal  debtor  is  liable  for  these 
costs,  just  as  a  party  who  has  accepted  a  bill  for  the  accommodation 
of  the  drawer  may,  if  sued,  recover  against  the  drawer  the  costs  of 
the  action.     Jones  v.  Brooke;2  Stratton  v.  Matthews.3 

1  Katz  v.  Moessinger,  110  111.  372,  Contra.  —  Ed. 

2  4  Taunt.  464.  3  3  Ex.  48. 


SECT.  II.]  HAKE   V.    GKANT.  525 

[Aldkrson,  B.  That  must  be  on  some  ground  peculiar  to  an  accom- 
modation bill.1] 

How  could  the  present  plaintiff  know  what  he  was  to  pay?  At 
least  the  costs  of  the  writ  should  be  recovered. 

Morgan  Lloyd,  contra,  was  not  called  upon. 

Per  Curiam.2  The  costs  of  the  writ  only  can  be  recovered,  as 
that  was  the  ouly  necessary  expense  to  which  the  plaintiff  was  put  by 
the  proceedings.  He  is  supposed  by  law  to  have  the  money  ready  to 
pay  without  the  process  of  execution.8 


JACKSON   B.  HARE  v.  JAMES   W.  GRANT,   Administrator. 

In  the  Supreme  Court,  North  Carolina,  June  Term,   1877. 

[Reported  in  77  North  Carolina  Reports,  203.] 

Civil  action  tried  at  Spring  Term,  1877,  of  Northampton  Superior 
Court,  before  Buxton,  J. 

James  Clark,  the  intestate  of  defendant,  was  the  guardian  of  one 
James  P.  Harrell,  and  the  plaintiff  was  surety  on  his  guardian  bond. 
The  plaintiff  alleged  that  in  an  action  brought  on  this  bond  by  Har- 
rell, he  was  compelled  to  pay  the  amount  demanded  as  due  to  the 
ward,  as  appeared  by  a  return  of  said  guardian  made  in  1851.  At 
the  trial  term  of  said  action,  a  nolle  prosequi  was  entered  as  to  the 
administrator  of  the  deceased  guardian,  and  judgment  rendered 
against  this  plaintiff.     This  action  was  brought  to  recover  back  the 

1  Jones  v.  Brooke  and  Stratton  v.  Matthews,  although  approved  and  followed  in 
Hubbly  v.  Brown,  16  Johns.  70  (but  see  Wilkins  v.  Pearce,  5  Den.  541,  544),  and 
Baker  v.  Martin,  3  Barb.  634,  are  not  to  be  relied  upon,  being  at  variance  with  the  fol- 
lowing cases:  Roach  v.  Thompson,  M.  &  M.  487  ;  Beech  v.  Jones,-5  C.  B.  696 ;  Garrard 
v.  Cottrell,  10  Q.  B.  679  ;  Crampton  v.  Walker,  30  L.  J.  Q.  B.  19,  7  Jur.  n.  s.  43,  s.  c. 
See  also  Mayne,  Damages  (2d  ed.),  47  ;  Seaver  v.  Seaver,  6  C.  &  P.  673  ;  Bleaden  v. 
Charles,  7  Bing.  246.  —  Ed. 

2  Alderson,  B.,  Piatt,  B  ,  and  Martin,  B. 

3  Fisher  v.  Fallows,  5  Esp.  171  ;  Knight  v.  Hughes,  M.  &  M.  247,  3  C.  &  P.  467,  s.  c. ; 
Gillett  v.  Rippon,  M.  &  M.  407  ;  John  v.  Jones,  16  Ala.  454 ;  Beckley  v.  Munson,  22 
Conn.  299;  Comegys  v.  State  Bank,  6  Ind.  357  ;  Newcomb  v.  Gibson,  127  Mass.  396, 
399  ;  Backus  v.  Coyne,  45  Mich.  584  ;  Van  Petten  v.  Richardson,  68  Mo.  379;  Board- 
man  v.  Paige,  11  N.  H.  431 ;  Stothoif  v.  Dunham,  4  Harr.  (N.  J.)  181 ;  Bright  v.  Len- 
non,  83  N.  Ca.  183,  188  (semble)  ;  Wynn  v.  Brooke,  5  Rawle,  106,  Accord. 

Kemp  v.  Finden,  12  M.  &  W.  421  ;  Van  Winkle  v.  Johnson,  11  Oreg.  469 ;  Briggs 
v.  Boyd,  37  Vt.  541,  Contra. 

But  the  surety  may  charge  the  principal  with  the  whole,  or  a  co-surety  with  a  propor- 
tionate share,  of  the  costs  and  expenses  reasonably  incurred  in  resisting  an  action  by  the 
creditor.  Wagenveller  v.  Prettyman,  7  111.  Ap.  197;  Bosley  v.  Taylor,  5  Dana,  157  ; 
Backus  v.  CoyDe,  45  Mich.  584;  Bright  v.  Lennon,  83  N.  Ca.  183  ;  McKennai-.  George, 
2  Rich.  Eq.  15;  Cleveland  v.  Covington,  3  Strob.  184  ;  Gross  v.  Davis,  87  Tenn.  226; 
Marsh  v.  Harrington,  18  Vt.  150 ;  Fletcher  v.  Jackson,  23  Vt.  581 ;  Downer  v.  Baxter, 
30  Vt.  467  ;  Briggs  v.  Boyd,  37  Vt.  541.  —Ed. 


526  HARE   V.   GRANT.  [CHAP.  IIL 

money  paid  by  the  surety  for  his  principal,  and  when  the  case  was 
called  for  trial,  the  defendant's  counsel  moved  for  a  continuance  on 
the  ground  that  the  defendant  was  absent,  and  that  he,  the  counsel, 
was  informed  that  defendant  had  in  his  possession  vouchers  showing 
payments  made  by  said  guardian  to  his  ward  after  the  guardian's 
last  return,  which  was  made  on  the  23d  of  May,  1859.  The  Court 
refused  the  motion  to  continue  and  the  defendant  excepted.  The 
plaintiff  introduced  the  transcript  of  certain  court  records,  execution, 
&c. ,  showing  that  he  had  paid  the  debt,  and  under  the  instructions 
of  his  Honor  the  jury  rendered  a  verdict  for  plaintiff.  Judgment. 
Appeal  by  defendant. 

Messrs.  D.  A.  Barnes  and  W.  N.  H.  Smith,  for  plaintiff. 

Messrs.  R.  B.  Peebles  and  W.   W.  Peebles,  for  defendant. 

Reade,  J.  Where  a  surety  is  sued  with  his  principal,  or  where  he 
is  sued  alone  and  notifies  his  principal,  so  as  to  enable  him  to  defend, 
or  to  furnish  the  surety  with  a  defence,  the  recovery  against  the 
surety  is  the  measure  of  his  damages  against  his  principal.  And 
in  an  action,  as  this  is,  to  recover  of  his  principal  money  paid  to 
his  use,  the  record  of  the  recovery  against  the  surety  is  conclusive 
evidence. 

It  would  be  iniquitous  for  the  principal  to  stand  by  and  see  an 
excessive  recovery  against  his  surety,  which  he  alone  could  prevent, 
and  then  set  up  the  defence  when  his  surety  sues  him. 

Of  course  this  principle  would  not  apply  where  there  was  fraud  or 
collusion  between  the  surety  and  creditor.  And  probably  it  would 
not  apply  where  there  had  been  negligence  on  the  part  of  the  surety  in 
using  the  defences  within  his  power,  or  which  were  furnished  him  by 
the  principal.  In  this  case  no  fault  attaches  to  the  surety.  Lewi? 
v.  Fort.1 

There  is  no  error. 

Per  Curiam.  Judgment  affirmed. 

1  75  N.  Ca.  251. 

2  Smith  v.  Compton,  3  B.  &  Ad.  407  (semble)  ;  Rice  v.  Rice,  14  B.  Mon.  417;  Lit- 
tleton v.  Richardson,  34  N.  II.  179,  Accord. 

The  rule  is  the  same  in  cases  in  which  the  surety  is  seeking  contribution.  Love 
v.  Gibson,  2  Fla.  598. 

If,  however,  the  surety  pays  a  judgment  against  himself,  obtained  without  an  oppor- 
tunity for  the  principal  or  co-surety  to  resist  the  action,  they  may  resist  a  subsequent 
claim  for  indemnity  or  contribution  by  establishing  that  the  judgment  against  the 
surety  ought  not  to  have  been  obtained.  Cathcart  v.  Foulke,  13  Mo.  561  ;  Skraiukar. 
Itohan,  18  Mo.  Ap.  340  ;  Thomas  v.  Hubbell,  15  N.  Y.  405;  Mahin  v.  Bull,  13  S.  &  R. 
441  ;  Krampli  v.  Hatz,  52  Pa.  525  ;  Lowndes  v.  Pinckney,  1  Rich.  Eq.  155. 

Judgment  in  favor  of  one  surety  and  against  another  surety.  —  In  Hill  v.  Morse,  61  Me. 
541,  judgment  being  given  in  favor  of  two  sureties  in  an  action  by  the  creditor, 
and  being  reversed  on  appeal  by  the  creditor  as  to  one  of  them,  this  surety  was 
allowed  to  have  contribution  against  the  other  notwithstanding  the  judgment  in  his 
favor  against  the  creditor  was  still  effective.  But  see  Ledoux  v.  Durrive,  10  La.  An.  7. 
—  Ed. 


SECT.  II.  J  OSBORN   V.   CUNNINGHAM.  527 


JOHN   OSBORN  v.   ENOCH   H.    CUNNINGHAM. 

In  the  Supreme  Court,  North  Carolina,   December,   1839. 
[Reported  in  4  Devereux  §•  Battle,  423.] 

Assumpsit  for  money  paid  by  the  plaintiff  for  the  use  of  the  de- 
fendant, tried  at  Buncombe,  on  the  last  circuit,  before  his  Honor 
Judge  Pearson. 

The  plaintiff  read  in  evidence  a  note  under  seal  for  about  $300, 
signed  by  the  defendant  and  one  Patton  as  joint  obligors;  and  then 
proved  that,  after  one-half  of  the  note  had  been  paid,  a  writ  was 
issued  against  Patton  and  the  defendant  for  the  balance,  and  the 
plaintiff  became  the  bail  of  Patton  in  that  suit;  that  judgment  was 
rendered  against  Patton  and  the  defendant;  that  Patton  left  the 
country,  and  thereupon  proceedings  were  regularly  taken  against  the 
plaintiff  as  his  bail ;  upon  which  judgment  was  rendered  against  him 
for  $162,  which  he  was  compelled  by  execution  to  pay.  His  Honor 
was  of  opinion  that  the  plaintiff  had  not  made  out  a  case  to  entitle  him 
to  recover,  for  that  there  was  not  such  a  privity  existing  between  the 
plaintiff,  as  the  bail  of  Patton,  and  the  defendant,  as  the  co-obligor 
of  the  latter,  as  would  sustain  an  action  at  law  for  money  which  he 
had  been  compelled  to  pay  as  bail.  Upon  this  intimation  the  plain- 
tiff submitted  to  a  nonsuit  and  appealed. 

No  counsel  appeared  for  the  plaintiff  in  this  court. 

Clingman  for  the  defendant. 

Daniel,  J.  The  plaintiff  declared  in  assumpsit  for  money  paid 
to  the  use  of  the  defendant,  at  his  request,  and  the  inquiry  is, 
whether  the  lq,w  would,  in  a  case  like  this,  imply  a  request.  It  is  set- 
tled law,  that  if  one  pays  the  debt  of  another  without  his  request,  ex- 
press or  implied,  he  cannot  recover  in  an  action  for  money  paid ; 
for  the  supposed  debtor  may  have  a  good  reason  to  resist  the  pay- 
ment of  the  money.  Stokes  v.  Lewis.1  The  plaintiff  became  bail 
only  for  Patton,  at  his  request,  and  for  his  personal  benefit.  In  con- 
sequence whereof,  he  has  been  by  process  of  law  compelled  to  pay  the 
whole  debt,  for  which  the  creditor  had  recovered  a  joint  judgment 
against  Patton  and  the  defendant  on  their  joint  obligation.  Had 
Patton,  merely  from  his  relation  of  co-obligor,  any  agency  or 
authority  to  request  the  plaintiff  to  pay  the  joint  debt,  so  as  to 
subject  the  defendant  to  this  action  for  money  paid  to  his  use?  We 
can  find  no  authority  for  such  a  position.  The  law  will  certainly 
imply  a  request  to  pay  on  behalf  of  Patton,  who  was  the  principal  in 
the  bail  bond;  but  not  on  behalf  of  the  defendant,  who  was  not  a 
privy,  but  is  a  mere  stranger  to  that   transaction.     It  seems  to  us 

1  1  T.  R.  20,  2  Saund.  264 ;  Leigh's  N.  P.  70. 


528  CARTER  V.    BLACK.  [CHAP.  III. 

that  the  opinion  of  the  judge  was  correct,  and  therefore  the  judgment 
must  be  affirmed. 

Per  Curiam.  -  -^  Judgment  affirmed.1 


^^-^e,  "r^-^^zJT  ^^r-^^jy^^^y  ^v 


MJTCHELL   CARTER  v.  PLEAS  AN£_  BLACK.  ^ 

In  the  Supreme  Court,  ITorth  CarolTna,  DECEMBEjt^lSSD.     ^ 

—  ^\2  Tj?*   This  was  an  action  of  assumpsit,  in  which  the  plaintiff  declared  in 

•  /i^Z^hhe  several  money  counts.     Plea,  the  general  issue  ;  and  on  the  trial  at 

q       a     Rockingham,  on  the  last  circuit,  before  his  Honor  Judge  Bailey,  the 

jury  found  the  following  special  verdict,  to  wit,  "  that  Pendleton  Jones 

^  -w»^»-^  executed  his  bond  to  Thomas  Smith,  with  the  defendant,  his  security, 
0        in  the  town  of  Madison,  in  this  State,  on  the  4th  of  November,  1837, 

'v*''  *  -^ —  payable  on  the  15th  of  January,  1838,  for  the  sum  of  $700  ;  that  said 

00^  -J^)  Smith  resided  in  the  county  of  W}'the,  Virginia,  and  took  with  him  the 

said  bond    to   his  residence,   and   offered  the   same  to  the  Sheriff  of 

>■ « —  V  Wythe  County,  in  part  satisfaction  of  two  executions  which  were  then 

in  his  hands  against  said  Smith,  in  favor  of  one  Thomas  J.  Boyd,  which 
the  plaintiff  refused  to  receive,  without  the  name  of  some  responsible 
person  who  lived  in  the  same  count}' ;  that  the  sheriff  of  Wythe  County 
made  known  this  fact  to  Carter,  the  plaintiff,  who  stated  that  to 
accommodate  Smith  he  would  join  in  said  paper,  as  he  knew  there 
was  no  danger  —  that  Black  was  good  ;  that  the  plaintiff  then  made  this 
indorsement  on  said  bond,  to  wit:  'This  is  a  good  bond,  (signed) 
Mitchell  Carter ; '  which  bond  was  then  assigned  by  Smith  to  Boyd,  and 
received  by  Boyd  in  part  satisfaction  of  the  executions  in  his  favor. 
They  further  find  that  said  bond  was  lost  or  destroyed,  and  that  the 
same  was  paid  by  the  plaintiff  to  Boyd  under  an  execution,  on  the  lltb 

1  In  Bowman  v.  Blodgett,  2  Met.  308,  one  who  became  bail  for  one  partner  in  a 
suit  against  all  the  partners  after  dissolution  of  the  firm,  and  paid  the  judgment 
against  the  parties,  was  not  permitted  to  recover  any  indemnity  from  the  co-partners  of 
his  principal. 

In  Yoder  v.  Briggs,  3  Bibb,  228,  a  joint  judgment  having  been  recovered  against 
A  and  B,  one  who  signed  a  replevin  bond  as  surety  for  A,  and  paid  the  joint  judgment 
against  A  and  B,  was  not  allowed  to  maintain  assumpsit  for  money  paid  against  B, 
who  was  in  fact  a  surety  of  A.     See  also  Elmendorph  v.  Tappen,  5  Johns.  176. 

In  Knox  v.  Vallandigham,  21  Miss.  527,  a  judgment  was  obtained  against  the  prin- 
cipal and  two  sureties  on  a  note.  One  who  executed  a  forthcoming  bond  as  surety 
for  one  of  the  two  sureties  and  paid  the  judgment,  was  denied  contribution  in  equity 
against  the  other  surety.     But  see  contra,  Stout  v.  Vanse,  1  Rob.  (Va.)  169. 

Married  woman  a  surety  for  her  husband.  —  By  statute  in  certain  jurisdictions  a 
married  woman  may  contract  with  any  one  except  her  husband.  In  these  jurisdictions  a 
married  woman  who  becomes  surety  for  her  husband  cannot,  upon  paying  the  creditor, 
charge  the  husband  upon  a  contract  of  indemnity.  Major  v.  Holmes,  124  Mass.  108. 
But  there  seems  to  be  no  reason  why  she  should  not  be  subrogated  to  the  creditor's 
light  against  the  husband.  —  Ed. 


SECT.  II.  "I 


CARTER   V.    BLACK. 


529 


of  February,  1839,  against  the  plaintiff  Carter;  and  that  the  plaintiff 
commenced  this  suit  without  calliug  on  the  defendant  for  payment,  or 
giving  him  notice  thereof. 

"The  jury  further  find  that  by  the  laws  of  Virginia  bonds  and  notes 
are  negotiable  and  transferable  by  indorsement,  and  that  at  the  time 
of  the  indorsement  by  the  plaintiff  the  defendant  was  not  present,  and 
knew  nothing  of  it;  and  that  there  was  no  express  request  by  the 
defendant  to  make  such  indorsement. 

His  Honor  being  of  opinion,  upon  this  special  verdict,  that  the  plain- 
tiff was  not  entitled  to  recover,  gave  judgment  of  nonsuit,  from  which 
the  plaintiff  appealed. 

J.  T.  Jloreherd,  for  the  plaintiff. 

No  counsel  appeared  for  the  defendant  in  this  court. 

Daniel,  J.  In  the  case  of  Osborne  v.  Cunningham,  decided  at 
this  term,  we  have  said  that  assumpsit  for  money  paid  will  not  lie, 
where  one  person  pays  the  debt  of  another  without  his  request,  express 
or  implied.  In  the  case  before  us,  the  jury  have  found  that  there  was 
no  express  request.  The  question  then  is,  will  the  law  imply  a  request? 
The  counsel  for  the  plaintiff  assimilates  the  case  to  that  of  an  indorser 
on  a  bill  of  exchange  or  promissory  note,  who  has  paid  all  and  taken 
up  the  paper,  or  who  has  paid  part :  he  may  maintain  assumpsit  for 
money  paid  to  the  use  of  the  acceptor  of  the  bill  or  the  drawer  of  the 
note.  Pownall  v.  Ferrand.1  The  answer  to  this  argument  is,  that  the 
indorser  of  a  bill  or  note  is  considered  in  law  a  surety.  A  bill  is  an 
undertaking  by  the  acceptor,  and  a  note  by  the  drawer,  to  pay  the  sum 
named  at  all  events  ;  and  each  subsequent  party  by  his  indorsement 
undertakes  to  pay  it  upon  the  default  of  any  prior  party.  Hence  by 
the  nature  of  these  instruments  each  subsequent  party  is  a  surety  for 
ever}*  prior  one.  Theobald  on  Principal  and  Surety,  180 ;  Fell  on 
Guarantees,  203.  But  the  plaintiff  was  not  a  regular  indorser,  —  he  was 
a  mere  volunteer,  or  placed  his  name  on  the  bond  only  at  the  instance 
of  the  agent  of  the  then  holder.  As  to  compulsion  of  law  in  paving 
the  debt,  it  was  a  compulsion  of  the  plaintiff's  own  seeking,  which 
arose  out  of  his  own  voluntary  act,  and  the  case  is  not  like  Exall  v. 
Partridge,2  when  the  monej*  was  paid  by  the  party  under  compulsion  of 
law,  to  redeem  his  property  from  a  distress  not  of  his  own  creation. 
Cumming  v.  Forrester.3  The  defendant  has  derived  no  benefit  from 
the  act  of  the  plaintiff  ;  the  bond  is  not  extinguished,  and  although  said 
to  be  lost,  a  court  of  law  cannot  take  an  indemnity  from  the  plaintiff. 
We  think,  in  this  case,  the  law  does  not  impl}-  a  request  to  pajT,  and 
the  judgment  must  be  affirmed. 

Per  Curiam.  Judgment  affirmed.* 


^ 


1  6  B.  &  C.  439.  2  8  T.  K.  308.  3  1  Maul.  &  Selw.  494. 

4  Teberg  v.  Swenson,32  Kan.  224  (semble),  Accord. 
Hall  v.  Smith,  5  How.  96  (semble),  Contra. 

In  this  case  Wayne,  J.,  said,  p.  102  :  "  But  suppose  such  a  privity  not  existing 
between  the  parties,  the  evidence  shows  it  also  to  be  a  case  of  the  surety  of  a  surety 

34 


530  JONES  V.    OKCHARD.  TCHAP.  III. 


JONES   v.    ORCHARD. 
In  the  Common  Pleas,  June  11,  1855. 

[Reported  in  16  Common  Bench  Reports,  C14.] 

Jervis,  C.  J.,  now  delivered  the  judgment  of  the  Court.1 
The  Court  desired  time  to  consider  one  point  in  this  case.  It 
was  an  action  upon  certain  bills  of  exchange,  with  counts  for  money 
paid  and  upon  an  account  stated.  A  verdict  having  been  found  for 
the  plaintiff,  a  rule  was  obtained,  pursuant  to  leave  reserved  at  the 
trial,  to  enter  a  verdict  for  the  defendant  on  the  last  two  counts,  and 
to  reduce  the  damages  by  the  sum  of  £40,  on  the  ground  that  no 
implied  indemnity  arose  out  of  the  transaction  giving  rise  to  the 
action  so  far  as  related  to  those  counts,  inasmuch  as  it  would  be 
contrary  to  public  policy.  We  are  all  of  opinion  that  the  rule  should 
be  discharged.  We  are  relieved  from  considering  whether,  if  the 
recognizance  had  been  estreated  for  the  non-appearance  of  Orchard, 
the  plaintiff  would  have  had  a  good  cause  of  action  against  him  upon 
an  implied  contract  of  indemnity,  because  that  question  does  not 
occur  in  this  case.  The  action  arises  out  of  these  circumstances: 
Jones  became  bail  for  Orchard,  who  had  been  indicted  at  the  Central 
Criminal  Court  for  a  conspiracy.  The  recognizance  was  conditioned 
that  Orchard  should  appear  in  the  Court  of  Queen's  Bench  on  a  given 
day,  and  plead  to  the  indictment,  and  at  his  own  proper  costs  and 
charges  cause  and  procure  the  issue  or  issues  that  might  be  joined 
thereon  to  be  tried,  and  should  appear  on  the  trial,  and  not  depart 
until  he  should  be  discharged  by  the  Court.  Orchard  did  duly  appear 
and  plead  to  the  indictment,  which  was  afterwards  tried  in  his  ab- 
sence; and  he  was  convicted.  By  force  of  the  statute  5  &  6  W.  & 
M.  c.  11,  s.  3,  Orchard  and  his  bail  became  liable  for  the  costs  of  the 
prosecution.  The  costs  were  accordingly  taxed,  but  not  paid,  and 
thereupon  the  recognizance  was  estreated,  and  Jones  was  compelled 
to  pay  the  amount,  £40;  and  he  now  brings  this  action  upon  an 
implied  undertaking  on  the  part  of  Orchard  to  indemnify  him  against 
the  consequences  of  the  obligation  entered  into  by  him  on  his  behalf. 
The  rule  was  moved  on  the  ground  that  a  contract,  in  a  criminal 
case,  to  indemnify  the  bail  against  the  consequences  of  a  default  of 
the  principal's  appearance  on  the  trial  of  the  indictment,  is  contrary 
to  public  policy,  and  therefore   that  the  law  will  not  presume   any 

paying  the  debt  of  a  principal,  under  a  legal  obligation,  from  which  the  principal  wag 
bound  to  relieve  him.  Such  a  payment  is  a  sufficient  consideration  to  raise  an  implied 
assumpsit  to  repay  the  "amount,  tnougn  tne  payment  was  made~without  a  request 
from  the  principal.  Tanpin  v.  Eroster.  1  (J.  &  P.  112  :  Exall  v.  Partridge.  8  T.  R.  310; 
Child  v.  Morliss,  8  T.  R.  610."  See  also  supra,  445,  447  n.  1.  —Ed. 
1  Only  the  opinion  of  the  Court  is  given.  —  Ed. 


SECT.  II.]  JONES   V.   ORCHAKD.  531 

such  contract.  It  is  unnecessary  to  decide  that  point  on  the  present 
occasion,  although  we  are  inclined  to  thiuk  the  objection  well  founded, 
and  that  such  a  contract  would  be  contrary  to  public  policy,  inasmuch 
as  it  would  be  in  effect  giving  the  public  the  security  of  one  person 
only,  instead  of  two.1  But  as  it  is  admitted  that  there  is  nothing 
illegal  or  contrary  to  public  policy  in  the  other  alternative,  viz.,  the 
contract  to  indemnify  the  bail  against  the  prosecutor's  costs,  we 
need  not  embarrass  ourselves  with  the  consideration  of  whether  or 
not  the  law  would  infer  an  indemnity  as  to  the  rest.  An  express 
contract  to  indemnify  against  costs  would  not  be  illegal ;  and  conse- 
quently there  can  be  no  reason  why  the  law  should  not  imply  an 
indemnity  under  the  circumstances. 

It  is  said  that  this  is  an  action  of  contract,  and  that  the  contract, 

1  Cripps  r.  Hartnoll,  4  B.  &  S.  414,  419, 420  (semble)  ;  Consol.  Co.  v.  Musgrave,  1900, 
1  Ch.  37 ;  U.  S.  v.  Ryder,  110  U.  S.  729  ;  U.  S.  v.  Simmous,  47  Fed.  R.  575,  Accord. 

Reynolds  v.  Harral,  2  Strob.  87,  Contra. 

Similarly,  a  surety  on  a  recognizance  in  a  criminal  case  has  no  right  of  subrogation 
to  the  State's  right  against  the  criminal  for  the  penalty  due.  U.  S.  v.  Ryder,  1 10  U.  S. 
729.     On  page  736,  Bradley,  J.,  speaking  for  the  Court,  said  :  — 

"The  object  of  bail  in  civil  cases  is,  either  directly  or  indirectly,  to  secure  the  pay- 
ment of  a  debt  or  other  civil  duty ;  whilst  the  object  of  bail  in  criminal  cases  is  to 
secure  the  appearance  of  the  principal  before  the  court  for  the  purposes  of  public  jus- 
tice. Payment  by  the  bail  in  a  civil  case  discharges  the  obligation  of  the  principal  to 
his  creditor,  and  is  only  required  to  the  extent  of  that  obligation,  whatever  may  be  the 
penalty  of  the  bond  or  recognizance ;  whilst  payment  by  the  bail  of  their  recognizance 
in  criminal  cases,  though  it  discharges  the  bail,  does  not  discharge  the  obligation  of 
the  principal  to  appear  in  court;  that  obligation  still  remains,  and  the  principal  may 
at  any  time  be  retaken  and  brought  into  court.  To  enable  the  bail,  however,  to  escape 
the  payment  of  their  recognizance  by  performing  that  which  the  recognizance  bound 
them  to  do,  the  government  will  lend  them  its  aid  in  every  proper  way,  by  process  and 
without  process,  to  seize  the  person  of  the  principal  and  compel  his  appearance.  This 
is  the  kind  of  subrogation  which  exists  in  criminal  cases,  namely,  subrogation  to  the 
means  of  enforcing  the  performance  of  the  thing  which  the  recognizance  of  bail  is  in- 
tended to  secure  the  performance  of,  and  not  subrogation  to  the  peculiar  remedies 
which  the  government  may  have  for  collecting  the  penalty;  for  this  would  be  to  aid 
the  bail  to  get  rid  of  their  obligation,  and  to  relieve  them  from  the  motives  to  exert 
themselves  in  securing  the  appearance  of  the  principal.  Subrogation  to  the  latter 
remedies  would  clearly  be  against  public  policy  by  subverting,  as  far  as  it  might  prove 
effectual,  the  very  object  and  purpose  of  the  recognizance.  It  would  be  as  though  the 
government  should  say  to  the  bail,  '  We  will  aid  you  to  get  the  amount  of  your  recog- 
nizance from  the  principal  so  that  you  may  be  relieved  from  your  obligation  to  surren- 
der him  to  justice.'  If  payment  of  the  recognizance  operated  as  a  satisfaction  or 
composition  of  the  crime,  then  the  subrogation  contended  for  might  be  free  from  this 
objection  ;  for  then  the  government  would  be  satisfied  in  regard  to  the  principal  matter 
intended  to  be  secured." 

But  if  one  of  two  sureties  in  such  a  recognizance  has  paid  the  full  amount  upon  the 
principal's  default,  he  is  not  prevented,  by  considerations  of  public  policy,  from  recov- 
ering contribution  from  his  co-surety.     Belond  v.  Guy,  20  Wash.  160. 

If  the  defendant  in  a  criminal  case  has  deposited  money  with  his  bail  to  be  retained 
as  his  indemnity  if  required,  and  otherwise  to  be  returned,  the  transaction  being  illegal, 
the  money  is  not  recoverable.  Herman  v.  Juechner,  15  Q.  B.  D.  561  (overruling  Wil- 
son v.  Strugnell,  7  Q.  B.  D.  548). 

The  transaction  is  equally  illegal,  although  the  deposit  be  made  by  a  third  person 
and  not  by  the  defendant  himself.     Consol.  Co.  t\  Musgrave,  1900,  1  Ch.  37.  —  E» 


532  JONES   V.   OKCHAED.  [CHAP.  III. 

being  void  in  part,  is  void  altogether.  The  obvious  answer  to  that 
argument  is  this,  —  if  it  would  be  illegal  to  enter  into  such  a  contract 
as  above  supposed,  the  law  will  not  infer  that  the  parties  have  en- 
tered into  an  illegal  contract;  and,  on  the  other  hand,  if  the  contract 
to  indemnify  the  plaintiff  against  the  payment  of  costs  was  legal, 
and  the  plaintiff  in  consequence  of  entering  into  the  recognizance  was 
obliged  to  pay  these  costs,  the  law  will  infer  a  contract  to  indemnify 
to  that  extent. 

Upon  the  whole,  we  are  of  opinion  that  there  is  no  illegality  in  the 
contract  on  which  the  plaintiff  relies,  and  that  he  is  entitled  to  re- 
cover.    The  rule,  therefore,  will  be  discharged. 

Mule  discharged. 


SECT.  III.] 


PETER   V.   RICH, 


533 


SECTION   III. 

Contribution. 


*=JD  ;t*_77 


^£e<- 


WORMLEIGHTON  and   HUNTER'S   CASE. 

In  the  Common  Pleas,  Hilary  Term,  1613. 

j'  - 

\ Reported  in  Godbult,  243.1    ^  Si       t§ 

Two  men  are  bounden  with  J.  S.  as  sureties  in  an  obligations^  One  — *Tfc»- 
of  the  sureties,  viz.  Wormleighton,  was  sued  upon  the  bond,  and  the 
whole  penalty  recovered  against  Lira.  He  exhibited  an  English  bill  into 
the  Court  of  Requests  against  the  defendant,  being  the  other  surety,  to 
have  contribution:  and  it  was  moved  to  the  Court  for  a  prohibition  to 
the  Court  of  Requests,  and  the  same  was  granted,  because  by  entering 
into  the  obligation  it  became  the  debt  of  each  of  them  jointly  and  sev- 
eralby,  and  the  obligee  had  his  election  to  sue  which  of  them  he  pleased 
and  take  forth  execution  against  him  :  and  the_Court  said,  jhat  if  one 
surety  should  have  contribution  against  the  other,  it  would  be  a  great  /&%^&- — 
cause  "of  suits,  and  therefore  the  prohibition  wasja  warded  ^aiid  so  it  was"  ^ 
satd_n7was~fately  adjudged  and  granted  in  the  like  case,  in  Sir  William 
VV  horwood's  caseT 


^V 


C/ 


FLEETWOOD  v.    CHARNOCK. 

In  Chancery,  before  Lord  Coventry,  1629. 

[Reported  in  Nelson,  10.1] 

The  plaintiff  and  defendant  were  jointly  bound  for  a  third  person, 
who  died  leaving  no  estate  ;  the  plaintiff  was  sued  and  paid  the  debt  and 
brought  his  bill  against  the  defendant  for  contribution,  who  was  decreed 
to  pay  his  proportionate  part.2 


tJeM 


That   the   i 


In  Chancery 


,  C,  1629. 

Reported  in  I  Reports  in  Chahxeru,  34.1  - 


s  LoRb  Cc 


plaintiff  and'defendant  with  one  Southc 
became  bound  to  the  Lord  Russel  in  two  bonds  of  £1,600  apiece  for 

1  Tothill,  41,  s.  c  — Ed. 

2  "  Parkhurst  v.  Bathurst.  Contribution  of  a  bond  in  Mich,  or  Hillar,  5  Car.  ; 
Wilcox  v.  Lord  Duusmore.  A  demurrer  put  in  upon  point  of  contribution  overruled 
12  Car."    Toth.  41.  — Ed. 


^7 


>7 


534  PETER   V.   RICH.  [CHAP.  IIL 

paj'iuent  of  £800,  £100  being  purchase-money ,  and  the  plaintiff  an<\ 
defendant  entered  into  two  counter-bonds  to  the  said  Southcot  for  his 
indemnity,  and  the  first  bond  of  £800  was  paid;  and  the  plaintiff  and 
defendants  Richard  [Rich  and?]  Sheppard  came  to  account,  upon  which 
the  plaintiff  appeared  to  have  paid  all  his  part  of  the  said  purchase- 
money  save  £40,  for  which  the  plaintiff  gave  the  defendant  Rich  alone  a 
bond  of  £80,  and  thereupon  was  to  be  freed  by  the  said  defendants  of 
the  £800  bond,  and  was  to  give  over  the  said  purchase  wholly  unto  them  ; 
yet  notwithstanding  £100  of  the  said  purchase-money  being  not  paid, 
the  plaintiff  was  compelled  to  pay  the  same,  being  formerly  bound  with 
the  defendants  in  the  said  bond  of  £1,600,  together  with  £5  interest 
thereof,  which  said  £105  this  Court  conceived  ought  to  have  been  paid 
by  the  said  Sheppard  as  the  residue  of  his  part  of  the  said  purchase- 
money  ;  bufthe  said  Sheppard  being  insolvent,  the  said  £105  in  the 
opinion  orthis  Coilrt  ought  to"  be  equally  paid  and  borne  by  the  plaintiff 
and  defendant  Rich,  and  decreed  accordingly.1 

1  Hole  v.  Harrison,  1  Ch.  Ca.  246 ;  Dallass  v.  Walls,  29  L.  T.  Rep.  599 ;  Lowe  v. 
Dixon,  16  Q.  B.  D.  455,  458  ;  Young  v.  Clark,  2  Ala.  264 ;  Burroughs  v.  Lott,  19  Cal. 
125;  Williams  v.  Riehl  (California,  1899),  59  Pac.  R.  762  (semble);  Hyde  v.  Tracy, 
2  Day,  491  ;  North  v.  Brace,  30  Conn.  60,  72  ;  Security  Co.  v.  St.  Paul  Co.,  50  Conn. 
233 ;  Hay  den  v.  Thrasher,  18  Fla.  795,  805  ;  Johnson  v.  Vaughn,  65  111.  425  ,  Newton 
v.  Pence,  10  Ind.  Ap.  672  ;  Bosley  v.  Taylor,  5  Dana,  307  ;  Morrison  v.  Poyntz,  7  Dana, 
307 ;  Cobb  v.  Haynes,  8  B.  Mon.  137 ;  Greene  v.  Anderson  (Kentucky,  1897),  43  S.  W. 
R.  195  ;  Swift  v.  Donahue  (Kentucky,  1898),  46  S.  W.  R.  683  ;  Young  v.  Lyons,  8  Gill, 
162 ;  Wood  v.  Leland,  1  Met.  387  ;  Cory  v.  Holmes,  16  Gray,  127  ;  Griffin  v.  Kelleher, 
132  Mass.  82,  83  ;  Rynearson  v.  Turner,  52  Mich.  7  ;  Stewart  v.  Goulden,  52  Mich.  143; 
Dodd  v.  Winn,  27  Mo.  501,  502,  supra,  328,  s.  c. ;  Smith  v.  Mason,  44  Neb.  610;  Vliet 
v.  Wyckoff,  42  N.  J.  Eq.  642  ;  Jones  v.  Blanton,  6  Ired.  Eq.  115  ;  McKenna  v.  George, 
2  Rich.  Eq.  15  ;  Gross  v.  Davis,  87  Tenn.  226  ;  Acers  v.  Curtis,  68  Tex.  423,425  ;  Marsh 
v.  Harrington,  18  Vt.  150 ;  Preston  v.  Preston,  4  Grat.  88,  90;  Robertson  v.  Trigg,  32 
Grat.  76;  Beckham  v.  Duncan  (Virginia,  1889),  9  S.  E.  R.  1002;  Faurot  v.  Gates,  86 
Wis.  569  ;  In  re  McDonaghs,  Ir.  R.  10  Eq.  269  ;  McKelvey  v.  Davis,  17  Grant,  Ch.  355, 
Accord. 

Non-resident  co-sureti/.  —  In  fixing  the  amount  of  the  contribution  in  favor  of  a  surety 
against  his  fellows,  a  surety  without  the  jurisdiction,  like  an  insolvent,  is  excluded,  so 
^hat  the  entire  burden  is  divided  among  those  within  the  jurisdiction.  Security  Co.  v. 
StTPauTC'o.,  50  Conn.  233";  Bosley  v.  Taylor,  5  Dana,  157  ;  Wood  v.  Leland,  1  Met. 
387  ;  Stewart  v.  Goulden,  52  Mich.  143  ;  Boardman  v.  Page,  11  N.  H.  431  ;  Currier  v. 
Baker,  51  N.  H.  613 ;  Jones  v.  Blanton,  6  Ired.  Eq.  115  ;  McKenna  v.  George,  2  Rich. 
Eq.  15  ;  Liddell  v.  Wiswell,  59  Vt.  365  ;  Faurot  v.  Gates,  86  Wis.  569. 

Non-resident  co-sureties  cannot,  and  insolvent  co-sureties  need  not,  be  made  de- 
fendants  to  a  bill  in  equity  for  contribution.  Burroughs  v.  Lott,  19  Cal.  125  ;  John- 
son v.  Vaughn,  65  HI.  425  ;  Jones  v.  Blanton,  6  Ired.  Eq.  115  ;  Gross  v.  Davis,  87  Teun. 
226.  —  En. 


^SECT.  III.l  SWAIN   V.   WALL.  535 


XX« 


*^>^*-  ""77*/ 4   ^-£  ^-^J? 


-LpZJtey 


/  That  the  plaintiff  and 


[Reported  in  L.Re  ports  in  Chancery,  149.] 


defendant  and  one  Jorden,  16  Jac,  became 
jointly  bound  in  a  bond  of  £500  to  the  City  of  London  for  the  payment -"J 
of  £300  in  February  then  next,  which  £300  was  employed  by  one  Shad- 
wel  for  procuring  the  place  of  Serjeant  at  Arms,  which  place  afterwards  *  &  *>SdA 
Shadwel  assigned  to  one  Hunt  for  good  consideration,  which  Hunt  by  y    „  £)      . 
direction  and  agreement  of  the  said  Shadwel  and  the  plaintiff  and  de-  ^  J^ 

fendant  Jorden  entered  into  several  counter-bonds  unto  the  plaintiff,  ^  *<-<*-*•- 
and  Jorden  and  Wall,  for  their  indemnity  from  the  said  bond  of  £500 
entered  in  to  the  City  of  London  ;  and  thereupon  it  was  agreed,  that  if' 
Hunt  failed  to  pay  the  said  debt  to  the  city,  then  the  plaintiff  and  Jor- 
den  and  Wall  should  pay  their  respective  parts  of  the  said  deBt  to  the  ^d-c*— ~ € 
city,  and  Hunt  died  possessed  of  the  said  place  insolvent,  so  as  the  *    ——f 

plaintiffs  Jorden  and  Wall  were  only  liable  to  pay  the  said  debt ;  and 
the  city  calling  in  the  said  debt,  Wall  was  not  able  to  pay  his  said  share,  //  '^*"+*A 
and  the  plaintiff  and  Jorden  in  1622  took  up  £300  of  one  Ducket  and  — q*  ^r  y 
Bates,  and  were  bound  unto  them  in  several  obligations  for  repayment 
thereof,  and  therewith  paid  the  said  debt  to  the  city,  and  afterwards 
Jorden  became  insolvent,  so  as  the  plaintiff,  on  the  behalf  of  himself  and 
Jorden  and  Wall,  was  forced  to  pay  the  said  £300  to  Ducket  and  Bates, 
and  all  interest ;  and  Wall  being  afterwards  of  sufficient  estate  to  pay 
his  ratable  part  of  the  £300  and  interest  paid  by  the  plaintiff  as  afore- 
said ;  so  the  bill  is,  that  the  defendant  Wall  may  pay  to  the  plaintiff  a 
moiety  of  the  £300  and  interest,  Jorden  being  insolvent. 

The  defendant  Wall  insisted,  that  the  said  defendant  Wall  was  not 
bound  in  the  bonds  given  to  Ducket  and  Bates,  but  only  in  the  first  bond 
wherein  the  plaintiff  and  Jorden  and  the  defendant  Wall  were  bound, 
and  by  the  agreement  they  three  were  to  bear  their  respective  parts  of 
the  said  £300  in  case  Hunt  failed  ;  besides,  the  first  bond  being  delivered 
up  and  the  debt  paid,  the  defendant  conceives  himself  totally  freed 
thereof. 

This  Court  upon  hearing  the  proofs  is  satisfied  that  the  said  defend- 
ant Wall  ought  to  pay  to  the  plaintiff  the  third  part  of  the  said  £300, 
and  did  decree  the  said  defendant  to  pay  £100.  And  as  for  the  damages 
for  the  same,  forasmuch  as  the  plaintiff  both  by  bill  and  replication  doth 
only  desire  a  ratable  part  of  the  principal  money,  and  the  said  damages 
by  him  paid,  which  was  £300  and  damages  but  for  nine  months.  This 
Court  saw  no  cause  to  order  more,  and  so  ordered  the  said  £100  and 
damages  only  for  nine  months  ;  but  the  plaintiff  insisted  that  there  are 
precedents  to  enforce  the  defendant  to  pay  a  moiety  of  the  said  £300 
and  damages. 

The  Court  ordered  precedents  to  be  produced  for  that  purpose. 


> 


536  COWELL   V.    EDWARDS.  [CILVI".  III. 

The  plaintiff  produced  a  precedent  in  5  Car.  I.  inter  Peter,  plaintiff, 
and  Rich  and  Sheppard,  defendants,  by  which  the  said  defendant  Rich, 
in  respect  the  other  defendant  Sheppard  became  insolvent,  was  ordered 
to  pay  the  plaintiff  Peter,  co-surety  with  the  said  Rich  and  Sheppard,  a 
moiet}'  of  the  debt  and  damages  there  in  question. 

Mr.  Justice  Hutton  was  to  consider  of  this  matter. 

Mr.  Justice  Hutton  thinks  fit  the  defendant  shall  pay  the  £100  and 
£7  10s.  for  nine  months  damages,  and  if  the  plaintiff  hath  recovered  or 
received  an3'thing  towards  the  said  £107  10*.  of  the  counter  security 
before  mentioned,  he  is  to  allow  the  same  to  the  defendant. 

This  Court  confirmed  the  judge's  order. 

>Z  /y+-«*L.       /^0W]§EB,    Administrator  op  COWJJLL,   v.   EDWARDS. 

^*~>  '  Indebitatus  ASSUMPSiT^br  misjjsey  paid.    ~~    r*~*^    3  c^c        '"^«— 

«^J    -^£*-?        John  Cowell,  the  plaintiff's  intestate,  having  entered  into  a  joint 
^    -^r^  anc*  severa^  bond  with  seven  other  persons,  two  of  whom  were  prin- 
^T  cipals  and  the  five  others  as  well  as  himself  sureties,  was  together 

n^^      1  _Q  with   his   co-sureties   called   upon   by  the  obligees  to  pay  the   sum 
"^engaged  for;  the  defendant  and  two  of  the  other  sureties  paid  each  a 
part  of  that  sum,  but  the  present  plaintiff's  intestate  paid  the  resi- 
due.    Upon  this  the  plaintiff,  considering  the  defendant  and  one  of 
the  two  sureties  who  had  already  contributed    as   the   only  solvenf 
'  Q    sureties,  called  upon  them  to  pay  their  proportion,  and  now  brough 
/^C**«L   this  action  to  recover  from  the  defendant  such  a  sum  of  money  as, 
£>>  N    .     when  added  to  what  had   been  already  paid  by  him,  would  make  up 
one-third   of   the   whole   sum  paid  to  the   obligees,  deducting  only 
*      >j<l  -jy   what  had  been  contributed  by  the  fourth  surety  not  called  upon  at  this 
'     ^  ''     time. 

f   ^_^£H         The  cause  was  tried  before  Lord  Eldon,  C.  J.,  at  the  sittings  after 

^7     last  Easter  Term,  when  the  plaintiff  obtained  a  verdict  for  a  sixth  of 

,  "&"(/£-      the  whole   sum  paid,  not  allowing   for  the  sum  paid  by  the  fourth 

^        surety,  with   liberty   to   move   the  Court  to  enter  a  verdict  for  the 

*T^\  whole  demand. 

'*~         Lens,  Serjt.,   however,  on   the  part  of  the  defendant,  obtained  a 

4-  j       J\    rule  calling  upon  the  plaintiff  to  show  cause  why  this  verdict  should 

f  not  be  set  aside  altogether  and  a  new  trial  be  had.     He  took  these 

objections:  that  this  action  could  not  be  maintained  at  law  by  one 

-  co-surety  against  another;  that  if  the  action  could  be  maintained  for 

i .  ,i  •f4"%***4L.  one-sixth  of  the  whole  sum  engaged  for,  and  which,  under  the  cir- 

_        eumstances  of   the   present  case,  he  insisted  was  all  that   could  be 

^P**^*i        recovered  from  the  defendant,  yet  that  the  insolvency  of  the  two 


SECT.  III.]  COWELL   V.    EDWARDS.  537 

principals  and  of  the  three  other  co-sureties  should  have  been  proved 
in  order  to  entitle  the  plaintiff  to  the  present  verdict. 

Shepherd  and  Vaughan,  Kerjts.,  were  proceeding  on  this  clay  to 
show  cause,  and  cited  Deering  v.  Lord  Winchelsea,  when  they  were 
stopped  by 

The  Coukt,  who  observed  that  it  might  now  perhaps  be  found  too 
late  to  hold  that  this  action  could  not  be  maintained  at  law,1  though 
neither  the  insolvency  of  the  principals  or  of  any  of  the  co-sureties 
were  proved;  but  that  at  all  events  the  plaintiff  could  not  be  entitled 
to  recover  at  law  more  than  one-sixth  of  the  whole  sum  paid. 

And  Lord  Eldon,  C.  J.,  said,  that  he  had  conversed  with  Lord 
Kenvqn  upon  the  subject,  who  wa3  also  of  opinion  that  no  more  than 
an  aliquot  part  of  the  whole,  regard  being  had  to  the  nu m ber  of  ~co- 
sureties,  could  be  recovered  at  law  by  the  defendant;2  though  iT"the 
insolvency  of  all  tUe  other  parties  were  made  out,  a  larger  propor- 
tion  might  be  recovered  in  a  court  of  equity~ 

In  consequence  of  these  intimations  from  the  Court,  and  of  an 
opinion  thrown  out  by  them  that  the  matter  must  ultimately  be  car- 
ried into  a  court  of  equity,  an  offer  was  made  by  the  defendant  and 
acceded  to  by  the  other  side,  to  enter  a  nonsuit  without  costs. 

Nota:  Lord  Eldon  also  added  a  doubt  of  his  own,  whether  a  dis- 
tinction might  not  be  made  between  holding  that  an  action  at  law 
is  maintainable  in  the  simple  case  where  there  are  but  two  sureties,  or 
where  the  insolvency  of  all  the  sureties  but  two  is  admitted,  and  the 
insolvency  of  the  principal  is  admitted,  and  holding  it  to  be  maintain- 

1  The  first  judicial  intimation  that  a  surety  might  sue  at  common  law  for  contri- 
bution is  believed  to  be  the  following  remark  of  Lord  Kenvon  in  Turner  v.  Davies 
(1796),  2  Esp.  479:  "I  have  no  doubt,  that  where  two  parties  become  joint  sureties 
for  a  third  person,  if  one  is  called  upon  and  forced  to  pay  the  whole,  he  has  a  right  to 
call  on  his  co-security  for  contribution."  Five  years  later,  in  North  Carolina,  the  surety 
failed  to  ohtain  contribution  because  he  sued  at  law  instead  of  in  equity.  Carrington 
v.  Carson,  Cam.  &  N.  Conf.  R.  216.  —  Ed. 

2  Brown  v.  Lee,  6  B.  &  C.  697 ;  Sherrod  v.  Rhodes,  5  Ala.  683,  692 ;  Chipman  v, 
Morrill,  20  Cal.  130;  Sloo  v.  Pool,  15  111.  47,  48;  Moore  v.  Bruner,  31  111.  Ap.  400; 
Morrison  v.  Poyntz,  7  Dana,  307,  308;  Young  v.  Lyons,  8  Gill,  162,  1G5  ;  Brigdeu  v. 
Cheever,  10  Mass.  450,  454;  Chaffee  v.  Jones,  19  Pick.  260,  265;  Wood  v.  Leland,  22 
Pick.  503,  506;  Cory  v.  Holmes,  16  Gray,  127,  128;  Griffin  v.  Kelleher,  132  Mass.  82; 
Dock!  v.  Winn,  27  Mo.  501 ;  Stothoff  v.  Dunham,  19  N.  J.  181 ;  Easterley  v.  Barber,  66 
N.  Y.  433  ;  Powell  v.  Matthis,  4  Ired.  83  ;  Samuel  v.  Zachary,  4  Ired.  377  ;  Adams  v. 
Hayes,  120  N.  Ca.  383,  386 ;  Fischer  v.  Gaither,  32  Oreg.  161  ;  Croft  v.  Moore,  9  Watts, 
451,  453  ;  Aikin  v.  Peay,  5  Strob.  15  (but  see  Harris  v.  Ferguson,  2  Bail.  397,  401)  ; 
Riley  v.  Rhea,  5  Lea,  115;  Acers  v.  Curtis,  68  Tex.  423;  Tarr  v.  Ravenscroft,  12 
Grat.  642,  652,  Accord. 

Conch  v.  Terry,  12  Ala.  225  (statutory) ;  Michael  v.  Allbright,  126  Ind.  172;  Van 
Petten  v.  Richardson,  68  Mo.  379  (statutory) ;  Henderson  v.  McDuffee,  5  N.  H.  38; 
Boardman  v.  Paige,  11  N.  H.  431 ;  Currier  v.  Baker,  51  N.  H.  613 ;  Cass  v.  Stearns, 
66  N.  H.  301,  303  ;  Mills  v.  Hyde,  19  Vt.  59  ;  Littell  v.  Wiswell,  59  Vt.  365  ;  Faurot 
v.  Gates,  86  Wis.  569  (statutory),  Contra. 

Statute  of  Limitations.  —  The  period  of  limitation  varies  in  some  jurisdictions  ac» 
cordingly  as  the  surety  proceeds  at  law  or  in  equity.  Hoyt  v.  Tuthill,  33  Hun,  196; 
Bushnell  v.  Bushnell,  It  Wis.  iHb.  —  iSK 


538  BATARD    V    HAWES.  [CHAP.  IIL 

able  in  a  complicated  case  like  the  present,  such  insolvency  being 
neither  admitted  nor  proved,  and  where  the  defendant  after  a  verdict 
against  him  at  law  may  still  remain  liable  to  various  suits  in  equity 
with  each  of  his  other  co-sureties,  and  where  the  event  of  the  actio* 
cannot  deliver  him  from  being  liable  to  a  multiplicity  of  other  suit 
founded  upon  his  character  as  a  co-surety.1 


BATARD  v.  HAWES. 
In  the  Queen's  Bench,  Trinity  Term,  1853. 

[Reported  in  2  Ellis  §•  Blackburn,  287.] 

Lord  Campbell,  C.  J.,  in  this  term  (May  3l3t),  delivered  the 
judgment  of  the  Court.2 

It  appeared  in  this  case  that  the  plaintiff,  the  defendant,  and  several 
other  persons,  had  jointly  employed  Mr.  Baley,  an  engineer,  to  make 
plans  and  sections,  and  to  do  engineering  work,  preparatory  to 
bringing  a  bill  for  a  railway  before  Parliament.  The  plaintiff  was 
sued  by  Baley  for  the  amount  of  his  bill,  and  was  obliged  to  pay  him; 
and  he  then  brought  the  present  action,  to  recover  from  the  defend- 
ant his  share  of  contribution. 

The  jury  found,  at  the  trial,  that  there  were  twelve  persons,  includ- 
ing the  plaintiff  and  the  defendant,  who  were  parties  to  the  original 
employment  of  and  contract  with  Baley;  and  that  two  of  those  per- 
sons had  died  before  the  payment  by  the  plaintiff  to  Baley.  The 
defendant  had  paid  into  court  an  amount  sufficient  to  cover  one- 
twelfth  of  the  amount  of  the  payment  to  Baley,  but  not  sufficient  to 
cover  one-tenth  of  that  amount.  And  the  question  thus  arose  for  our 
consideration,  whether  the  amount  to  be  recovered  by  the  plaintiff 
under  the  above  circumstances  was  to  be  calculated  according  to 
the  number  of  original  joint  contractors,  or  according  to  the  number 
of  those  who  were  alive  when  the  payment  was  made,  and  against 
whom  the  right  of  the  creditor  to  sue  at  law  had  survived.  The 
point  appeared  to  us  to  be  one  which  would  admit  of  considerable 
doubt;  and  we  took  time  to  consider  our  judgment. 

1  In  an  action  at  law  for  contribution  it  is  not  necessary  to  establish  the  insolvency 
of  the  principal'.  Roberts'  V.  Adams,  b  IJort.  (Aia.)  361  ;  Uuckner  v.  Stewart,  34  Ala. 
529';  Taylor"  T.  Reynolds,  53  Cal.  686;  Sloo  v.  Pool,  15  111.  47;  Judah  v.  Mieure, 
5  Blackf.  171;  Rankin  u.  Collins,  50  Ind.  158;  Goodall  v.  Wentworth,  20  Me.  322; 
Mosely  v.  Fullerton,  59  Mo.  Ap.  143;  Smith  v.  Mason,  44  Neb.  610;  Odlin  v.  Green- 
leaf,  3  N.  H.  270  ;  Lucas  v.  Guy,  2  Bail.  403. 

But  see  contra,  Peareson  v.  Duckham,  3  Litt.  385  ;  Morrison  v.  Poyntz,  7  Dana,  507  ; 
Lee  v.  Forman,  3  Met.  (Ky.)  114;  Boiling  v.  Doneghy,  1  Duv.  220;  Glasscock  v. 
Hamilton,  62  Tex.  143 ;  and  compare  Leek  v.  Covington,  99  N.  Ca.  559 ;  Cage  v. 
Foster,  5  Yerg.  261,  264. —Ed. 

2  Only  the  opinion  of  the  Court  is  given.  —  Ed. 


SECT.  III.]  BATARD   V.    HAWES.  539 

If  the  right  to  contribution  is  to  be  considered  as  arising  merely 
from  the  fact  of  payment  being  made,  so  as  to  relieve  a  party  jointly 
liable  from  legal  liability,  we  should  have  to  look  to  the  number  of 
co-contractors  actually  liable  at  law  at  the  time  of  making  the  pay- 
ment which  relieved  them  from  liability.  But  we  think  that  it  is  not 
merely  the  legal  liability  to  the  creditor  at  the  time  of  the  payment 
that  we  are  to  regard,  but  that  we  must  look  to  the  implied  engage- 
ment of  each,  to  pay  his  share,  arising  out  of  the  joint  contract  when 
entered  into.  To  support  the  action  for  money  paid,  it  is  necessary 
that  there  should  be  a  request  from  the  defendant  to  pay,  either 
express  or  implied  by  law.  Where  one  party  enters  into  a  legal  lia- 
bility for  and  at  the  request  of  another,  a  request  to  pay  the  money 
is  implied  by  law  from  the  fact  of  entering  into  the  engagement; 
and,  if  the  debt  or  liability  is  incurred  entirely  for  a  principal,  the 
surety,  being  liable  for  him  at  his  request,  and  being  obliged  to  pay, 
is  held  at  law  to  pay  on  an  implied  request  from  the  principal  that  he 
will  do  so.  In  a  joint  contract  for  the  benefit  of  all,  each  takes  upon 
himself  the  liability  to  pay  the  whole  debt,  consisting  of  the  shares 
which  each  co-contractor  ought  to  pay  as  between  themselves;  and 
each,  in  effect,  takes  upon  himself  a  liability  for  each  to  the  extent 
of  the  amount  of  his  share.  Each,  therefore,  may  be  considered  as 
becoming  liable  for  the  share  of  each  one  of  his  co-contractors  at  the 
request  of  such  co-contractor;  and,  on  being  obliged  to  pay  such 
share,  a  request  to  pay  it  is  implied  as  against  the  party  who  ought 
to  have  paid  it,  and  who  is  relieved  from  paying  what,  as  between 
himself  and  the  party  who  pays,  he  ought  himself  to  have  paid  accord- 
ing to  the  original  arrangement.  If  the  original  arrangement  was  in- 
consistent with  the  fact  that  each  was  to  pay  his  share,  no  action  for 
such  contribution  could  be  maintained.  Thus,  if,  by  arrangement 
between  themselves,  one  of  the  joint  contractors,  though  liable  to 
the  creditor,  was  not  to  be  liable  to  pay  any  portion  of  the  debt,  it 
is  clear  that  no  action  could  be  maintained  against  him ;  though,  if 
the  relief  from  the  legal  liability  were  alone  looked  to,  it  would  follow 
that  he  was  liable  to  contribute.  So,  where  one  surety  enters  into  an 
engagement  of  suret3^ship  at  the  request  of  his  co-surety,  it  has  been 
held  that  the  co-surety,  paying  the  whole,  can  maintain  no  action. 
Turner  v.  Davies. 

Our  opinion  is  in  conformity  with  the  cases  in  which  it  has  been 
held  that  a  co-surety  is  not  liable  at  law  to  a  greater  extent  than  his 
share,  with  reference  to  the  original  number  of  sureties,  notwithstand- 
ing the  insolvency  of  one  or  more  of  the  co-contractors;  and  also 
agrees  with  the  rule  laid  down  by  Mr.  Justice  Bayley,  in  Browne  v. 
Lee,1  where  he  says:  "I  think  that  at  law  one  of  three  co-sureties 
can  only  recover  against  any  one  of  the  others  an  aliquot  proportion 
of  the  money  paid,  regard  being  had  to  the  number  of  sureties." 

It  was  urged  before  us,  by  Mr.   Bramwell,  that  if  there  were  an 

1  6  B.  &  C.  697. 


540  BATARD    V.    HAWES.  [CHAP.  IIL 

implied  original  arrangement  between  the  co-contractors,  an  action 
ought  to  be  maintainable  on  such  promise  against  the  executors  of  a 
deceased  co-contractor;  and  he  said  that  there  being  no  instance 
of  such  an  action  went  strongly  to  show  that  there  was  no  such  orig- 
inal engagement.  It  might  be  said,  on  the  other  hand,  that  there 
is  no  instance  in  the  books  of  the  party  who  has  paid  recovering  more 
than  an  aliquot  proportion  with  reference  to  the  original  number  of 
co-contractors,  by  reason  of  the  death  of  one  or  more  of  them.  But 
it  is  a  more  satisfactory  answer,  that  there  is  very  strong  authority 
for  holding  that  such  an  action  will  lie  against  executors. 

In  Ashby  v.  Ashby 1  those  very  learned  judges  Mr.  Justice  Bayley 
and  Mr.  Justice  Littledale  rely  on  such  an  action  lying  against  ex- 
ecutors as  the  ground  of  their  judgments  on  the  point  directly  before 
them.  Mr.  Justice  Bayley  says:2  "To  put  a  plain  case,  suppose 
two  persons  are  jointly  bound  as  sureties,  one  dies,  the  survivor  is 
sued  and  is  obliged  to  pay  the  whole  debt.  If  the  deceased  had  been 
living,  the  survivor  might  have  sued  him  for  contribution  in  an 
action  for  money  paid,  and  I  think  he  is  entitled  to  sue  the  executor 
of  the  deceased  for  money  paid  to  his  use  as  executor."  And  Mr. 
Justice  Littledale  says:3  "Suppose  that  a  plaintiff  had  become 
bound  jointly  with  a  testator,  and  after  his  death  had  paid  the  whole 
debt;  I  should  think  that  an  action  against  the  executor  for  money 
paid  to  his  use  might  be  supported,  and  that  the  plaintiff  would  be 
entitled  to  judgment  de  bonis  testatoris."  See  also  2  Williams  on 
Executors,  1st  edit.  1088. 4  Such  an  action  against  executors  can 
only  be  supported  on  the  ground  of  the  existence  of  such  an  implied 
original  engagement  as  we  have  adverted  to,  which,  being  made  in 
the  testator's  time,  would  bind  the  executors;  and  such  au  engage- 
ment, if  implied,  would  form  a  good  legal  ground  for  supporting  the 
action  of  money  paid. 

We  were  pressed  also  with  the  dictum  of  Lord  Eldon  in  Cray- 
thorne  v.  Swinburne,  referred  to  by  Parke,  B.,  in  Kemp  v.  Finden5 
aud  in  Davies  v.  Humphreys,  as  to  the  action  of  contribution  being 
founded  rather  upon  a  principle  of  equity  than  upon  contract.  The 
expressions  of  Lord  Eldon,  however,  will  be  found  to  relate  rather 
to  the  origin  of  the  implied  contract  than  to  the  time  at  which  it 
is  to  be  taken  to  be  made.  He  says:  "And  I  think  that  right  is 
properly  enough  stated  as  depending  rather  upon  a  principle  of  equity 
than  upon  contract;  unless  in  this  sense:  that,  the  principle  of 
equity  being  in  its  operation  established,  a  contract  may  be  inferred 
upon  the  implied  knowledge  of  that  principle  by  all  persons,  and  it 
must  be  upon  such  a  ground  of  implied  assumpsit,  that  in  modern 
times  courts  of  law  have  assumed  a  jurisdiction  upon  this  subject." 
This  passage  must  be  taken  to  admit  the  existence  of   an  implied 

i  7  B.  &  C.  444.  2  7  B.  &  C.  449.  3  7  B.  &  C.  451. 

4  Vol.  II.  p.  1509,  in  4th  edition.  5  12  M.  &  W.  421,  424. 


DAVIES   V.    HUMPHREYS. 


541 


e 


contract,  and  does  not  appear  to  us  to  be  inconsistent  with,  or  to 
outweigh,  the  clear  expression  of  the  opinion  of  the  judges  in  Ashby 
v.  Ashby.1 

Several  inconveniences  and  difficulties  were  pointed  out  on  both 
sides,  in  the  course  of  the  argument,  as  likely  to  arise  from  the 
adoption  of  each  of  the  rules  contended  for;  but  we  think  that  the 
rule  suggested  by  the  defendant's  counsel  will  be  found  much  more 
simple,  and  less  liable  to  the  inconveniences  pointed  out,  than  that 
contended  for  on  behalf  of  the  plaintiff. 

After  entertaining  considerable  doubt  on  the  subject,  we  have  come 
to  the  conclusion  that  the  rule  most  in  conformity  with  the  authori- 
ties, the  principles  of  law  and  the  convenience  of  the  case,  is  to  look 
to  the  number  of  original  co-contractors  for  the  purpose  of  determin- 
ing the  aliquot  part  which  each  contributor  is  to  pay.  And,  the 
defendant  in  the  present  case  having  paid  into  court  a  sum  sufficient 
to  cover  the  amount  due  in  proportion  to  the  number  of  the  original 
contractors,  the  rule  for  entering  the  vertl  ict  for  the  defendant  must 
be  made  absolute. 


tf.    *r** 


3c  '7?>~JZ-    ^Z*<- 

^DA^IES^EVAN  WOmwS^f^c^ 


sU 


f  r-~-v       In  the  |^chequer,Hilab&  Term,  IMO.  (7  ^f  (y*~^ 

5\  s^neponeft  in  6  1/^yff?-  WjJfhu    153.]  /7~'/i  " ^ 

Parke£/B.2     In  these  cases  actions  wwe  brought  by/tjre  plaintiff,  - 

one  of  the  makers  of  a  joint  and  several  promfssoiy  note,  dated  the'^**?  -*-** 
27th  of  December,  1827,  for  the  sum  of  £300,  with  interest,  to  recover  -*J^C£.  '"'*<- 
from  the  two  other  makers,  Evan  Humphreys  and  John  Humphrej's,  a  \r'a    -*%*+ 


part  of  the  money  paid  by  him  to  the  payee,  he  having  paid  the  whole. 


^O) 


-*"*-t^ 


In  the  action  against  Evan  Humphreys,  the  plaintiff  claimed  the  whole, 

alleging  that  the   defendant  was  the  principal   debtor.     Against  thee^-~E~*^~™ 

defendant   John  Humphreys,  he  claimed  a  moiety  of  what  he  had  paid, 

alleging  that  the  defendant  was  a  co-surety.     There  were  two  pleas,  — • 

non  assumpsit,  and  the  Statute  of  Limitations  ;  and  on  the  trial  at  the 

Spring  Assizes,  before   my  Brother  Coleridge,  it   appeared   that  the 

plaintiff  had  paid  the  whole  of  the  debt  and  interest,  of  which  the  sum 

of  £30  only  was  paid  within  six  years  before  the  commencement  of  the 

suit,  the  residue   having  been  discharged  before.     For  this  sura  the 

plaintiff  recovered  against  Evan  Humphre}'s,  leave  being  reserved  by 

the  learned  judge  to  move  to  increase  the  amount  to  the  whole  sum 

paid ;  against  John  Humphreys,  the  plaintiff  recovered  a  moiety  of 

£30,  and  permission  was  also  given  to  move  to  increase  that  verdict. 


The  rule  for 


increasing 


the  amount  of  the  verdict 


against 


Evan 


MB.&C.  444 
2 


7  B.  &  C.  444. 

Only  a  portion  of  the  opinion  of  the  Court  is  giv 


en.  —  Ed. 


#*i 


542  DAVIES   V.   HUMPHREYS.  [CHAP.  III. 

Humphreys,  the  principal,  must  be  discharged  ;  for  it  is  clear  that  each 
sum  the  plaintiff,  the  surety,  paid,  was  paid  in  ease  of  the  principal, 
and  ought  to  have  been  paid  in  the  first  mstance_by  him,  and  that~t"Ke 
plaintiff  had  a  right  of  action  against  him  the  instant  he  paid  it,  for  so 
much  ruone}'  paid  to  his  use.  However  convenient  it"lnightl3e~Io~limit 
the  number  of  actions  in  respect  of  one  suretyship,  there  is  no  rule  of 
law  which  requires  the  surety  to  pay  the  whole  debt  before  he  can  call 
for  reimbursement.  The  consequence  is,  that  the  plaintiff's  right  of 
action  against  the  principal  must  be  limited  to  the  full  amount  of  all 
the  payments  within  six  3-ears,  and  this  being  the  amount  for  which  the 
verdict  was  taken,  the  rule  to  enter  a  verdict  for  a  larger  sum  must  be 
discharged.  Against  the  co-surety  the  case  is  different  —  the  Court 
will  give  it  further  consideration. 

And  now,  in  this  term,  the  judgment  of  the  Court,  on  the  remaining 
point  in  the  action  against  John  Humphreys,  the  surety,  was  delivered 
by 

Parke,  B.  A  rule  granted  in  this  case,  as  well  as  one  which  was 
granted  in  another  action  on  the  same  note  against  the  principal,  was 
argued  in  the  sittings  after  Trinity  Term.  In  the  course  of  the  last 
term,  the  Court  disposed  of  the  rule  in  the  latter  action,  and  one  of 
the  questions  in  this  ;  having  reserved  for  further  consideration  the 
question,  at  what  time  the  right  of  one  co-surety  to  sue  the  other  for 
contribution  arises. 

This  right  is  founded  not  originally  upon  contract,  but  upon  a  princi- 
ple of  equity,  though  it  is  now  established  to  be  the  foundation  of  an 
action,  as  appears  by  the  cases  of  Cowell  v.  Edwards  and  Craythorne 
v.  Swinburne  ;  though  Lord  Eldon  has,  and  not  without  reason,  inti- 
mated some  regret  that  the  courts  of  law  have  assumed  a  jurisdiction 
on  this  subject,  on  account  of  the  difficulties  in  doing  full  justice  be- 
tween the  pai'ties.  What,  then,  is  the  nature  of  the  equity  upon  which 
the  right  of  action  depends?  Is  it  that  when  one  surety  has  paid  any 
part  of  the  debt,  he  shall  have  a  right  to  call  on  his  co-surety  or  co- 
sureties to  bear  a  proportion  of  the  burthen,  or  that,  when  he  has  paid 
more  than  his  shai-e,  he  shall  have  a  right  to  be  reimbursed  whatever 
he  has  paid  beyond  it?  or  must  the  whole  of  the  debt  be  paid  by  him 
or  some  one  liable,  before  he  has  a  right  to  sue  for  contribution  at  all? 
We  are  not  without  authority  on  this  subject,  and  it  is  in  favor  of  the 
second  of  these  propositions.  Lord  Eldon,  in  the  case  of  Ex  parte 
Gifford,  states,  that  sureties  stand  with  regard  to  each  other  in  a 
relation  which  gives  rise  to  this  right  amongst  others,  that  if  one  pays 
more  than  his  pro])ortion,  there  shall  be  a  contribution  for  a  propor- 
tion of  the  excess  beyond  the  proportion  which,  in  all  events,  he  is  to 
pay  ;  ana  he  expressly  says,  "  that  unless  one  surety  should  pa}-  more 
tlian  his  moiety,  he  would  not  pay  enough  to  bring  an  assumpsit  against 
the  other,"  And  this  appears  to  us  to  be  very  reasonable  ;  for,  if  "a 
surety  pays  a  part  of  the  debt  only,  and  less  than  his  moiety,  he  can- 
not be  entitled  to  call  on  his  co-surety,  who  might  himself  subsequently 


SECT.  III.] 


DAVIES    V.    HUMPHREYS. 


543 


pay  an  equal  or  greater  portion  of  the  debt :  in  the  former  of  which 
eases,  such  co-surety  would  have  no  contribution  to  pay,  and  in  the 
latter  he  would  have  one  to  receive.  In  truth,  therefore,  until  the  one 
has  paid  more  than  his  proportion,  either  of  the  whole  debt,  or  of  that 
part  of  the  debt  which  remains  unpaid  by  the  principal,  it  is  not  clear 
that  he  ever  will  be  entitled  to  demand  anything  from  the  other ;  and 
before  that,  he  has  no  equity  to  receive  a  contribution,  and  consequently 
no  right  of  action,  which  is  founded  on  the  equity  to  receive  it.  Thus, 
if  the  surety,  more  than  six  years  before  the  action,  have  paid  a  por- 
tion of  the  cteot,  and  the  principal  has  paid  the  residue  within  six  yea r s , 
the  Statute  of  Limitations  will  not  run  from  the  payment  by  the  surety, 
but  from  the  payment  of  the  residue  by  the  principal,  for  until  the 
latter  date  it  does  not  appear  that  the  surety  has  paid  more  than  his 
share.  The  practical  advantage  of  the  rule  above  stated  is  consider- 
able, as  it  would  tend  to  multiplicity  of  suits,  and  to  a  great  inconven- 
ience, if  each  surety  might  sue  all  the  others  for  a  ratable  proportion 
of  what  he  had  paid,  the  instant  he  had  paid  any  part  of  the  debt. 
But,  whenever  it  appears  that  one  has  paid  more  than  his  proportion 
of  what  the  sureties  can  ever  be  called  upon  to  pay,  then,  and  not  till 
then,  it  is  also  clear  that  such  part  ought  to  be  repaid  by  the  others, 
and  the  action  will  lie  for  it.  It  might,  indeed,  be  more  convenient  to 
require  that  the  whole  amount  should  be  settled  before  the  sureties 
should  be  permitted  to  call  upon  each  other,  in  order  to  prevent  multi- 
plicity of  suits  ;  indeed,  convenience  seems  to  require  that  courts  of 
equity  alone  should  deal  with  the  subject ;  but  the  right  of  action  hav- 
ing been  once  established,  it  seems  clear  that  when  a  surety  has  paid 
more  than  his  share,  every  such  payment  ought  to  be  reimbursed  by 
those  who  have  not  paid  theirs,  in  order  to  place  him  on  the  same 
footing.  If  we  adopt  this  rule,  the  result  will  be,  that  here,  the  whole 
of  what  the  plaintiff  has  paid  within  six  years  will  be  recoverable 
against  the  defendant,  as  the  plaintiff  had  paid  more  than  his  moiety 
in  the  year  1831  ;  and  consequently  the  rule  must  be  absolute  to  in- 
crease the  amount  of  the  verdict  from  £15  to  £30. 

Rules  accordingly.1 

1  Ex  parte,  Snowdon.  17  Ch.  D.  44;  Preslar  v.  Stallworth,  37  Ala.  402,  405;  Sher- 
wood v.  Dunbar,  6  Cat.  53  ;  Richter  v.  Henniug,  110  Cal.  530;  Lytle  v.  Pope,  11  B. 
Mon.  297,307;  Rooinson  v.  Jennings,  7  Bush,  630;  Hooper  v.  Hooper,  81  Md.  155, 
174;  Pass  v.  Grenada  71  Miss.  426 ;  Singleton  v.  Townsend,  45  Mo.  379 ;  Magruder 
v.  Admire,  4  Mo.  Ap.  133 :  Sherwood  v.  Woodard,  4  Dev.  360 ;  Leek  v.  Covington,  99 
N.  Ca.  559 ;  Durkin  v.  Kuney,  19  Dreg.  71  ;  Mateer  v.  Cockrill  (Texas  Civ.  Ap.  1898), 
45  S.  W.  R.  751  ;  Bushnell  v.  Bushnell,  77  Wis.  435,  Accord.        . 

The  surety's  right  to  contribution  is  complete  upon  payment  (without  notice  to  the^ 
co-surety  of~the  payment  or  demand  of  repayment/of  the  contributive  share.  Taylor^- 
v.  Reynolds,  53  Cal.  686;  Ward  v.  Henry,  5  Conn.  595 ;  Wood  v.  Perry,  y  lowa,  479 ; 
Morrison  v.  Poyntz,  7  Dana,  307;  Chaffee  v.  Jones,  19  Pick.  260;  Vliet  v.  Wyckoff, 
42  N.  J.  Eq.  644  ;  Sherrod  v.  Woodard,  4  Dev.  360 ;  Parham  v.  Green,  64  N.  Ca.  436  ; 
Bright  v.  Lennon,  83  N.  Ca.  133;  Cage  v.  Foster,  5  Yerg.  261  (principal  being  insol- 
vent); Poster  v.  Johnson,  5  Vt.  60;  Mason  v.  Pierson,  69  Wis.  585,  Accord. 

Williams  ?•.  Williams,  5  Oh.  444 ;  Carpenter  v.  Kelley,  9  Oh.  106 ;  Neilson  v.  Fry, 
16  Oh.  St.  552,  Contra.— Ed. 


544    ^  DEEKING    V.    EARL   OF   WINCHELSEA.  _£CH^P.  \W 

SIR  E.    DEERING   K   THE   EARL   OF   WINCHELSEA 
£^T  s^2<j2rf     AND  Others. 

In  the  Exchequer",  February  8,  1787. 


[Reported  in  2  Bosanquet  Sf  Puller,  270.1] 

Lord  Chief  Baron  Eyre  (present  Hotham  and  Perrin,  Barons) 
delivered  the  opinion  of  the  Court. 

Thomas  Deering,  younger  brother  of  the  plaintiff,  was  appointed 
in  1778  receiver  of  fines  and  forfeitures  of  the  customs  of  the  out- 
ports,  and  entered  into  three  bonds,  each  in  the  penalty  of  £4,000, 
with  condition  for  duly  accounting;  in  one  of  which  the  plaintiff 
joined  as  surety,  in  another  Lord  Winchelsea,  and  Sir  John  Rous  in 
—j-  t~+*y^^  third.  Thomas  Deering  became  insolvent  and  left  the  country; 
^~~"i  — .  the  balance  due  to  the  crown  was  £6,602  10s.  8d.,  part  of  which 
was  levied  on  his  effects,  and  when  the  bill  was  filed  there  was  due 
£3,883  14s.  8^d.,  which  was  rather  less  than  the  penalty  of  each  of 
the  bonds.  The  bond  in  which  the  plaintiff  had  joined  was  put  in 
suit  against  him,  and  judgment  obtained.  He  filed  his  bill  demand- 
ing contribution  against  Lord  Winchelsea  and  Sir  John  Rous,  and 
praying  an  account  of  what  was  due  to  the  crown  and  money  levied  on 
the  plaintiff  (supposing  execution  to  follow  the  judgment),  and  that 
Lord  Winchelsea  and  Sir  John  Rous  might  contribute  to  discharge 
the  debt  of  Thomas  Deering  as  two  of  the  sureties  for  that  debt.  The 
appointment,  the  three  bonds,  and  the  judgment  against  the  plaintiff 
were  in  proof,  and  the  balances  were  admitted  by  all  parties. 

The  Lord  Chief  Baron,  after  stating  the  case,  observed,  that  con- 
tribution was  resisted  on  two  grounds:  first,  that  there  was  no  foun- 
dation for  the  demand  in  the  nature  of  the  contract  between  the 
parties,  the  counsel  for  the  defendants  considering  the  title  to  contri- 
bution as  arising  from  contract  expressed  or  implied;  secondly,  that 
the  conduct  of  Sir  Edward  Deering  had  deprived  him  of  the  bene- 
fit of  any  equity  which  he  might  have  otherwise  had  against  the 
defendants. 

The  Lord  Chief  Baron  considered  the  second  objection  first.  The 
misconduct  imputed  to  Sir  E.  Deering  was,  that  he  had  encouraged 
his  brother  in  irregularities,  and  particularly  in  gaming,  which  had 
ruined  him,  and  had  done  this  knowing  his  fortune  to  be  such  that  he 
could  not  support  himself  in  his  extravagances  and  faithfully  account 
to  the  crown;  that  Sir  E.  Deering  was  privy  to  his  brother's  break- 
ing through  the  orders  given  him  to  deposit  the  money  he  received 
in  a  chest  under  the  key  of  the  comptroller.  His  Lordship  observed 
that  this  might  be  true,  and  certainly  put  Sir  E.  Deering  in  a  point  of 
view  which  made  his  demand  indecorous ;  but  it  had  not  been  made 

1  1  Cox,  319,  s.  c  — Ed. 


SECT.  III.]  PEERING   V.    EARL   OF    WINCHELSEA.  545 

out  to  the  satisfaction  of  the  Court  that  this  constituted  a  defence. 
Mr.  Maddocks  had  stated  that  the  author  of  the  loss  should  not  have 
contribution;  but  stated  neither  reason  nor  authority  to  support  the 
principle  he  urged.     If  these  were  circumstances  which  could  work        .- 
a  disability  in  the  plaintiff  to  support  his  demand,  it  must  be  on  the    p*^^? 

maxim,   "that  a  man  must  come  into  a  court  of  equity  with  clean _j  "us 

hands ; "  but  general  depravity  is  not  sufficient.  It  must  be  pointed 
to  the  act  upon  which  the  loss  arises,  and  must  be  in  a  leaal  sense  /%*—& 
the  cause  of  the  loss.  In  a  moral  sense  Sir  E.  Deering  might  be  the 
author  of  the  loss;  but  in  a  legal  sense  Thomas  Deering  was  the 
author;  and  if  the  evil  example  of  Sir  E.  Deering  led  him  to  it,  yet 
this  was  not  what  a  court  of  justice  could  take  cognizance  of.  There 
might  indeed  be  a  case  in  which  a  person  might  be  in  a  legal  sense 
the  author  of  the  loss,  and  therefore  not  entitled  to  contribution ;  as 
if  a  person  on  board  a  ship  was  to  bore  a  hole  in  the  ship,  and  in 
consequence  of  the  distress  occasioned  by  this  act  it  became  necessary 
to  throw  overboard  his  goods  to  save  the  ship.  This  head  of  defence 
therefore  fails.  The  real  point,  is,  Whether  there  shall  be  contribn-  «/-s 
tion  by  sureties  in  distinct  obligations? 

It  is  admitted,  that  if  they  had  aTTjoined  in  one  bond  for  £12,000, 
there  must  have  been  contribution.     But  this  is  said  to  be  on  the 
foundation  of  contract  implied  from  their  being  parties  in  the  same 
engagement,  and  here  the  parties  might  be  strangers  to  each  other. 
And  it  was  stated  that  no  man  could  be  called  upon  to  contribute 
who  is  not  a  surety  on  the  face  of  the  bond  to  which  he  is  called  to 
contribute.     The  point  remains  to   be  proved   that   contribution   is 
founded  on  contract.     If  a  view  is  taken  of  the  cases,  it  will  appear 
that  the  bottom  of  contribution  is  a  fixed  principle  of  justice,  and  is 
not  founded  in  contract.     Contract  indeed  may  qualify  it,  as  in  Swain        Z^^  — 
v.  Wall,  where  three  were  bound  for  H.  in  an  obligation,  and  agreed,      *    ^^, 
if  H.  failed,  to  bear  their  respective  parts.     Two  proved  insolvent, 
the  third  paid  the  money,  and  one  of  the  others  becoming  solvent^"  he     '^^   *4 
was  compelled  "to  pay  a  third  oulyT" 

There  are  in  the  Register,  fo.  176  b,  two  writs  of  contribution, 
one,  uDe  contributions  facienda  inter  co/ucredes,"  the  other,  "Z>e 
feoffamento  ;  "  these  are  founded  on  the  Statute  of  Marlebridge,  52  H. 
III.,  c.  9,  which  enacts,  "That  if  any  inheritance  whereof  but  one  suit 
is  due  descends  unto  many  heirs  as  unto  parceners,  whoso  hath  the 
eldest  part  of  the  inheritance,  shall  do  that  one  suit  for  himself 
and  fellows,  and  the  other  co-heirs  shall  be  contributaries  according 
to  their  portion  for  doing  such  suit.  And  if  many  feoffees  be 
seised  of  an  inheritance  whereof  but  one  suit  is  due,  the  lord  of  the 
fee  shall  have  but  that  one  suit,  and  shall  not  exact  of  the  said  inheri- 
tance but  that  one  suit,  as  has  been  used  to  be  done  before.  And  if 
these  feoffees  have  no  warrant  or  means  which  ought  to  acquit  them, 
then  all  the  feoffees  according  to  their  portion  shall  be  contributaries 
for  doing  the  suit  for  them."     The  object  of  the  statute  was  to  protect 

35 


546  DEERING   V.    EARL    OF   WINCHELSEA.  [CHAP.  III. 

the  inheritance  for  more  than  one  suit.  The  provision  for  contribu- 
tion was  an  application  of  a  principle  of  justice.  In  Fitzh.  N.  B. 
162  B,  there  is  a  writ  of  contribution  where  there  are  tenants  in 
common  of  a  mill  and  one  of  them  will  not  repair  the  mill,  the  other 
shall  have  the  writ  to  compel  him  to  contribute  to  the  repair.  In 
the  same  page  Fitzherbert  takes  notice  of  the  writs  of  contribution 
between  co-heirs  and  co- feoffees;  and  supposes  that  between  feoffees 
the  writ  cannot  be  had  without  the  agreement  of  all,  and  the  writ  in 
the  register  countenances  the  idea;  yet  this  seems  contrary  to  the 
express  provision  in  the  statute.  In  Sir  Win.  Harbet's  Case  1  many 
cases  are  put  of  contribution  at  common  law.  The  reason  is,  they 
are  all  in  cequali  jure,  and  as  the  law  requires  equality  they  shall 
equally  bear  the  burden.  This  is  considered  as  founded  in  equity: 
contract  is  not  mentioned.  The  principle  operates  more  clearly  in  a 
court   of   equity    than    at   law.     At   law   the   party  is  driven  to  an 

idita  querela  or  scire  facias  to  defeat  the  execution  and  compel 
execution  to  be  taken  against  all.  There  are  more  cases  of  contri- 
bution in  equity  than  at  law.  In  Equity  Cases  Abridged  there  is  a 
string  under  the  title  "Contribution  and  Average."  Another  case  at 
law  occurred  in  looking  into  Hargrave's  Tracts  in  a  treatise  ascribed 
to  Lord  Hale  on  the  prisage  of  wines.  The  king's  title  is  to  one  ton 
before  the  mast  and  one  ton  behind  the  mast.  If  there  are  different 
owners  they  may  be  compelled  in  the  Exchequer  Chamber  to  con- 
tribute. Contribution  was  considered  as  following  the  accident  on  a 
general  principle  of  equity  in  the  court  in  which  we  are  now  sitting. 

In  the  particular  case  of  sureties,  it  is  admitted  that  one  surety 
may  compel  another  to  contribute  to  the  debt  for  which  they  are 
jointly  bound.  On  what  principle?  Can  it  be  because  they  are 
jointly  bound?.-  What  if  they  are  jointly  an$  severally  bound?  What 
if  severally  bound  by  the  same  or  different  instruments?  In  every 
one  of  those  cases  sureties  have  a  common  interest  and  a"common 
burthen.  They  are  bound  as _ effectually  quoad  contribution,  as  if 
bound  In  one  instrument,  with  this  difference  only,  that  the  sums  in 
each  instrument  ascertain  the  proportions,  whereas  if__they  werj^all 
joined  in  the  same  engagement  they  must  all  contribute  equally. 

In  this  case  Sir  E.  Deering,  Lord  Winchelsea,  and  Sir  J.  Rous 
were  all  bound  that  Thomas  Deering  should  account.  At  law  all  the 
bonds  are  forfeited.  The  balance  due  might  have  been  so  large  as  to 
take  in  all  the  bonds;  but  here  the  balance  happens  to  be  less  than 
the  penalty  of  one.  Which  ought  to  pay?  He  on  whom  the  crown 
calls  must  pay  to  the  crown;  but  as  between  themselves  they  are 
in  cequali  jure,  and  shall  contribute.  This  principle  is  carried  a 
great  way  in  the  case  of  three  or  more  sureties  in  a  joint  obligation; 
one  being  insolvent,  the  third  is  obliged  to  contribute  a  full  moiety. 
This  circumstance  and  the  possibility  of  being  made  liable  to  the 
whole  has   probably  produced   several   bonds.      But   this   does   not 

i  3  Co.  1 1  6. 


/rt)   66jf»^~f 


zzz 


SETTT.  m.T    '  BELLS    ADMINISTRATOR^ V.   JASPER. 

touch  the  principle  of  contribution  where  all  are  bound  as  sureties  for 
the  same  person. 

"  There  is  an  instance  in  the  civil  law  of  average,  where  part  of  a 
cargo  is  thrown  overboard  to  save  the  vessel.  Show.  Pari.  Cas.  19 
Moor,  297.  The  maxim  applied  is  qui  sentit  commodum  sentire  debet' 
et  onus.  In  the  case  of  average  there  is  no  contract  express  or  implied, 
nor  any  privity  in  an  ordinary  sense.  This  shows  that  contribution 
is  founded  on  equality,  and  established  by  the  law  of  all  n atious . 

There  is  no  difficulty  in  ascertaining  the  proportions  in  which  the 
parties  ought  to  contribute.  The  penalties  of  the  bonds  ascertain 
the  proportions.  ' 

The  decree  pronounced  was,  that  it  being  admitted  by  the  Attorney- 
General  and  all  parties  that  the  balance  due  was  £3,883  14s.  8%d.,  the 
plaintiff  Sir  E.  Deering,  and  the  defendants  the  Earl  of  Winchelsea 
and  Sir  J.  Rous,  ought  to  contribute  in  equal  shares  to  the  payment 
thereof,  and  that  they  do  accordingly  pay  each  £1,294  lis.  6\d.,  and 
on  payment  the  Attorney-General  to  acknowledge  satisfaction  on  the 
record  of  the  judgment  against  the  plaintiff,  and  the  two  bonds 
entered  into  by  the  Earl  of  Winchelsea  and  Sir  J.  Rous  to  be  deliv- 
ered up. 

This  being  a  case  which  the  Court  considered  as  not  favorable  to 
Sir  E.  Deering  and  a  case  of  difficulty,  they  did  not  think  fit  to  give 
him  costs.1  <^  «. 

STRATOR  Vr-J.   B.   JASPER  and  Others.      ~_ 
Court,  North  Carolina,  June,  1843.        ^      Z*5r    o 

[Reported  in  2  IredelL  Equit*.  597.] 
In  the 


A.     diLIjIj  o 


~n  the  S 


Daniel,  J.2 


^U-Q  +~L 


year  1  ST?,.  John  B.  Jasper  was  appointed  guard- 


"77 


ian  to  Patsey  Jasper  by  the  County  Court^of  Hyde,  and  he  executed  a  %. 


1  WnTWng  v.  Burke,  6  Ch.  342,  10  Eq.  539  ;  In  re  Ennis,  1893,  3  Ch.  238;  Dugger  ^r<y 
v.  Wright,  51  Ark.  232  ;  Powell  v.  Powell,  48  Cal.  234 ;  Monson  v.  Drakeley,  40  Conn.  -      »  ,^ 
552  ;  Stevens  v.  Tucker,  87  Ind.  109 ;  Hutchcraft  v.  Shrout,  1  T.  B.  Mon.  208  ;  Breck-"*^*W  . 
enridge  v.  Taylor,  5  Dana,  110;  Bosley  v.  Taylor,  5  Dana,  157;  Cobb  v.  Harries,  8  B. 
Mon.  137;  Stockmeyer  v.  Oertling,  35  La.  An.  468;  Chaffee  v.  Jones,  19  Pick.  260;     y  y»  / 

Craig  v.  Ankeney,  4  Gill,  225  ;  Loring  v.  Bacon,  3  Cush.  465 ;  Brooks  v.  Whitmore,  £"^  ■    '"**■*' 
142  Mass.  399  ;  Forbes  v.  Harrington,  171  Mass.  386  ;  Young  v.  Shunk,  30  Minn.  503  ;  'TTfc+fi' 
Wood  v.  Williams,  61  Mo.  63;  Norton  v.  Coons,  3  Den.  130;  Aspinwall  v.  Torrance,  _ 

57  N.  Y.  331  ;  Armitage  v.  Pulver,  37  N.  Y.  494  ;  Schram  v.  Werner,  85  Hun,  293 ;       t~+4L~ 
Oats  v.  Bryan,  3  Dev.  451 
502;  Jones  v.  Blanton,  6  Ired. 

Ross,  78  N.  Ca.  164  ;  Hughes  v.  Boone,  81  N.  Ca.  204 ;  Pickens  v.  Miller,  83  N.  Ca.  543  j 
Robinson  v.  Boyd,  60  Oh.  St.  57  ;  Durbin  v.  Kuney,  19  Oreg.  71  ;  Thompson  v.  Dekum/ 
32  Oreg.  506  ;  Commw.  v.  Cox,  36  Pa.  442  ;  Harris  v.  Ferguson,  2  Bail.  397  ;  E nicks  ~ 'C'    ^**- 
V.  Powell,  2  Strob.  Eq.  196  ;  Odom  v.  Owens,  2  Baxt.  446,  Accord.  —  Ed. 

a  Only  a  portion  of  the  opinion  of  the  Court  is  given.  —  Ed. 


;.  Pulver,  37  N.  Y.  494  ;  Schram  v.  Werner,  85  Hun,  293 ;       *-*■*£.    ^ 
;  Bell  v.  Jasper,  2  Ired.  Eq.  597  ;  Jones  v.  Hayes,  3  Ired.  Eq.  _^  r^J^zfl 
Ired.  Eq.  115;  Moore  v.  Boudinot,  64  N.  Ca.  190;  Cherry  v. 


-2, 


st^Le  U 


«j&~ 


1 


£) 


548  bell's  administrator  v.  jasper.  [chap.  hi. 

guardian  bond  in  the  penalty  of  810,000,  with  James  Cleaves,  Asa 
Bell,  and  Irael  Wilkerson,  as  his  sureties.  In  the  3-ear  1819,  the 
securities  to  the  said  bond  petitioned  the  Court,  under  the  act  of 
Assembly  (vide  Rev.  Stat.  312,  s.  20),  and  suggested  in  the  said  peti- 
tion, that  the  guardian  was  acting  in  such  a  manner  with  the  estate  of 
the  ward,  that  they  were  in  danger,  and  the}-  prayed  the  Court  that  an 
order  might  be  made,  that  the  property  of  the  ward  might  be  delivered 
over  to  them,  or  that  the  guardian  should  counter-secure  them.  The 
Court,  at  February  Sessions,  1820,  ordered  that  the  said  guardian  enter 
into  a  new  bond  in  the  penalty  of  $5,000  ;  which  order  was  performed 
by  the  guardian,  and  the  new  bond  was  drawn  in  the  form  of  an  ordi- 
nary guardian  bond,  and  executed  by  Jasper  as  principal,  and  William 
H.  Russell,  James  Leath,  and  D.  W.  Martin  as  his  sureties.  And  the 
LrCourt  then  further  ordered,  "  that  Asa  Bell  and  others,  the  sureties  of 
Jf       Jno.  B.  Jasper,  guardian  of  Patsey  B.  Jasper,   upon  the  old  bond,  be 

^jwr  *,  released  from  that   time   from  their   liabilities."     The  ward   married 

ScJ  /\  first  a  man  b}T  the  name  of  Hawks;  suit  was  brought  by  Hawks  and 
/  wife  against  Asa  Bell,  one  of  the  sureties  to  the  first  bond,  to  recover 

the  personal  estate  of  the  ward  :  Hawks  died,  his  widow  then  married 
Foy,  and  suit  was  continued  against  Bell  in  the  name  of  Foy  and  wife, 
and  at  December  Term,  1835,  of  the  Supreme  Court,  judgment  was 
obtained  for  the  sum  of  $4,100.65  and  costs  ;  the  costs  were  $198.09  ; 
all  which  moneys  were  paid  b}'  Bell,  at  June  Term,  1837,  of  the  Su- 
preme Court.  The  bill  states  that  Jasper  is  hopelessly  insolvent. 
But,  nevertheless,  a  decree  is  prayed  against  him  for  the  whole  sum 
as  principal  debtor,  and  also  against  the  sureties  that  are  alive,  and  the 
representatives  of  those  that  are  dead,  on  both  bonds,  for  contrib u  tio  n 
on  the  score  of  Jasper's  insolven cy . 

)^*Tg"  ^  m  The  right  of  contribution  exists  between  co-sureties,  when  the  princi- 
pal  is  insolvent,  and  that,  whether  they  are  so  by  separate  instruments, 

Pt<-~+<£ir  or  b}T  the  same  instrument.  Mayhew  v.  Crickett ; 1  Deering  v.  Wincliel- 
♦  ^^  sea ;  Craythorne  v.  Swinburne.  But  in  what  proportions  are  the}'  to 
—  /  contribute?  The  sureties  are  not  liable  beyond  the  penally  of  the  par- 
ticular bond  each  has  signed.  If  Foy  and  wife  had  been  damnified  by 
the  acts  of  the  guardian  to  the  amount  of  $15,000  or  more,  then  the 
rule  of  contribution  between  these  two  sets  of  sureties  would  plainly  be 
this,  the  sureties  to  the  old  bond  would  have  to  pa}'  $10,000  and  those 
to  the  new  bond  $5,000.  And  the  same  proportions  must  be  observed, 
when  the  sum  demanded  for  the  breaches  of  the  conditions  of  the  two 
bonds  is  less  than  the  penalty  of  the  smallest  bond.  The  contribution 
between  co-sureties,  who  are  so  under  separate  instruments,  is  to  be 
in  the  proportion  of  the  penalties  of  the  separate  bond,  which  each^et 
of  sureties  has  signed.2     Deering  v.  Winchelsea.      In  this  case  the 

1  2  Swan,  185. 

2  Pendlebury  v.  Walker,  4  Y.  &  C.  424,  441  (semble) ;  Chipman  v.  Morrill,  20  Cal. 
130;  Loring  v.  Bacon,  3  Cush.  65  (semble) ;  Brooks  v.  Whitmarsh,  142  Mass.  399  (semble) ; 
iToung  v.  Skunk,  30  Minn.  503;  Armitage  v.  Pulver,  37  N.  Y.  494;  Jones  v.  Hayes, 


-** 


SECT.  III.]  McBRIDE   V.    POTTER-LOVELL    CO.  549 

sureties  to  the  old  bond,  including  Bell,  would  have  to  bear  the  loss 
of  two-thirds,  and  the  other  sureties  to  the  new  bond  one-third.  Bell 
has  paid  all  the  loss,  and,  therefore,  he  is  entitled  to  have  his  debt 
established  against  Wilkerson's  administrator  for  one-third  of  two- 
thirds  of  said  loss,  and  the  same  against  Cleaves's  administrator.  But 
he  has  no  assets.  The  plaintiff  has  not  shown  by  proof  that  there  are 
any  assets  belonging  to  either  of  the  said  estates.  And  the  bill  must 
be  dismissed  as  to  him,  unless  the  plaintiff  wishes  to  have  an  inquiry 
as  to  the  assets  and  the  administration  thereof,  which  he  ma}'  have  if 
he  will.  As  to  the  other  third  of  the  plaintiff's  loss,  for  which  he 
should  be  indemnified  by  the  sureties  of  the  second  bond,  it  becomes 
necessary  to  ascertain,  in  order  to  fix  the  liabilities  of  the  defendants 
thereby  sought  to  be  charged,  the  value  of  the  property  which  the 
defendants  Susan  Martin  and  Julia  Ann  Elizabeth  Hays  hold,  that 
was  devised  to  them  respectively  by  Daniel  W.  Martin,  deceased. 
And  as  to  the  said  last-mentioned  defendants,  there  must  be  an  inquiry,  / 
whether  tue  amount  recovered  b}-  Foy  and  wife  against  Bell  was  justly 
recovered.     The  cause  will  be  retained  for  further  directions. 

Per  Curiam.  Ordered  accordingly. 


L.    McBRIDE  and  Akqther  y 

^'+*+&Ztg^^^P*^tfg£$Y   .AND^UJl       15T7    / 


In  the  Supreme  Judicial  Court,  Massachusetts,  June  15JT897.       — _-_ 

'  \ja"    jt^ Reported  in  169  Mpswchusftts  Iiepons,  7. 1  ^^  _ 


^v     •  t*rx~     --[Reported  inl&'da^ssachiisettsIxejwrTs,  7.1  _-,  _ 

Allen,  J.      The  Potter-Lovell  Company,  a  corporation,  held  certain        ^  ^— . 


notes  of  the  plaintiffs  for  sale,  and  it  was  to  remit  to  them  the  proceeds,- 

3  Ired.  Eq.  502  ;  Jones  v.  Blanton,  6  Tred.  Eq.  115  ;  Moore  v.  Boudinot,  64  N.  Ca.  190;    <Z^^*^-t- 

Hughes  v.  Boone,  81  N.  Ca.  204  (semble) ;  Bright  v.  Lennon,  83  N.  Ca.  187  ;  Enicks  v.  ,^ZfL  " 
Powell,  2  Strob.  Eq.  196  (semble) ;  In  re  McDonaghs,  Ir.  K.  10  Eq.  269,  Accord.  ^     ' 

If  two  or  more  obligations  are  executed  by  the  principal  in  the  same  amount  aud  for 
the  same  debt  or  liability^  but  with  different  sureties,  andTlie  total  amount  recoverable' 
by  the  obligee  on  all  the  obligations  is  not  intended  in  am  (.•vent  to  exceed  the  amount  ^ 
specified  in  each  of  them,  contribution  will  be  enforced  just  as  if  all  the  sureties  had 
executed  the  same  obligation.  Uugger  v.  \v  right,  !>  i  Ark.  232  ;  Powell  v.  Powell,  48 
Cal.  234 ;  Bosley  v.  Taylor,  5  Dana,  157  ;  Cobb  v.  Haynes,  8  B.  Mon.  137;  Elbert  v. 
Jacobey,  8  Bush,  542  ;  Ketler  v.  Thompson,  13  Bush,  287  ;  Bergen  v.  Stewart,  28  How. 
Pr.  6  ;  Hughes  v.  Boone,  81  N.  Ca.  204 ;  Pickens  v.  Miller,  83  N.  Ca.  543 ;  Harris  v. 
Ferguson,  2  Bail.  397  ;  Bentley  v.  Harris,  2  Grat.  357  ;  Rudolf  v.  Malone  (Wisconsin, 
1894),  80  N.  W.  R.  743. 

It  has  been  held  that,  if  a  principal  has  given  a  bond  with  sureties,  and  subsequently 
has  executed  a  second  bond  for  a  smaller  amount  with  different  sureties,  covering  a 
part  of  the  duty  embraced  in  the  first  bond,  the  sureties  on  the  two  bonds  will  share 
the  burden  equally,  unless  the  creditor's  claim  exceeds  twice  the  amount  of  the  smaller 
bond,  the  sureties  in  the  larger hond  being  liable  for  all  the  excess  beyond  this  amount. 
Burnett  v.  Millsaps,  59  Miss.  333;  Cherry  v.  Wilson,  78  N.  Ca.  164,  166;  Odom  v. 
Owen,  58  Tenn.  446  (semble).—  Ed. 

1  Only  the  opinion  of  the  Court  is  given.  —  Ed. 


^ 


&1 


550  McBKIDE    V.    POTTER-LOVELL    CO.  [CHAP.  IIL 

less  its  commissions  for  selling  the  same.  The  Potter-Lovell  Company 
also  held  notes  of  others  of  the  defendants,  which  it  had  received  from 
them  for  sale.  Instead  of  selling  the  above-mentioned  notes  for  the 
benefit  of  the  several  makers,  the  company  at  different  times  wrongfully 
and  fraudulently  pledged  all  of  them  to  the  Second  National  Bank  as 
security  for  its  own  debts  to  said  bank,  all  the  notes  being  pledged  for 
the  same  debts.  The  bank,  being  a  bona  fide  holder  for  value  without 
notice,  collected  enough  of  these  notes  from  time  to  time  as  they  fell 
due,  including  the  notes  of  the  plaintiffs  and  some  others,  to  satisfy  its 
claims  against  the  Potter-Lovell  Company.  All  of  the  various  parties 
whose  notes  were  thus  fraudulently  pledged  stood  on  the  same  footing, 
except  that  the  notes  were  pledged  at  different  times,  and  fell  due  and 
were  collected  at  different  times  ;  and  except  that  one  of  the  parties, 
the  North  Star  Boot  and  Shoe  Company,  demanded  the  return  of  its 
note  from  the  Potter-Lovell  Company  before  the  same  was  pledged, 
and  has  never  paid  the  same  in  whole  or  in  part  to  the  bank. 

These  differences  do  not  vary  the  equitable  rights  and  liabilities  of 
the  parties  as  amongst  themselves.  The  liability  to  contribute  does 
not  depend  on  a  contract  between  the  parties  who  are  held  liable  to 
contribute,  and  is  not  affected  b}T  the  fact  that  notes  were  pledged  and 
fell  due  and  were  paid  at  different  times,  or  that  some  of  them  were 
paid  only  in  part,  or  not  at  all.  The  notes  were  all  pledged  to  secure 
the  same  indebtedness.  The  fact  that  some  of  them  fell  due  at  earlier 
dates  than  others  creates  no  equit}T  in  favor  of  those  which  fell  due  last. 
See  American  Loan  &  Trust  Co.  v.  Northwestern  Guarant}'  Loan  Co.1 
The  various  parties  selected  a  common  agent,  and  this  agent  used  its 
power  to  place  them  all  under  a  common  liability,  thus  virtually  making 
them  all  sureties  for  itself.  It  might  be  that  under  such  circumstances 
the  pledgee  would  prefer  to  hold  one  and  exonerate  another,  and  it 
would  have  power  to  do  so  in  the  first  instance  by  proceeding  to  collect 
of  one,  but  not  of  another.  But  where  several  different  parties  have 
thus  been  exposed  to  loss  by  the  fraud  of  their  common  agent,  it  is 
more  equitable  tliat  the  burden  of  the  loss  should  be  shared  pro  rata. 
Under  such  circumstances  equality  is  equity,  without  respect  to  the  time 
of  the  maturity  of  the  notes.  The  demand  by  the  North  Star  Boot  and 
Shoe  Compan}'  for  the  return  of  its  note  was  also  immaterial.  It  was 
no  more  fraudulent  to  pledge  this  note  after  such  demand  than  it  would 
have  been  to  pledge  it  before  a  demand.  All  the  notes  being  pledged 
as  security  for  the  same  indebtedness,  the  whole  loss  in  consequence 
thereof  is  to  be  borne  by  all  the  makers  in  proportion  to  the  amounts  of 
the  notes  so  pledged.  Gould  v.  Central  Trust  Co.  ; 2  New  England 
Trust  Co.  v.  New  York  Belting  &  Packing  Co. ; 3  Wiggin  v.  Suffolk  Ins. 
Co.;4  Warner  v.  Morrison.  Decree  for  the  plaintiff s.5 

i  166  Mass.  337.  2  6  Abb.  N.  C.  381. 

3  166  Mass.  42,  and  cases  there  cited.  4  18  Pick.  145,  153. 

5  The  doctrine  of  the  principal  case  applies  equally  although  the  co-suretyship  cre- 
ated against  the  will  of  the  parties  be  real  and  not  personal,  as  in  Gould  v.  Central 


SECT.  III.]  COOPE   V.   TWYNAM.  551 


COOPE  v.  TWYNAM. 
In  Chancery,  before  Lord  Eldon,  C,  December  3,  1823. 

[Reported  in  Turner  §•  Russell,  426.] 

The  bill  in  this  cause,  amongst  other  things,  pra}Ted,  that  a  bond, 
which  had  been  executed  by  the  plaintiff  and  John  Brice  deceased,  for 
securing  to  the  defendant  Twjnam  the  sum  of  £400,  and  interest,  pay- 
able on  the  24th  of  December,  1814,  might  be  delivered  up  to  be  can- 
celled, and  for  an  injunction  in  the  mean  time  to  restrain  proceedings  at 
law  upon  the  bond. 

The  principal  case  stated  by  the  bill  in  support  of  the  relief  prayed 
respecting  the  bond  was,  that  in  August,  1812,  the  plaintiff  and  William 
Rogers  and  William  Purdue  Smith  respectively  agreed  to  become  secu- 
rity with  the  said  John  Brice  for  the  payment  to  the  defendant  Twynam 
of  such  sum  of  money,  not  exceeding  £1,200,  as  Brice  might  be  found 
indebted  to  Twynam  upon  the  settlement  of  an  account  then  depending 
between  them  ;  that  it  was  agreed  that  such  security  of  the  plaintiff  and 
Rogers  and  Smith  respectively  should  be  given  by  three  several  bonds 
pa}able,  with  interest,  at  different  periods,  that  is  to  sa}-,  one  bond 
from  Brice,  and  Smith  as  his  surety,  for  the  payment  of  £400,  and  in- 
terest, on  the  24th  of  December,  1813  ;  another  bond  from  Brice,  and 
the  plaintiff  as  his  suretj*,  for  the  payment  of  £400,  and  interest,  on  the 
24th  of  Decembei',  1814  ;  and  another  bond  from  Brice,  and  Rogers  as 
his  surety,  for  the  payment  of  £400,  and  interest,  on  the  24th  of  Decem- 
ber, 1815  ;  that  Brice  and  Twynam  accordingly  caused  three  several 
bouds  to  the  effect  aforesaid  to  be  prepared,  and  that  the  plaintiff  and 
Rogers  respectively  executed  the  bonds  in  which  the}-  were  respectively 
named  as  sureties,  but  that  Smith  declined  to  execute  the  bond  in  which 
he  was  named  as  suret}-,  or  to  cany  the  agreement  with  Twynam  into 
effect.  The  bill  charged,  that  the  execution  of  the  bonds  was  one  entire 
agreement,  and  that  as  Smith  did  not  execute  the  bond  in  which  he  was 
named  as  suret}*,  the  plaintiff  was  not  bound  b}'  the  bond  which  he  had 
executed  ;  and  it  further  charged,  that  the  bond  executed  by  the  plain- 
tiff was  executed  b}T  him  upon  the  faith  and  expectation  that  Smith 
would  execute  his  bond,  and  that  Brice  would  thereby  be  relieved  from 

Trust  Co.,  6  Abb.  N.  C.  381,  in  which  ease  the  subject-matter  of  the  pledge  was  not_as 
in  the  principal  case  the  obligations,  but  the  properties  of  different  persons. 

Contribution  in  cases  of  Double  Insurance.  — "A  double  insurance,  tliough  it  be  made 
with  a  view  to  a  double  satisfaction  in  case  of  loss,  and  is  therefore  in  nature  of  a 
wager,  is  not  void  by  the  law  of  England.  The  two  policies  are  considered  as  making 
but  one  insurance.  They  are  good  to  the  extent  of  the  value  of  the  effects  put  in  risk. 
But  the  insured  shall  not  be  permitted  to  recover  a  double  satisfaction.  He  may  sue 
the  underwriters  on  both  the  policies,  but  be  can  only  recover  the  real  amount  of  Bis 
loss,  to  wnicli  all  the  underwriters  shall  contribute  in  proportion  to  their  several  sub- 
scriptions.'     1  Marsh.  Ins.  (1st  ed .]  115.     See  also  1  Arnould,  Ins.  "328,  329.  —  Ed-  ~~ 


552  COOPE   V.   TWYNAM.  [CHAP.  III. 

the  payment  of  the  £1,200  to  Twynam  until  the  bonds  should  respec- 
tively become  payable. 

The  defendant  Twynam,  by  his  answer,  said  that  in  August,  1812, 
Brice  was  indebted  to  him  in  the  sum  of  £1,364,  or  thereabouts,  upon 
the  balance  of  an  account  which  was  then  depending  between  them,  and 
that  being  pressed  for  payment  of  the  balance,  Brice  proposed  to  give 
security  for  £1,200,  part  thereof,  and  offered  as  such  security  the  three 
several  bonds  mentioned  in  the  bill.  He  further  said,  he  believed  that 
the  plaintiff  and  Rogers,  each  of  them  alone  and  separately  from  the 
other,  agreed  to  become  bound  with  Brice  for  the  payment  of  £400  to 
him,  the  defendant,  without  any  reference  to  the  settlement  of  accounts 
between  him  and  Brice,  and  without  the  plaintiff  and  Rogers  becoming 
sureties  or  liable  for  the  default  of  each  other,  or  of  Smith  ;  and  he  said 
he  believed,  that  for  the  purpose  of  giving  the  aforesaid  security7,  the 
plaintiff,  for  himself  alone,  and  without  any  privity  or  connection  with 
Rogers  or  Smith,  agreed  to  join  Brice  in  a  bond  for  the  payment  of 
£400  and  interest  on  the  24th  of  December,  1814  ;  and  Rogers,  in  like 
manner,  agreed  to  join  Brice  in  a  bond  for  the  payment  of  £400  and 
interest  upon  the  24th  of  December,  1815  ;  but  he  said  he  did  not  be- 
lieve that  Smith  ever  agreed  to  join  Brice  in  a  bond  for  the  pa3Tment  of 
£400  and  interest  on  the  24th  of  December,  1813,  although,  at  the  time 
when  the  other  bonds  were  executed,  Brice  had  induced  him  to  believe 
that  Smith  would  execute  such  a  bond.  He  admitted  that  the  three 
bonds  were  prepared  by  his  solicitor  (who,  he  said,  acted  on  that  occa- 
sion as  the  solicitor  of  Brice),  and  that  the  plaintiff  and  Rogers  respec- 
tively joined  with  Brice  in  the  bonds  in  which  they  were  named  as 
co-obligors  with  him  ;  and  that  Smith  declined  on  his  part  to  execute 
the  bond  in  which  he  was  named  as  co-obligor  with  Brice,  and  he  in- 
sisted that,  notwithstanding  Smith  did  not  execute  that  bond,  the  plain* 
tiff  was  bound  by  the  bond  which  had  been  executed  by  him.  He  denied 
that  the  execution  of  the  bonds  was  one  entire  agreement,  and  said  that 
he  did  not  believe  that  the  plaintiff  executed  the  bond  in  which  he  had 
joined,  upon  the  faith  and  expectation  that  Smith  would  execute  the 
other  bond,  and  that  Brice  would  thereby  be  relieved  from  the  payment 
of  the  £1,200  until  the  bonds  should  respectively  become  paj'able. 

Mr.  Hart  and  Mr.  Koe  moved  for  the  injunction  upon  the  merits 
confessed  by  the  answer,  and  in  support  of  the  motion  argued,  that  if 
the  arrangement  had  been  that  Brice  should  give  a  bond  for  £1,200, 
with  three  sureties,  and  one  of  the  sureties  had  declined  to  execute  the 
bond,  neither  of  the  others  would  have  been  liable.  That  the  same 
principle  which  applied  to  the  case  of  an  arrangement  for  three  sureties 
joining  the  principal  debtor  in  one  bond,  must  apply  to  the  case  of  an 
ai'rangement  for  three  sureties  joining  the  principal  debtor  in  several 
bonds.  That  in  each  instance  it  was  merely  the  case  of  three  persons 
Agreeing  to  become  sureties  for  the  principal  debtor,  and  two  only 
becoming  such  sureties.  They  cited  Deering  v.  Lord  Winchelsea  and 
Underbill  v.  Horwood.1 

1  10  Ves.  209. 


SECT.  III.]  DAVIS   V.    EMERSON.  553 

Mr.  Sugden  and  Mr.  Homilly  for  the  defendant,  relied  upon  the  fact 
of  the  sureties  having  entered  into  several  and  distinct  obligations  as  an 
answer  to  the  motion. 

The  Lord  Chancellor. 

These  cases  of  sureties  depend  upon  nice  distinctions  in  point  of 
fact.  Deering  v.  Lord  Winchelsea  settled,  that  if  three  persons  became 
sureties  for  £12,000,  each  in  a  separate  bond  for  £4,000,  there  would  be 
a  right  of  contribution  between  them.  That  case  was  much  doubted  in 
Westminster  Hall  at  the  time  it  was  decided  ;  but  I  believe,  upon  con- 
sideration, it  will  be  found  to  be  quite  right.  In  that  case  it  was  said 
by  the  sureties,  we  will  each  give  a  bond  for  £4,000,  but  beyond  that 
we  will  not  be  liable ;  it  was  held,  however,  that  there  was  a  liability 
between  them  as  co-sureties.  The  present  case  depends  upon  the  ques- 
tion, whether  this  was  really  a  separate  and  distinct  transaction,  or  the 
same  transaction  split  into  different  parts.  If  the  case  of  Deering  v. 
Lord  Winchelsea  be  right,  and  there  was  an  agreement  that  A,  B,  and 
C  should  become  liable  for  £1,200,  each  in  a  bond  for  £400,  there 
would  be  a  right  of  contribution  between  them  ;  and  then  it  would  be 
a  question  whether,  if  the  bonds  were  not  given  by  all,  they  would  be 
obligatory  upon  any.  That  would  depend  upon  nice  distinctions.  It 
might  be  waived  by  subsequent  transactions. 

The  Lord  Chancellor  said,  that  he  considered  the  bonds  in  this 
case  as  distinct  obligations,  and  that  it  was  impossible  to  appby  the 
doctrine  in  Deering  v.  Lord  Winchelsea.  Injunction  refused.1 


JOHN   M.  DAVIS  v.  JOSEPH  EMERSON. 
In  the  Supreme  Judicial  Court,  Maine,  April  Term,  1840. 

[Reported  in  1 7  Maine  Reports,  64.] 

Assumpsit  for  money  paid,  laid  out,  and  expended.  The  plaintiff 
and  defendant  had  been  sureties  for  one  Chadbourne,  and  a  suit  had 
been  brought  against  them,  and  judgment  obtained  against  the  three. 
This  execution  had  been  paid  by  the  plaintiff,  Chadbourne  being  in- 
solvent ;  and  he  now  claimed  to  recover  one-half  the  amount  of  execu- 
tion, debt,  and  costs.  The  defendant  objected  to  the  allowance  of  any 
part  of  the  costs.2 

1  Pendlebury  v.  Walker,  4  Y.  &  C.  424.  —Accord. 

Similarly,  a  once-existing  right  of  contribution  may  be  renounced  by  a  subsequent 
agreement.  Moore  v.  Isley,  2  Dev.  &  B.  Eq.  372  ;  see  also  Curtis  v.  Parks,  55  Cal.  106 ; 
or  the  measure  of  contribution  may  be  determined  by  a  special  agreement :  Rose  v 
Wollenborg  (Oregon,  1899),  59  Pac.  R.  190  (semble).  —  Ed. 

2  The  statement  is  slightly  abridged.  —  Ed. 


554  HITCHMAN   V.    STEWART.  [CHAP.  III. 

Weston,  C.  J.  A  judgment  was  recovered  against  the  plaintiff  and 
the  defendant,  for  which  both  were  jointly  and  equally  liable.  The 
failure  to  pay,  which  occasioned  the  costs,  was  imputable  to  the  de- 
fendant as  much  as  to  the  plaintiff.  The  plaintiff  paid  the  execution, 
including  the  costs.  As  the  defendant  was  liable  for  half  the  execu- 
tion,  to  that  extent  the  plaintiff  paid  money  for  his  use  and  benefit. 
The  costs  cannot  be  distinguished  from  the  debt.  Eveiy  equitable 
principle  which  entitles  the  plaintiff  to  contribution  for  the  one  applies 
equally  to  the  other.  Judgment  on  the  verdict} 


HITCHMAN  v.  STEWART. 
In  Chancery,  before  Sir  R.  T.  Kindersley,  V.  C,  May  29,  1855. 

[Reported  in  3  Drewry,  271.] 

The  bill  was  filed  in  this  case  by  Joseph  Hitchman,  against  John 
Stewart,  Frederick  Priest,  Alfred  Suter,  William  Green,  William  John- 
son, and  Frederick  Green. 

The  plaintiff  was,  together  with  W.  Johnson,  F.  Green,  A.  Suter, 
and  Fann}r  Stewart,  deceased,  whose  representatives  were  the  defend- 
ants Stewart  and  Priest,  one  of  the  sureties  of  W.  Green,  for  securing 
his  due  performance  of  his  duty  as  a  collector  of  taxes.  W.  Green, 
the  principal  debtor,  failed  in  the  performance  of  the  obligations,  and 
the  sureties  became  liable,  and  the  plaintiff  was  called  upon  to  pay,  and 
did  pay,  the  amount  due  from  hira. 

The  bill  was  filed  to  have  contribution  against  the  representatives  of 
F.  Stewart  and  against  A.  Suter  only,  alleging  that  W.  Green,  W.  John- 
son, and  F.  Green  were  insolvent. 

The  answer  of  Stewart  and  Suter  suggested  that  they  were  not 
insolvent,  and  required  that  they  should  be  made  parties,  and  they 
were  made  parties. 

It  subsequently  turned  out  that  the  allegations  of  the  bill  were  so 
far  correct  that  W.  Green,  the  principal  debtor,  and  F.  Green  were 
insolvent,  and  the  certificate  of  the  chief  clerk  on  the  inquiries  directed 
found  that  W.  Johnson  was  not  able  to  pay  anything  except  his  own 

1  Kemp  v.  Einden,  12  M.  &  W.  421  ;  Security  Co.  v.  St.  Paul  Co.,  50  Conn.  233; 
Bosley  v.  Taylor,  5  Dana,  157;  Newcomb  v.  Gibson,  127  Mass.  396;  Boardman  v. 
Paige,  11  N.  H.  431  (sernble)  ;  Stothoff  v.  Dunbam,  4  Harr.  (N.  J.)  181,  185  (semble); 
Bright  v.  Lennon,  83  N.  Ca.  183;  Van  Winkle  v.  Johnson,  1]  Oreg.  469;  McKenna  v. 
George,  2  Rich.  Eq.  15;  Gross  v.  Davis,  87  Tenn.  226;  Foster  v.  Johnson,  5  Vt.  60; 
Marsh  v.  Harrington,  18  Vt.  150;  Harper  v.  Knowlson,  2  Up.  Can.  E.  &  A.  253, 
Accord. 

Counsel  Fees.  —  The  rule  is  the  same  as  to  counsel  fees.  Wagenseller  v.  Pretty- 
man,  7  111.  Ap.  192;  Van  Winkle  v.  Johnson,  11  Oreg.  469;  McKenna  v.  George, 
2  Rich.  Eq.  15;  Gross  v.  Davis,  87  Tenn.  226;  Marsh  v.  Harrington,  18  Vt.  150; 
Fletcher  v.  Jackson,  23  Vt.  581.  — Ed. 


SECT.  III.]  HITCHMAN    V.    STEWART.  555 

costs  and  £40.  The  defendants  Stewart,  Priest,  and  Suter  had  dis- 
puted the  right  of  the  plaintiff  altogether,  on  which  point  the  decision 
of  the  Court  was  against  them;  and  the  only  questions  now  to  be  de- 
termined on  further  directions  were,  whether  the  plaintiff  was  entitled 
to  interest,  which  he  claimed,  at  £4  per  cent  on  the  moneys  paid  by 
him,  from  those  of  the  co-sureties  who  could  refund  their  shares  ;  and 
how  the  costs,  particularly  of  the  insolvent  co-sureties  who  were  before 
the  Court,  were  to  be  dealt  with  ?  1 

The  Vice-Chancellor.  The  two  questions  in  this  case  are,  as  to 
the  right  of  the  plaintiff  to  interest ;  and  as  to  the  costs.  Now,  the 
case  of  Lawson  v.  Wright2  appears  to  me  to  be  in  point  on  both  ques- 
tions ;  that  is,  precisely  in  point  on  the  question  of  interest,  and  it 
bears  on  the  question  of  costs. 

First,  as  to  the  question  of  interest,  —  the  plaintiff  has  paid,  under 
his  liability  as  surety",  a  sum  of  £800  ;  there  is  no  question  but  that  he 
is  entitled  to  contribution  from  each  of  the  other  four  sureties,  one-fifth 
of  the  amount  paid,  that  is,  if  all  were  able  to  pa}'.  But  F.  Green  is 
quite  unable.  Therefore,  the  plaintiff  has  a  right  to  recover  from  each 
of  the  other  three  one-fourth  of  the  sum  paid  by  him  ;  then  is  he  en- 
titled not  only  to  the  principal,  but  to  interest  from  the  time  when  the 
payment  was  made?  The  case  of  Peter  v.  Rich  does  not  appear  to  me 
to  apply :  it  only  decides  that  when  a  suret}'  makes  a  pa}-ment,  part  of 
which  consists  of  principal  and  part  of  interest,  he  is  entitled  to  recover 
all  that  he  has  paid. 

Petre  v.  Duncombe,  in  the  second  volume  of  Lowndes,  Maxwell,  and 
Pollock's  Practice  Cases,3  is  to  a  certain  extent  in  point ;  but  in  that 
case  there  was  an  actual  indemnity  given  by  the  defendant  to  the  plain- 
tiff;  and  there  it  was  held  that  the  indemnit}'  carried  with  it  interest. 
Here  there  is  no  actual  indemnity  ;  but  Lawson  v.  Wright  appears  to 
me  to  be  on  this  point  on  all-fours  with  this  case.  Now  that  decision 
appears  to  me  to  be  in  the  interests  of  justice,  and  I  find  no  decision 
against  it.  It  appears  to  me  that  it  is  just  that  when  several  persons 
concur  in  being  sureties  for  a  principal  debtor,  whatever  view  a  court  of 
law  may  take,  on  which  I  give  no  opinion,  a  court  of  equity  will  take 
this  view,  that  there  is  among  them  all  an  implied  agreement  to  indem- 
nif}'  each  other ;  each  agrees  that,  as  among  them,  he  will  bear  his 
aliquot  part  of  the  debt,  and  on  that  principle  it  is,  I  think,  that  Lawson 
v.  Wright  must  have  been  decided.  Finding  that  decision,  and  finding 
it  founded  on  what  T  think  a  sound  equity,  and  no  decision  against  it, 
I  cannot  do  better  than  to  follow  it ;  and  I  am  of  opinion,  therefore, 
that  the  plaintiff  is  entitled  to  interest  on  what  he  has  paid.4 

1  The  arguments  of  counsel  are  omitted.  —  Ed. 

2  1  Cox,  275.  3  20  L.  J.  Q.  B.  242,  s.  c  — Ed. 

*  Lawson  v.  Wright,  1  Cox,  275  ;  Ex  parte  Bishop,  15  Ch.  Div.  400;  In  re  Watson, 
1896,  1  Ch.  925  (Bell  v.  Free,  1  Sw.  90,  contra,  is  no  longer  law)  ;  In  re  Swan,  Ir.  R. 
4  Eq.  209  (overruling  Onge  v.  Truelock,  2  Moll.  42,  and    Salkeld  v.  Abbott,  Hayes  <§ 
Jones,  110)  ;  Buckmaster  v.  Grundy,  8  111.  626;  Moore  v.  Bruner,  31  111.  Ap.  400 
Breckinridge  v.  Taylor,  5  Dana,  110;  Bosley  v.  Taylor,  5  Dana,  157;   Titcomb  v 


656  HITCHMAN   V.   STEWART.  [CHAP.  IIL 

On  the  question  of  costs,  —  so  far  as  the  costs  have  been  occasioned 
by  the  contention  of  the  representatives  of  Mrs.  Stewart  against  the 
claim  of  the  plaintiff  altogether,  the  plaintiff  must  have  those  costs. 
Then  as  to  the  general  costs  of  the  suit  ultra  those  costs  :  this  is  a 
case  not  like  Lawson  v.  Wright,  where  there  were  only  two  sureties, 
each  solvent ;  here  there  were  five  of  them,  sureties,  and  some  of 
them  turn  out  to  be  insolvent.  It  appears  to  me  that  this  is  a  case  in 
which  it  would  have  been  impossible  to  find  out  what  each  surety  was 
liable  to  pa}',  without  coming  into  equity.  This  is  a  case  in  which  the 
plaintiff,  on  the  one  hand,  is  obliged  to  come  into  equity  to  ascertain 
what  is  due  from  each,  and,  on  the  other  hand,  the  defendants  could 
not  have  their  liabilities  determined  without  inquiry  ;  and,  therefore,  as 
to  that  part  of  the  costs  of  the  suit,  neither  defendant  nor  plaintiff 
ought  to  have  costs,  but  each  part}'  must  bear  his  own.  Therefore  the 
plaintiff  and  the  representatives  of  Stewart  and  Suter  will  pa}-  their 
own  costs.  As  to  F.  Green,  one  of  the  co-sureties,  an  offer  was  made 
at  the  hearing  to  have  an  inquiry  whether  he  was  able  to  pay,  and  that 
was  declined;  I  must  assume,  then,  that  he  was  altogether  insolvent; 
and  then  the  question  is,  whether  he  has  now  a  right  to  say  he  ought 
not  to  be  brought  here,  that  it  was  unnecessary  and  improper  that 
he  should  be  brought  here,  and  that  the  plaintiff  must  pay  his  costs. 
Now  it  appears  to  me  impossible  to  say  that  is  so  with  regard  to  a  party 
liable  to  pay  one-fifth;  he  cannot  be  allowed  to  say,  "I  cannot  pay 
anything,  and  therefore  you  had  no  business  to  bring  me  here,  or  to 
trouble  me."  All  I  can  do  is  to  make  him  pay  costs  ;  but  I  will  not 
give  him  costs  ;  he  must  pay  his  own  costs.  Then  as  to  W.  Green,  his 
case  is  even  stronger  than  that  of  F.  Green ;  he  clearly  was  not  an 
improper  party  ;  the  plaintiff  might,  it  is  true,  have  dispensed  with 
him,  but  then  he  must  have  proved  his  insolvency  in  the  cause.1 

His  Honor  again  referred  to  Lawson  v.  Wright  on  this  point,  observ- 
ing that  that  case  was,  as  to  the  principal  debtor,  on  all-fours  with  the 
present  case. 

McAllister,  81  Me.  399;  Smithy.  Mason,  44  Neb.  610;  Campbells.  Mesier,  6  Johns. 
Ch.  21.;  Burrows  v.  McWhann,  1  Desauss.  409,  424;  Aikin  v.  Peay,  5  Strob.  15; 
Sherwood  v.  Jordan,  2  Tex.  Unrep.  Cas.  610,  Accord. 

The  surety  is,  of  course,  to  be  reimbursed  for  interest  paid  by  him  as  well  as  for 
principal.  But  in  Hawkins  v.  Maltby,  6  Eq.  505,  4  Ch.  200,  one  who  had  paid  1 1  per 
cent  interest  was  allowed  to  recover  only  the  legal  rate  from  the  one  primarily  liable, 
because  his  paymeut  of  the  higher  rate  was  due  to  his  own  default.  But  why  should 
the  principal,  who  was  in  default  to  the  surety  as  well  as  to  the  creditor,  profit  at  the 
expense  of  the  surety  1     See  a  similar  criticism  in  Rowlatt;  Pr.  &  Sur.  185.  —  Ed. 

1  In  a  proceeding  in  equity  for  contribution  the  plaintiff  must  join  the  priiiciji.il  as 
defendant,  if  within  the  jurisdiction,  or  else  prove  his  insolvency.  Lawson  v.  Wright, 
1  Cox,  Eq.  275;  Chrisman  v.  Jones,  34  Ark.  73;  Sloo  v.  Pool,  15  111.  47  (semble) ; 
Johnson  v.  Vaughan,  65  111.  425  ;  Daniel  v.  Ballard,  2  Dana,  296 ;  Byers  v.  McClana- 
han,  6  Gill  &  J.  250 ;  Stone  v.  Buckner,  20  Miss.  73 ;  Rainey  v.  Yarborough,  2  Ired. 
Eq.  249;  Allen  v.  Wood,  3  Ired.  Eq.  386;  Fischer  v.  Gaither,  32  Oreg.  161  ;  Grose  v. 
Davis,  87  Tenn.  226,  230  (semble)  ;  McCormack  v.  O'Bannon,  3  Munf.  484. 

He  must  also  join  all  solvent  co-sureties  within  the  jurisdiction.  Johnson  v.  Vaughan, 
65  111.  425;  Byers  v.  McClanahan,  6  Gill  &  J.  250;  Young  v.  Lyons,  8  Gill,  162; 


SECT.  III.  I  TOBIAS   V.   KOGEKS.  657 


TOBIAS  v.  ROGERS. 

In  the  Court  of  Appeals,  September,  1855. 

[Reported  in  13  New  York  Reports,  59.] 

Gardiner,  C.  J.1  The  plaintiff  and  defendant  were  sureties  in  a 
replevin  bond  for  Mahoney  and  Trull,  conditioned,  among  other  things, 
for  the  payment  to  the  defendants  in  the  replevin  suit  "of  all  such 
sums  as  might  by  them  be  recovered  against  Mahoney  and  Trull  in  that 
suit."  The  bond  was  executed  in  1837.  Rogers,  the  defendant  in 
this  suit,  presented  his  petition  in  1842,  and  obtained  his  discharge  in 
1843.  The  discharge  operated  upon  "  all  debts,  contracts,  and  other 
engagements  of  the  bankrupt,  provable  under  the  act."  The  5th  sec- 
tion of  the  bankrupt  act  provides  "that  all  persons  having  uncertain 
or  contingent  demands  against  such  bankrupt  shall  have  a  right  to 
come  in  and  prove  such  debts  or  claims,  and  shall  have  a  right  when 
their  debts  and  claims  become  absolute  to  have  the  same  allowed  to 
them."  Ten  j-ears  after  the  execution  of  the  bond,  and  five  after  the 
presentation  by  Rogers  of  his  petition,  the  defendants  in  the  replevin 
suit  recovered  judgment  against  Mahoney  and  Trull  for  over  $1,300, 
which  Tobias,  the  plaintiff  in  this  action,  was  compelled  to  pa}' ;  and 
he  now  brings  this  suit  against  Rogers,  his  co-surety  in  the  replevin 
bond,  for  contribution. 

The  effect  of  the  discharge  was  to  exonerate  Rogers  from  his  obliga- 
tion incurred  to  the  defendants  in  the  replevin  suit,  by  his  execution  of 
the  bond  in  their  favor,  as  one  of  the  sureties  of  Mahoney  and  Trull. 
His  liability  as  a  co-obligor  with  the  plaintiff  was  extinguished  by  ope- 
ration of  law ;  and  from  that  moment  he  ceased  to  be  co-suret}'  with 
him  for  a  common  liability  or  a  common  principal.  Now  if  the  right 
to  contribution  results  from  a  general  principle  of  equity,  that  sureties 
in  cequali  jure  must  bear  the  common  burden  equally,  and  that  it  will 
be  enforced  whenever  they  are  bound  for  a  principal  debtor  in  relation 
to  one  and  the  same  transaction,  as  determined  by  the  Supreme  Court 
in  Norton  v.  Coons,2  and  by  this  court,  in  effect,  in  Barry  v.  Ransom,8 
then  it  follows  that  all  claim  to  it  ceases  when  that  obligation  is  can- 
celled, either  hy  the  act  of  the  parties  or  by  operation  of  law.  The 
defendants  in  the  replevin  suit  could  have  released  one  of  the  sureties 
with  the  assent  of  the  other,  leaving  the  latter  sole  guarantor  of  the 

Butler  v.  Durham,  3  Ired.  Eq.   589;  Jones  v.  Blanton,  6  Ired.  Eq.   115;  Adams  v. 
Hayes,  120  N.  Ca.  383  ;  Bruce  v.  Bickerton,  18  W.  Va.  342. 

But  two  or  more  co-sureties  cannot  be  joined  as  defendants  in  an  action  at  law  for 
contribution.  Voss  v.  Lewis,  126  Ind.  155  (semble) ;  Powell  v.  Mathis,  4  Ired.  83 ;  Adams 
v.  Hayes,  120  N.  Ca.  383  ;  Burnham  v.  Cboate,  5  Up.  Can.  Q.  B.  o.  s.  736.  —Ed. 

1  Only  tbeopiuion  of  the  Court  is  given.     Dean,  J.,  delivered  a  dissenting  opinion. 
^Ed. 

2  3  Den.  130.  3  2  Kernan,  462. 


558  TOBIAS    V.    ROGERS.  [CHAP.  III. 

performance  of  the  contract  of  the  principal.  What  the  parties  could 
do  b}-  agreement  the  law  has  done  without  it.  When  the  sureties  con- 
tracted for  their  principal,  they  knew  that  the  national  legislature  could, 
in  the  case  that  has  arisen,  discharge  either  of  them  from  the  obligation 
thereby  assumed,  and  that  the  right  of  contribution  would  cease  with 
the  liability  to  which  it  was  antecedent.  If  the  plaintiff  is  without 
remed}*,  it  is  by  an  act  of  the  law  to  which  he,  in  common  with  every 
other  citizen,  is  presumed  to  have  assented. 

Contribution  is  not  founded  upon,  although  it  may  be  modified  b}-, 
contract.  The  right  to  it  is  as  complete  in  the  case  where  the  sureties 
are  unknown  to  each  other  as  in  any  other.  The  law  following  equity 
will  imply  a  promise  to  contribute  in  order  to  afford  a  remedy.  But  as 
this  is  in  most  instances  a  fiction,  in  aid  of  an  equitable  right,  it  will 
never  be  tolerated  where  the  relation  upon  which  the  equity  is  founded 
is  wanting.  Such  is  this  case.  The  liability  of  the  defendant  upon 
the  replevin  bond  was  discharged  four  years  before  the  suit  by  the 
obligees  against  the  plaintiff;  subsequent  to  that  time  the  plaintiff  and 
defendant  have  never  stood  in  cequali  jure  in  reference  to  the  obliga- 
tion of  their  principal.  The  burden,  which  pressed  with  its  whole 
weight  upon  the  plaintiff,  was  removed  from  the  defendant  by  aid  of 
the  bankrupt  law.  When  the  former  paid  the  judgment  recovered 
upon  the  replevin  bond,  it  was  as  sole  surety  for  Mahoney  and  Trull, 
and  not  as  co-surety  with  the  defendant. 

The  plaintiff  executed  the  bond  at  the  request  and  for  the  benefit  of 
Mahoney  and  Trull,  and  paid  the  debt  secured  by  it  for  their  use,  and 
not  for  the  use  of  the  defendant  as  to  the  whole  or  any  part  of  the  sum 
advanced.  6  M.  &  W.  167.  No  assumpsit  arises  until  the  co-surety 
has  paid  more  than  his  proportion,  even  by  way  of  furnishing  a  lega/ 
remedy.     Davies  v.  Humphreys. 

I  think  the  judgment  of  the  Supreme  Court  should  be  affirmed  upofi 
the  ground  that  when  the  money  was  paid  by  the  plaintiff,  the  relation 
of  co-surety  did  not  exist  between  him  and  the  defendant ;  and  con- 
sequently no  action,  either  at  law  or  in  equit}-,  founded  on  that  relation 
can  be  maintained. 

Denio,  Johnson,  Crippen,  and  Marvin,  JJ.,  concurred  in  the  fore- 
going opinion.1 

1  Miller  v.  Gillespie,  59  Mo.  220  (semble) ;  Johnson  v.  Harvey,  84  N.  Y.  363,  366 
(semble)  ;  Smith  v.  Hodson,  50  Wis.  279  (semble),  Accord. 

In  some  jurisdictions,  if  a  cause  of  action  has  accrued  in  favor  of  the  creditor 
against  the  sureties  at  the  time  of  the  bankruptcy  of  one  of  them,  the  latter's  certifi- 
cate will  be  a  bar  to  any  action  for  contribution,  even  though  the  claim  for  contribu- 
tion is  founded  upon  a  payment  made  after  the  discharge  of  the  bankrupt.  Eberhardt 
v.  Wood,  2  Tenn.  Ch.  488  ;  Cocke  v.  Hoffman,  5  Lea,  105  {semble)  (but  see  Goss  v 
Gibson,  8  Humph.  197,  and  Kerr  v.  Clark.  11  Humph.  77). 

But  see  contra,  Byers  v.  Alcorn,  6  111.  Ap.  39  ;  Dunn  v.  Sparks,  1  Ind.  397  ;  Hays  v. 
Ford,  55  Ind.  52,  57  (semble) ;  Dole  v.  Warren,  32  Me.  94  (but  see  Fernald  v.  Clark, 
84  Me.  234,  237)  ;  Swain  v.  Barber,  29  Vt.  292 ;  Liddell  v.  Wiswell,  59  Vt.  365. 

The  cases  in  the  preceding  paragraph  were  decided  under  the  United  States  Bank- 
rupt Laws  of  1841  and  1867.     The  same  result  was  reached  by  the  English  courts  in 


SECT.  III.]  TOBIAS   V.   EOGERS.  559 

interpreting  the  English  Bankrupt  Act,  6  Geo.  IV.  c.  16.  Ex  parte  Porter,  2  Mont. 
&  A.  281 ;  Wallis  v.  Swinburne,  1  Ex.  203.  This  interpretation,  which  lets  in  the 
evils  of  double  proof  against  the  surety,  seems  to  have  been  unnecessary.  Pollock, 
C.  B.,  commenting  upon  Wallis  v.  Swinburne  in  Adkins  v.  Farriugton,  5  H.  &  N.  586, 
said :  — 

"  I  am  by  no  means  satisfied  that  full  effect  was  given  to  the  construction  of  which 
the  52d  section  of  the  6  Geo.  IV.  c.  16,  is  capable;  for  there  being  three  sureties, 
one  of  whom  became  bankrupt,  it  is  clear  that  the  holder  of  the  promissory  note  could 
have  proved  for  the  amount  under  the  bankruptcy  of  that  surety,  and  if  he  had  done 
so,  I  apprehend  that  neither  of  the  other  sureties  could  have  maintained  an  action 
against  the  bankrupt  in  respect  of  any  money  which  they  paid.  Certainly  the  old 
doctrine  (more  than  once  enunciated  by  Lord  Eldon)  was  this :  That  the  payment  of  a 
dividend  and  the  obtaining  a  certificate,  so  far  as  the  bankrupt  is  concerned,  is  to 
be  considered  as  a  full  satisfaction  of  the  debt.  According  to  that  doctrine,  if  the 
holder  of  a  security  proves  the  debt  under  the  bankruptcy  of  one  of  two  sureties,  the 
receipt  of  a  dividend  would  prevent  the  other  from  making  any  claim  upon  his  co- 
surety. Indeed,  I  am  far  from  being  satisfied  that,  as  between  co-sureties,  there  is  not 
the  same  promise  and  the  same  liability,  and  that  in  one  sense  they  are  sureties  one 
for  the  other;  for  though  in  the  case  of  two  sureties  each  is  bound  to  pay  a  part,  yet 
each  is  bound  to  pay  the  whole  if  the  other  is  incapable  of  doing  so ;  and  there  is  a 
contract  between  them  that  in  such  case  the  one  will  repay  the  other  if  he  is  able,  but 
if  he  becomes  bankrupt  he  cannot.  Though  I  feel  myself  bound  by  the  decision  in 
Wallis  v.  Swinburne,  I  cannot  help  making  these  remarks,  because  they  tend  to  throw 
some  light  upon  our  present  decision.  Certainly,  I  consider  that,  where  a  debt  is 
provable,  it  makes  no  difference  whether  it  is  proved  by  the  surety  or  the  person  who 
holds  the  security." 

Co-obligors  who  are  co-principals.  —  Whenever  the  creditor  of  several  co-principals  is 
barred  against  one  of  them  by  the  latter's  discharge  in  bankruptcy,  all  right  of  contri- 
bution is  also  lost.  Ex  parte  Rose,  2  Rose,  175  ;  Ex  parte  Watson,  Buck,  449  ;  Aflalo 
v.  Fourdriuier,  6  Bing.  306  ;  Dean  v.  Speakman,  7  Blackf.  31"  ;  Frentress  v.  Mar.kle, 
2  Greene  (Iowa),  553  ;  Butcher  v.  Forman,  6  Hill,  583  (but  see  Ellsworth  v.  Coldwell, 
27  How.  Pr.  188) ;  Clarke  v.  Porter,  25  Pa.  141  ;  Carman  v.  White,  4  Humph.  301. 
The  decision  to  the  contrary  in  Ex  parte  Porter,  4  D.  &  C.  774,  has  been  deservedly 
criticised  in  Griffith  &  Holmes,  Bank.  Law,  564,  and  in  Lowell,  Bank.  134. 

Under  the  United  States  Bankrupt  Law  of  1 898,  as  well  as  under  the  English  Bank- 
ruptcy Act  of  1883,  it  is  believed,  a  surety's  right  of  contribution  against  a  co-surety 
will  not  survive  the  latter's  discharge  in  bankruptcy  from  the  claim  of  the  creditor. 
In  other  words,  full  effect  is  given  to  the  rule  prohibiting  double  proof  against  an 
obligor.  In  re  Bingham,  94  Fed.  R.  796  ;  Wolmershauseii  v.  Gullick,  1893,  2  Ch.  514. 
Compare  Hill  v.  Harding,  130  U.  S.  699,  704. 

Wherever  the  creditor's  claim  against  the  surety  is  not  provable,  and  therefore  not 
barred,  a  co-surety's  claim  for  contribution  is  not  affected  by  the  surety's  discharge  in 
bankruptcy.  The  illustrations  of  this  rule  were  decided  under  former  bankrupt  laws. 
Brown  v.  Lee,  6  B.  &  C.  689  ;  Clements  v.  Langley,  5  B.  &  Ad.  372  ;  Thompson  v. 
Thompson,  2  Bing.  N.  C.  168;  Vliet  v.  Wyckoff,  42*N.  J.  Eq.  642. 

Similarly,  if  the  creditor's  claim  against  a  surety,  although  provable,  is  not  barred 
by  the  surety's  discharge  in  bankruptcy,  a  co-surety's  right  of  contribution  survives 
also ;  c.  g.,  when  the  United  States  is  the  creditor.  Smith  v.  Hodson,  50  Wis.  279. 
—  Ed. 


560 


1 


&-€*- 


BRADLEY 


BRADLEY   >/  BURWELL.  [CHAP.  IIL 


*^*W^"~  **^^y 


^^3i>; 


m**%***\J 


t^KU-. 


iP 


BURWELL   and  Another  ^Executors 

the  Supreme  Court,  New  York,  May,  1846 

ported  /jf3  Demo,  6Ll 

23d  day  of  Janu 


>7 

The   third0  count  stated  that  on  the  23d  day  of  January,   1832, 

Thomas  Gould,  the  defendants'  testator,  and  the  plaintiff,  became 
sureties  for  A.  C.  H.  Smith,  who  was  appointed  general  guardian  for 
M.  E.  Fuller,  a  minor,  in  a  joint  bond  executed  by  the  three,  to  Fuller, 
in  the  penalty  of  $8,500,  conditioned  that  Smith  should  faithfully  per- 
form his  trust  as  guardian  and  render  a  just  and  true  account  when 
thereunto  required :  by  means  whereof,  it  is  averred,  the  plaintiff  and 
Gould  became  liable  as  co-sureties  to  pay  to  Fuller  any  damages  which 
he  might  sustain  on  account  of  any  default  of  Smith  as  guardian  ;  and 
by  means  whereof  also  Gould  in  his  lifetime  became  liable  to  pay  the 
plaintiff  the  moiety  of  any  moneys  which  he,  the  plaintiff,  might  be- 
come liable  to  pay  and  might  pay  to  Fuller,  by  reason  of  an}'  default 
on  the  part  of  the  guardian  ;■  and  that  being  so  liable,  Gould  in  his 
lifetime,  to  wit,  on  the  day  and  year  aforesaid,  &c,  undertook  and 
faithful!}'  promised  the  plaintiff  well  and  truly  to  pay  him  the  moiety 
of  all  such  moneys  when  he  should  be  thereunto  requested,  after  the 
payment  thereof  by  the  plaintiff,  according  to  the  bond.  The  count 
then  proceeds  with  an  averment  that  afterwards,  and  after  the  death 
of  Goulrt,  to  wit,  on  the  T2d  INovember,  1843,  Fuller  recovered  a  Judg- 
raent  in  the  Supreme  Court,  against  the  plaintiff  and  Smith  the  guard- 
ian, lor  $z,34'/.o2,  on  account  of  tlie  detault  of  Smith,  as  guardian,  to 
perform  Ins  duties  according  to  the  condition  of  the  bond  ;  and  that 
after  such  recover}',  to  wit,  &c,  the  plaintiff  paid  the  amount  thereof 
to  Fuller,  with  costs,  as  he  was  bound  and  obliged  to  do,  of  all  which 
the  defendants  had  notice.  Breach  :  that  the  defendants,  as  executors 
of  Gould,  have  not  paid  the  plaintiff  the  moiety  of  the  moneys  so  by 
him  paid  to  Fuller,  but  have  hitherto  refused,  &c. 

The  defendants  pleaded  to  both  counts,  1st,  That  the  condition  of 
the  bond  was  not  broken  by  the  guardian  during  the  lifetime  of  Gould, 
their  testator,  but  was  faithfully  kept  by  Smith  until  after  the  death  of 
Gould ;  2d.  That  the  plaintiff  paid  the  amount  recovered  by  Fuller 
voluntarily  and  of  his  own  accord,  and  without  being  obliged  by  ex- 
ecution or  otherwise  to  pay  the  same  ;  and  so  they  say  that  he  paid 
the  same  of  his  own  wrong.  &c.  The  plaintiff  demurred  to  both  pleas, 
and  the  defendants  joined  in  demurrer. 

J.  A.  Spencer,  for  the  plaintiff. 

iV".  Hill,  Jr.,  for  the  defendants. 


1  Only  what  relates  to  this  count  is  here  given.    The  arguments  of  coudspI  and  a 
part  of  the  opinion  are  omitted.  —  Ed. 


■^"•-^-c/ 


-^  SECT.  IILl        .  BRADLEY  4>.    BURWELL.  561 


By  the  Court,  Jewett,  J.     It  is  a  general  principle,  that  in  case  of  a 


joint  bond  or  obligation,  if  one  of  the  obligors  dies,  his  representatives 


are    at   law   discharged   from  liability  to    the    obligee,    and    the   sur** 


vivor  alone  can  be  sued.     1  Chitty's  PI.  36.     But  in  equity  the  repre "\ 

sentatives  of  such  deceased  obligor  are  liable,  unless  the  deceased  w&s^^L**  rr~^i 
a  mere  surety  ;  in  such  case  even  equity  will  not  extend  by  implication  C*~-—C»v*j^, 

the  responsiPiuty  fi'om  that  61  a  joint  to  a  joint  and  several  undertak- N     — 

ing.     Weaver  v.  Shryock  ; 1  Sumner  v.  Powell ; 2  Harrison  v.  Mirge  ;  3    ^^**^  ^"^ 
Ward  v.  Webber;  4  Thomas  v.  Frazer.5 

The  counsel  for  the  defendants,  on  the  argument,  assumed  the  prin- 
ciple that  the  liability  of  one  co-surety  to  contribute  to  another,  must 
depend  upon  his  liability  to  the  creditor,  at  the  time  of  payment  of  the 
debt  by  such  other,  or  at  most  at  the  time  that  such  other's  liability 
was  fixed  and  ascertained,  by  judgment  or  decree  ;  and  that  as  Gould 
or  his  representatives  were  never  thus  liable  to  Fuller,  no  breach  of 
the  condition  of  the  bond  having  been  committed  in  Gould's  lifetime, 
and  as  by  his  death  his  representatives  were  discharged  of  any  claim 
by  Fuller,  the  plaintiff  had  no  right  of  action  against  the  latter  for  any 
portion  of  the  amount  of  the  judgment  recovered  against,  and  paid  b}r 
him  upon  the  bond,  as  survivor  of  Gould. 

From  the  examination  which  I  have  made  I  am  entirely  satisfied 
that  the  principle  assumed  is  not  sound,  and  that  it  cannot  be  sustained. 
I  think  that  the  law  implies  a  contract  between  co-sureties  to  contrib- 
ute, ratably,  towards  discharging  any  liability'  which  the}'  may  incur 
in  behalf  of  their  principal,  such  contract  originating  at  the  time 
they  execute  the  principal  obligation  ;  that  there  results,  by  implication 
of  law.  a  promise  on  the  part  of  the  principal  to  indemnify  his  sureties  ; 
and  also  in  like  manner  a  mutual  promise  between  the  sureties,  to  con- 
tribute proportionally  towards  indemnifying  each  other  against  such 
liability ;  and  that  such  implication  does  not  take  its  origin  from  the 
subsequent  payment  of  the  money.  The  right  of  action  for  contribu- 
tion arises,  it  is  true,  when  tne  "surety  claiming  such  contribution  pays 
the  money,  and  not  before.  Notwithstanding  a  breach,  the  debt  may 
be  paid  by  the  principal,  or  relinquished  or  compromised,  and  the 
surety'  never  compelled  to  pay ;  and  in  that  case  he  never  has  a  cause 
of  action,  either  as  against  his  principal  or  co-surety.  The  right  of 
action  as  between  the  sureties  grows  out  of  the  original  implied  agree- 
ment,  that  if  one  shall  be  compelled  to  pay  the  whole  or  a  dispropor- 
tionate part  ot  tbe  cieot,  tne  other  will  pay  such  sum  as  will  make  the 
common  burden  equal,  in  case  ot  the  death  of  either,  this  obligation 
devolves  upon  his* legal  respresentatives.  In  this  respect  it  is  like  any 
other  contract  made  by  one  in  his  lifetime,  to  pa}r  money7  at  a  future 
time,  absolutely  or  contingently,  who  dies  before  the  occurrence  of  any 

1  6  Serg.  &  Rawle,  262.  2  2  Meriv.  R.  30. 

8  2  Wash.  Va.  R.  136.  4  1  Wash.  Va.  R.  274. 

5  3  Ves.  Jr.  399 ;  1  Story's  Com.  on  Eq.  §§  162-164. 

36 


~=rz^ 


J*iSL* 


562  BKADLEY   V.    BURWELL.  [CHAP.  III. 

breach  of  the  contract.  Tom  v.  Goodrich  ;  Toussaint  v.  Martinant ; * 
Powell  v.  Smith;2  Cowell  v.  Edwards;  Deering  v.  The  Earl  of  Win- 
chelsea  ;  Wood  v.  Leland  ; 3  Bachelder  v.  Fisk.4 

The  case  of  Bachelder  v.  Fisk  is  directly  in  point. 

The  facts  were  as  follows :  Ebenezer  Fisk,  at  the  time  mentioned, 
was  appointed  guardian  as  averred  in  the  declaration  —  the  plaintiff 
and  defendant's  testator  executed  a  bond  as  sureties  for  the  guardian 
to  the  judge  of  probate,  in  the  penalty  of  $10,000,  conditioned  for  the 
faithful  discharge  of  the  trust  by  the  guardian.  The  defendant's  tes- 
tator died  April  9th,  1815.  In  June,  1820,  the  minor  came  of  age, 
and  demanded  of  the  guardian  an  account  and  payment  of  $4, 197.71 
which  was  due  from  the  guardian,  who  was  insolvent ;  and  the  plaintiff, 
on  the  25th  of  August,  1820,  paid  to  the  ward  the  sum  so  due  in  dis- 
charge of  the  bond,  without  suit.  The  Court  held  that  a  surety  who 
had  paid  the  debt  of  the  principal  might  have  an  action  for  contribution 
against  his  co-surety ;  and  that  the  common  form  of  the  action  was 
indebitatus  assumpsit  for  money  paid  by  the  plaintiff  for  the  use  of 
the  defendant ;  that  the  right  of  action  is  founded  upon  an  implied 
promise  by  one  surety  to  contribute  towards  indemnifying  the  other. 
It  was  said  that  there  was  in  that  case  (and  the  same  remark  is  ap- 
plicable to  this  case)  a  technical  objection  to  the  usual  form  of  declar- 
ing, in  indebitatus  assumjysit,  inasmuch  as  the  plaintiff  could  not  allege 
that  he  paid  the  money  for  the  use  of  his  co-surety,  after  the  death  of 
the  latter ;  and  that  if  he  alleged  that  he  paid  it  for  the  use  of  the 
defendants  as  executors,  it  would  be  to  charge  the  defendants  in  their 
own  right,  which  could  not  be  done.  That  objection,  it  was  said,  was 
answered  by  the  general  principle,  which  is  universally  recognized  and 
which  was  applied  in  Birkley  v.  Presgrave,5  that  when  the  law  confers 
a  right  it  will  also  give  a  remed^y.  That  case,  as  well  as  this, 
furnishes  an  authority  as  to  the  form  of  pleading.  The  declaration 
there  contained  the  usual  money  counts,  with  a  special  count  setting 
forth  the  facts  on  which  the  implied  promise  of  the  defendant  was 
founded,  exhibiting  the  grounds  and  nature  of  the  action.  It  was  held 
also,  that  in  actions  of  assumpsit  the  plaintiff,  whenever  be  finds  it 
necessary  or  useful,  might  set  out  his  whole  case ;  and  if  that  showed 
a  valid  legal  promise  by  the  defendant,  whether  express  or  implied,  it 
was  sufficient. 

.  It  follows  that  the  first  plea  to  the  third  count  furnishes  no  sufficient 
answer.6 

The  other  plea  which  is  demurred  to,  sets  up  as  a  defence  to  those 
counts,  that  the  plaintiff  voluntarily,  and  without  being  compelled  by 

1  2  T.  E.  000.  2  8  j0]in>  049.  3  1  Mete.  R.  387. 

4  17  Mass.  R.  464.  5  i  East,  220. 

6  Ashby  v.  Ashby,  7  B.  &  C.  444,  449,  451 ;  Johnson  v.  Harvey,  84  N.  Y.  363; 
Comes  i\  Wilkin,  14  Hun,  428;  McKenna  v.  George,  2  Rich.  Eq.  15;  Stephens  v. 
Meek,  6  Lea,  226;  Tarr  v.  Ravenscroft,  12  Grat.  642,  652,  Accord. 

Waters  v.  Riley,  2  Har.  &  G.  305;  Kennedy  v.  Carpenter,  2  Whart.  344,  Contra 


SECT.  III.]  KOELSCH   V.    MIXER. 

execution,  paid  the  money,  and  so  paid  it  in  his  own  wrong;  and  that 
the  same,  if  it  had  not  been  so  paid,  might  and  would  have  been  col- 
lected against  Smith.     It  is  not  necessary  for  the  plaintiff,  in  order  to 
sustain  his  action,  to  show  that  he  was  compelled  to  pa}-  as  a  surety     Jgd-^* 
upon  the  bond  by  execution.     When  the  contract  has  been  broken,/^  ~/ 

the  surety  may  paythe  money  without  suit  and  recover  the  amount 
of  his  principal x  (Mauri  v.  Heffernan2),  and  by  analogy,  a  surety  may   ^>   <£^-*»— 
recover  against  his  co-surety  his  due  proportion  upon  the  like  ground.8     ^^<_  ~ tZ- 
The  pleas,  therefore,  are  clearly  bad,  and  judgment  on  the  demurrer    \*+-*fz^SL 
should  be  rendered  in  favor  of  the  plaintiff.  V***J3^ 

"XER,   Administrator.    -  7f  '  "**" 

,  Ohio,  ^January  Term,  1894.  w 

-%A*>r*&V     ~~n       ^IteportodinhOhfo  fee  RtpoA,  207j^--*J^'  '^+~~9  ~"»«-^-^ 

Minshall,  J.4     It  is  averred  in  the  petition,  and  not  denied  in  the 
answer,  that  the  action  in  which  the  judgment  was  rendered  again st^-2**fci  -^ 
Koelsch  was  upon  a  bond  made  by  one  Wichmann  as  principal,  witlK__ -// 
Koelsch  and  Mecum,  then  in  life,  as  co-sureties,  for  the  faithful  per-    ff  • 
formance  of  the  duties  of  the  principal  as  treasurer  of  the  school  district         .-  ^ 
of  Reading,  in  Hamilton  County.     The  substance  of  the  answer  is,  that    ^&***^+^2 
the  action  in  which  the  judgment  was  rendered,  was  prosecuted  against      /r LtfV*' 
the  plaintiff  and  the  defendant,  as  administrator  of  Mecum,  on  what 
purported  to  be  a  bond,  both  being  sued  as  sureties ;  and  that  it  was 
determined  therein  by  the  verdict  of  the  jury  that  the  defendant  was 
not  liable  on  the  bond,  and  that  the  plaintiff  alone  was  liable  thereon. 
What  the  issues  between  the  obligee  and  the  defendants,  or  either  of 
them  were,  is  not  stated.     Hence,  the  ground  of  the  defence  must  be, 
that,  as  both  were  parties  to  that  action,  the  judgment,  irrespective  of 
what  the  issues  were,  releasing  one  of  the  defendants,  is  conclusive  of 
his  liability  upon  the  bond  as  against  the  other,  and  of  any  liabilit}'  to 
contribute  as  a  co-surety  to  the  one  who  was  held  and  compelled  to  pay 
the  judgment.     We  do  not  regard  this  as  the  law.     Whilst  the  exact 
limits  of  the  doctrine  of  res  judicata  in  its  application  to  some  cases, 

1  Fishback  v.  Weaver,  34  Ark.  569,  580 ;  Odlin  v.  Greenleaf,  3  N.  H.  270,  Accord. 
—  Ed. 

2  13  John.  R.  58. 

3  Pitt  v.  Purssord,  8  M.  &  W.  538 ;  Gibson  v.  Love,  2  Fla.  597 ;  Judah  v.  Mieure, 
5  Blackf.  171 ;  Wood  v.  Perry,  9  Iowa,  479  ;  Goodall  v.  Wentworth,  20  Me.  322  ;  Hich- 
born  v.  Fletcher,  66  Me.  209,210;  Warner  v.  Morrison,  3  All.  566 ;  Skrainka  v.  Rohan, 
18  Mo.  Ap.  341,  344;  Hoyt  v.  Tuthill,  33  Hun,  196;  Linn  v.  McClelland,  4  Dev.  &  B. 
458  ;  Acers  v.  Curtis,  68  Tex.  423  ;  Mason  v.  Pierron,  69  Wis.  585;  Hardell  v.  CarroU 
90  Wis.  350,  Accord. 

Stockmeyer  v.  Oertling,  35  La.  An.  467,  Contra. — Ed. 

4  Only  the  opinion  of  the  Court  is  given.  — Ed. 


564  KOELSCH   V.    MIXER.  [CHAP.  III. 

e  not  definitely  settled,  it  is  accepted  as  general!}'  true,  that  the  judg- 
ment relied  on  for  that  effect  in  subsequent  litigation,  must  have  Tjeen 

ronounced  "upon  the  same  issues,  between  the  same  parties,  or  their 
privies,  standjn"g~in~an  adversary  character  "£o  one  another.  By  this  is 
not  meant  that  they  should  have  stood  uponlthe  record  as  plaintiff  and 
defendant,  but  that  this  should  have  been  their  real  attitude  upon  the 
issues  tried  and  determined.  As  before  observed,  the  defendant  does 
not  state  what  the  issues  were  in  the  former  action.  If  any  were  joined 
between  himself  and  the  plaintiff  in  this  action,  the  determination  of 
which  may  be  relied  on  as  conclusive  of  the  rights  of  the  parties,  they 
should  have  been  pleaded.  They  cannot  be  left  to  conjecture.  The 
mere  fact  that  it  was  there  determined  that  he  was  not  liable  on  the 
bond  to  the  obligee,  cannot  conclude  the  plaintiff  in  this  action  from 
demanding  contribution  from  the  estate  of  his  deceased  co-surety,  if,  as 
a  matter  ot  tact,  they  were  co-sureties  on  the  bond,  and  the  plaintiff  has 
been  compelled  to  discharge  all,  or  more  than  his  just.  proportion,  of 
the  common  liability.  The  subject-matter  of  the  two  actions  is  differ- 
ent. The  former  was  a  suit  on  a  treasurer's  bond  by  the  obligee  against 
the  makers  as  co-defendants  to  recover  for  a  breach  of  it.  The  present 
is  a  suit  by  one  surety  on  the  bond  against  the  estate  of  another  for 
contribution  ;  and  had  not  accrued  at  the  time  of  the  former  suit.  It 
is  not  based  upon  the  bond.  In  the  language  of  Mcllvaine,  J.,  in 
Camp  v.  Bostwick : x  "It,"  the  right  to  contribution,  "is  an  equit3r 
which  springs  up  at  the  time  the  relation  of  co-sureties  is  entered  into, 
and  ripens  into  a  cause  of  action  when  one  surety  pays  more  than  his 
proportion  of  the  debt.  From  this  relation  the  common  law  implies  a 
promise  to  contribute  in  case  of  unequal  pa3Tments  by  co-sureties." 
And  he  adds  :  ' '  Neither  the  creditor,  the  principal,  the  Statute  of  Limi- 
tations, nor  the  death  of  a  party,  can  take  it  away."  And  so,  itlvas 
there  held,  that  though  the  estate  was,  by  the  Statute  of  Limitations, 
released  irom  its  direct  liability  to  the  creditor,  it,  nevertheless,  remai n ed 
liable  to  contribute  to  a  co-surety  who  had  paid  more  than  his  moiety 
of  the  debt,     i^ee,  also,  Kinkead's  Code  Pleading,  §  457. 

It  is  not  enough  that  an  issue  may  have  been  joined  between  the 
obligee  and  the  defendant,  as  to  the  liability  of  the  latter  on  the  bond. 
Whatever  that  issue  may  have  been,  it  was  not  an  issue  between  him- 
self and  his  co-defendant,  the  plaintiff  in  this  action,  and  could  not 
therefore  conclude  the  latter ;  though  parties  to  the  suit,  the}'  were  not 
such  in  ail  adversary  character,  being  simply  co-defendants  to  the  suit 
on  the  bond.  The  plaintiff  in  this  suit  could  not  in  the  former  suit,  as 
a  matter  of" right,  have  insisted  on  the  admission  or  rejection  of  evidence 
on  the  trial  of  the  issue  ;  had  no  right  to  move  for  a  new  trial,  nor  pros- 
ecute error  if  aggrieved  by  the  rulings  of  the  Court ;  and  hence  he  can- 
not be  held  bound  by  the  judgment  in  any  subsequent  litigation  to  which 
be  may  be  a  party.     Vose  v.  Morton.3 

1  20  Ohio  St.  337.  2  4  Cush.  31. 


SECT.  III.]  KOELSCH   V.   MIXER.  565 

It  is  the  general  rule  that  parties  to  a  judgment  arc  not  bound  by  it.  in.    ^^~7   ** 
a  subsequent  controversy  between  eacb  other,  unless  they  are  adversary  l  ff    - 

parties  in  the  original  actiom     freeman  on  Judgments,  §  158  ;  Black  '^*-0^-«-*^" 
on  Judgments,  §599;    21  Am.  &  Eng.  Enc.  Law,  151  ;    McMahan  v. 
Geiger;1   Gardner  v.  Kaisbeck;2  BufQngton  v.  Cook;8  Harvey  v.  Os- 
born  ;4  Cox's  Adm'r  v.  Hill.5 

The  case  of  McCrory  v.  Parks 6  is  much  in  point.  There  the  action 
below  was  a  suit  by  one  surety  on  a  sheriff's  bond  against  his  co-sureties 
for  contribution.  The  question  arose  on  a  cross-petition  filed  by  one  of 
them,  and  the  reply  of  the  plaintiff.  In  the  cross-petition  the  allowance 
of  a  claim  of  money  paid  on  the  amercement  of  the  sheriff,  to  which  all 
had  been  made  parties,  was  asked.  The  reply  controverted  the  justice 
of  the  judgment,  and  claimed  that  it  should  not  have  been  rendered,  — 
that  the  amercement  had  been  for  the  alleged  failure  of  the  sheriff  to 
pay  over  moneys  made  on  an  execution  against  the  cross-petitioner ; 
that,  though  the  Court  found  and  adjudged  in  the  former  action  that  the 
money  had  been  paid,  yet,  as  a  matter  of  fact,  it  had  not  been  paid, 
and  the  judgment  was  wrongly  entered  ;  and  the  question  arose,  whether- 
having  been  a  party  to  the  former  judgment,  the  plaintiff  was  not  con- 
cluded by  it.  The  Court  heldjiot,  for  the  reason  that  the  parties  to  this 
suit  were  not  adversary  parties  in  the  former  suit,  and  that  their  respect- 
ive rights  against  each  other  were  not  in  controversy  iu  that  sjiit.  The 
only  difference  between  this  case  and  the  one  under  review  is,  that  in 
the  former  case  a  judgment  was  pleaded  in  which  the  opposite  party 
was  held  to  an  obligation,  and  here  he  was  released.  But  this  can 
make  no  difference  in  the  application  of  the  principle ;  the  conclusive- 
ness of  the  judgment,  in  either  case,  must  depend  on  the  same  question, 
—  whether  an  issue  was  joined  between  the  parties  and  determined  in 
the  former  case,  material  to  their  respective  rights  in  the  subsequent 
suit ;  for,  as  shown  by  the  authorities  above  cited,  and  thej'  are  sus- 
tained by  reason,  when  such  is  not  the  case,  there  is  no  ground  for  the 
application  of  the  doctrine  of  res  judicata;  which  rests  upon  that  prin- 
ciple of  public  policy  which  requires  that  where  a  matter  has  once  been 
tried  and  determined  on  issues  joined  between  the  parties  in  interest  in 
a  court  of  competent  jurisdiction,  there  should,  in  the  interest  of  society, 
be  an  end  of  litigation.  It,  however,  reaches  and  concludes  only  parties 
to  the  issues ;  mid  does  not  affect  persons  who,  though  parties  to  the 
suit,  were  not  parties  to  the  issue  upon  which  the  judgment  was  ren- 
dered. The  latter  being  strangers  to  the  issue,  are,  in  a  legal  sense, 
strangers  to  the  judgment. 

Judgment  of  the  Circuit  Court  reversed,  and  that  of  the  Common 
Pleas  affirmed.1 

1  73  Mo.  145.  2  28  N.  J.  Eq.  71. 

3  35  Ala.  312.  *  55  in(j.  535 

5  3  Ohio,  412,  424.  6  18  Ohio  St.  1. 

7  Hoxie  v.  Farmers'  Bank  (Texas  Civil  Appeals,  1899),  49  S.  W.  R.  637,  Accord.— 
Ed. 


!^-    ,-t_~*W      -j^U*i)    y^tZ+tC^    (^l~**j^    -4r~~i)    ?-*^«<s£^  r  ^*-~tst> 'fr-y 

566  STEEL   V.    QIXON.  , |  CHAP.  11^/ 

.  In  the  Chancery  Division,  bekq^e  Sir  Edward  Fry,  J., 

"~~"^       yv       \~r7*  [Reported  in  17  Chanafi-y  Division  Reports,  H9.i.]|r-      *C     /t>J  ^y 

In  October,  1878,  William  Robinson  applied  to  his  bankers  for  an 

^N  advance  of  £800.     The  bankers  consented  to  make  the  advance  upon 

l<c-f1**'  the  securit}'  of  a  joint  and  several  promissory  note  for  £800  signed  by 

Robinson  and  four  sureties.     Robinson  applied  to  G.  W.  Dixon  and 

-Jason  Gurney  to  become  two  of  the  sureties,  and  they  consented  to  do 

t^-y  K>  upon  the  terms  of  his  securing  them,  by  means  of  an  assignment  or 

"~sf  transfer  of  sufficient  property  of  his  own,  from  any  liability  upon  the 

%(/  note.     The  note  was  dated  the  28th  of  October,  1878,  and  was  signed 

by  Dixon  on  the  27th  of  October,  and  by  Gurney  on  the  28th  October, 
and  was  payable  on  the  30th  of  April,  1879.  Afterwards  Robinson 
procured  T.  A.  Steel  and  W.  Chater  to  act  as  the  other  sureties.  Steel 
signed  the  note  on  the  15th  of  November,  1878,  and  Chater  a  day  or 
two  before.  Neither  Steel  nor  Chater  when  they  signed  the  note  had 
any  knowledge  of  the  agreement  between  Robinson  and  Dixon  and 
Gurney  that  he  should  give  them  security.  On  the  24th  of  February, 
1879,  Robinson  executed  a  bill  of  sale  of  bis  furniture  to  Dixon  and 
Gurney  as  security  for  their  liability  on  the  note.  The  deed  contained 
a  power  of  sale,  and  it  was  declared  that  the  grantees  should  apply  the 
proceeds  of  sale  in  the  first  place  in  the  payment  of  expenses,  and  in 
the  second  place  in  or  towards  pa3Tment  of  the  share  or  shares  of  the 
moneys  which  should  or  might  become  paj-able  upon  or  in  respect  of 
the  promissory  note,  and  which  share  or  shares  Dixon  and  Gurney 
should  or  might,  as  between  themselves  and  Steel  and  Chater,  be  liable 
to  pay  or  contribute  in  the  event  of  default  being  made  by  Robinson  in 
the  payment  of  all  or  any  part  of  the  moneys  due  under  the  promissory 
note  ;  and  in  the  third  place  towards  payment  of  the  residue  of  the 
moneys  which  should  or  might  become  payable  upon  or  in  respect  of 
the  promissory  note,  and  which  residue  Steel  and  Chater  would  upon 
default  of  Robinson  be  primarily  liable  to  pay  or  contribute,  but  so  that 
Steel  and  Chater  or  either  of  them  should  have  no  right  or  power  to  in- 
terfere or  claim  any  benefit  in  the  provisions  of  the  security;  and  lastly, 
to  pay  any  surplus  of  the  proceeds  to  Robinson.  This  deed  was  regis- 
tered under  the  Bills  of  Sale  Act.  On  the  18th  of  March,  Robinson  filed 
a  liquidation  petition.  The  promissory  note  was  paid  to  the  bankers  at 
maturity  by  the  four  sureties,  each  of  them  contributing  £200.  Dixon 
and  Gurney  afterwards  sold  the  furniture  comprised  in  the  deed  of  the 
24th  of  February,  1879,  realizing  thereby  about  £500.  This  action  was 
brought  by  Steel  and  Chater  against  Dixon  and  Gurney,  claiming  a  dec- 
laration that  Dixon  and  Gurney  were  bound  to  account  to  the  plain- 


SECT.  III.]  STEEL   V.    DIXON.  567 

tiffs,  as  co-sureties  of  the  promissory  note,  for  the  sums  received  by 
them  by  the  sale  of  the  furniture ;  that  an  account  might  be  taken  of 
the  moneys  so  received  ;  and  payment  to  each  of  the  plaintiffs  of  one- 
fourth  part  of  what  should  appear  on  the  taking  of  the  account  to  have 
been  received  hy  Dixon  and  Gurney. 

The  trustee  in  the  liquidation  of  Robinson  disputed  the  validit}7  of 
the  deed  of  the  24th  of  February,  1879,  alleging  that  its  execution  by 
Robinson  was  an  act  of  bankruptcy,  and  that  it  was  void  in  toto,  as 
against  the  trustee.  The  trustee  was  afterwards  made  a  defendant  to 
the  action,  and  he  delivered  a  statement  of  defence.  An  order  was  sub- 
sequently made  b}r  Fry,  J.,  on  the  application  of  Dixon  and  Gurney, 
giving  them  leave  to  serve  a  notice,  under  rule  17  of  Order  xvi.,  of  the 
Rules  of  Court,  1875,  on  the  trustee,  for  the  purpose  of  raising  as  be- 
tween them  and  him  the  question  of  the  validity  of  the  deed.  A  notice 
was  accordingly  served  by  Dixon  and  Gurney  on  the  trustee,  and  he 
delivered  a  reply,  alleging  the  total  invalidity  of  the  deed.  The  plain- 
tiffs  by  their  reply  to  the  trustee's  defence  said  that  they  did  not  claim 
an}'  interest  in  the  proceeds  of  sale  of  the  furniture  so  far  as  those  pro- 
ceeds exceeded  the  £400  secured  by  the  deed  of  the  24th  of  February, 
1879,  to  Dixon  and  Gurney. 

This  was  the  trial  of  the  action. 

It  was  arranged  that  the  question  should  first  be  tried  whether,  as- 
suming that  the  bill  of  sale  created  a  valid  security  as  between  Robinson 
and  his  trustee  and  Dixon  and  Gurney  for  £400  in  favor  of  Dixon  and 
Gurney,  but  that  it  did  not  create  any  security  in  favor  of  Steel  and 
Chater,  Steel  and  Chater  were,  as  between  themselves  and  Dixon 
and  Gurney,  entitled  to  share  in  the  benefit  of  the  security. 

Cookson,  Q.  C,  and  Warmington,  for  the  plaintiffs. 

North,  Q.  C,  and  C.  Lyttleton  Chubb,  for  Dixon  and  Gurney. 

There  was  nothing  on  the  face  of  the  promissoiy  note  to  show  how 
many  persons  were  to  sign  it ;  Dixon  and  Gurne}'  signed  it  before  the 
plaintiffs.  The  plaintiffs  knew  nothing  about  the  agreement  for  secu- 
rity when  they  signed  the  note.  Dixon  and  Gurne}'  expressly  stipulated 
for  the  security  before  they  signed  the  note.  Why  should  not  one  surety 
be  entitled  to  contract  with  the  principal  debtor  for  a  benefit  ?  Does 
equity  require  that  there  should  be  equality  between  co-sureties  when 
some  of  them  take  care  to  agree  that  they  shall  be  specially  favored  and 
the  others  do  not  ? 

[Fry,  J.  That  would  equally  apply  to  a  suret}^  obtaining  a  payment 
of  money  from  the  principal  debtor.] 

If,  after  each  of  the  four  sureties  had  paid  his  £200,  one  of  them  had 
received  something  from  the  principal  debtor,  could  he  have  been  com- 
pelled to  bring  the  same  into  hotchpot?  If  two  of  the  co-sureties,  after 
paying  their  proportion,  sue  the  principal  debtor  and  the  other  two  re- 
fuse to  join,  and  the  two  who  sue  recover  something  from  the  principal 
debtor  by  means  either  of  execution  upon  a  judgment  in  the  action,  or 
by  his  paying  after  action  brought,  or  even  if  he  pays  upon  a  threat  of 


568 


STEEL    V.    DIXON. 


[chap,  iil 


proceedings,  could  the}*  be  compelled  to  share  the  amount  thus  recov- 
ered with  their  co-sureties? 

[Fry,  J.  Possibly  if  the  co-sureties  would  not  do  their  part  in  suing 
the  principal  debtor  they  might  lose  their  right  to  contribution.1] 

Fry,  J.,  after  stating  the  facts,  continued  :  — 

The  plaintiffs,  by  their  reply  to  the  trustee  in  the  liquidation  of  Rob- 
inson, make  no  claim  under  the  deed,  except  to  the  extent  of  the  £400 
which  has  been  raised  under  it  for  the  defendants  Dixon  and  Gurney, 
and  therefore  the  question  on  which  I  have  now  to  express  my  opinion 
is  this,  assuming  that  the  deed  created  a  valid  security  in  favor  of 
Dixon  and  Gurney,  must  it  not  have  created  a  like  valid  security  in 
favor  of  the  plaintiffs,  and  are  not  the  plaintiffs,  as  between  themselves 
and  Dixon  and  Gurne}',  entitled  to  share  in  the  security? 

In  my  opinion  the  plaintiffs  are  entitled  to  share  in  the  benefits 
secured  by  the  deed  to  the  defendants.  In  coming  to  that  conclusion, 
I  base  myself  on  the  general  principle  applicable  to  co-sureties,  as  es- 
tablished by  the  well-known  and  often-cited  case  of  Deering  v.  Earl  of 
Winchelsea,  the  short  effect  of  which  I  take  to  be  that,  as  between  co- 
sureties,  there  is  to  be  equality  of  the  burden  and  of  the  benefit.  When 
I  say  equality  J  do  not  mean  necessarily  equality  in  its  simplest  form , 
but  what  has  been  sometimes  called  proportionable  equality.  The  re- 
sult  of  that  case  was  expressed  b}^  Baron  Alderson  in  Pendlebury  v. 
Walker2  in  these  terms,  that  "  where  the  same  default  of  the  principal 
renders  all  the  co-sureties  responsible,  all  are  to  contribute ;  find  then 
the  law  superadds  that  which  is  not  only  the  principle  but  the  equitable 
mode  of  applying  the  principle,  that  they  should  all  contribute  equally, 
if  each  is  a  surety  to  an  equal  amount ;  and  if  not  equally,  then  pro- 
portionably  to  the  amount  for  which  each  is  a  surety."  I  hold,  there- 
fore,  that"  the  result  of  Deering  v.  Earl  of  Winchelsea  is  to  require  thaf 
the  ultimate  burden,  whatever  it  may  be,  is.  as  between  the  co-sureties, 
to  be  borne  by  them  in  proportion  to  the  shares  of  the  debt  for  which 
they  have  made  themselves  responsible. 

If  that  be  the  case,  it  follows  that  each  surety  must  bring  into  hotch- 
pot every  benefit  which  he  has  received  in  respect  of  the  suretyship  which 
he  undertook,  and  if  he  has  received  a  benefit  by  way  of  indemnity  from 
the  principal  debtor,  it  appears  to  me  that  he  is  bound,  as  between  him- 
self and  his  co-sureties,  to  bring  that  into  hotchpot,  in  order  that  it  may 
be  ascertained  what  is  the  ultimate  burden  which  the  co-sureties  have 
to  bear,  so  that  that  ultimate  burden  may  be  distributed  between  them, 
equally  or  proportionably,  as  the  case  may  require.8 

1  The  argument  for  plaintiffs  and  a  part  of  that  for  defendants  are  omitted. —  Ed. 

2  4  Y.  &C.  Ex.  p.  441. 

8  Berridge  v.  Berridge,  44  Ch.  D.  168;  Bell  v.  Lamkin,  1  St.  &  P.  460;  White 
v.  Banks,  21  Ala.  705 ;  Steele  v.  Mealing,  24  Ala.  285  ;  Tyms  v.  Dejarnette,  26  Ala. 
280;  Taylor  v.  Morrison,  26  Ala.  728;  Hartwell  v.  Whitman,  36  Ala.  712;  Mun- 
ien  v.  Bailey,  70  Ala.  63  ;  Vandiver  v.  Pollak,  107  Ala.  547;  Fishback  v.  Weaver,  34 
Ark.  569 ;  Gibson  v.  Sheehan,  5  App.  Cas.  Dist.  Col.  391 ;  Cannon  v.  Collaway, 
5  Del.  Ch.  559;  Simmons  v.  Camp,  71  Ga.  54;  Frink  v.  Peabody,  26  111.  Ap.  390; 


SECT.  III.]  STEEL   V.    DIXON.  569 

In  coming  to  that  conclusion,  as  I  do  upon  principle,  I  am  much 
strengthened  by  the  American  authorities  to  which  my  attention  has 
been  called  by  Mr.  Cookson.  Mr.  Justice  Story,  in  his  Equity  Juris- 
prudence, asserts  the  principle  in  these  terms  : *  "  Sureties  are  not  only 
entitled  to  contribution  from  each  other  for  moneys  paid  in  discharge  of 
their  joint  liabilities  for  the  principal,  but  they  are  also  entitled  to  the 
benefit  of  all  securities  which  have  been  taken  by  any  one  of  them  to 
indemnify  himself  against  such  liabilities."  And  in  the  case  of  Miller 
v.  Sawyer,2  which  was  before  the  Court  of  Chancery  in  the  State  of 
Vermont,  the  principle  is  stated  thus  by  Mr.  Justice  Barrett,  the  learned 
judge  who  delivered  the  judgment  of  the  Court.  Having  referred  to 
Deering  u.  Earl  of  Winchelsea,  he  said  :  "  For  present  purposes  it  is 
needless  to  cite  and  discuss  the  books  and  cases  to  any  considerable 
extent,  in  which  this  subject  is  treated,  and  the  leading  principles  of  it 

Comegys  v.  State  Bank,  6  Ind.  357  ;  Whiteman  v.  Harriman,  85  Ind.  49  ;  Sanders  v. 
Weelburg,  107  Ind.  266;  Reiser  v.  Beam,  117  Ind.  31 ;  Kelso  v.  Kelso  (Indiana  Ap- 
peals, 1896),  44  N.  E.  R.  1013;  Reinhart  v.  Johnson,  62  Iowa,  155;  Hoover  v.  Mow- 
rer,  84  Iowa,  43  ;  Seibert  v.  Thompson,  8  Kan.  65  ;  Goodloe  v.  Clay,  6  B.  Mon.  236  ; 
Teeter  v.  Pierce,  11  B.  Mon.  399;  Smith  v.  Conrad,  15  La.  An.  579;  Scribner  v. 
Adams,  73  Me.  541  ;  Lane  v.  Stacy,  8  All.  41 ;  Schmidt  v.  Coulter,  6  Minn.  492  ;  Mueller 
v.  Barge,  54  Minn.  314;  Barge  v.  Van  der  Horck,  57  Minn.  497  ;  Chilton  v.  Chapman, 
13  Mo.  470 ;  McCune  v.  Belt,  45  Mo.  174 ;  Tolle  v.  Beckler,  12  Mo.  Ap.  54  ;  Low  v. 
Smart,  5  N.  H.  353  ;  Brown  v.  Ray,  18  N.  H.  102  ;  Currier  v.  Fellows,  27  N.  H.  366 ; 
Paulin  v.  Kaighn,  27  N.  J.  503  (semble) ;  Wolcott  v.  Hagerman,  50  N.  J.  289;  Davis 
v.  Toulmin,  77  N.  Y.  280  (semble);  Crisfield  v.  Murdock,  127  N.  Y.  315,  Ramsay  v. 
Lewis,  30  Barb.  403  ;  Fielding  v.  Waterhouse,  40  N.  Y.  Sup'r  Ct.  424 ;  Fagan  v. 
Jacocks,  4  Dev.  263  ;  Gregory  v.  Murrell,  2  Ired.  Eq.  233;  Hall  v.  Jones,  8  Ired.  56  ; 
Barnes  v.  Pearson,  6  Ired.  Eq.  482;  Leary  ;;.  Cheshire,  3  Jones,  Eq.  170;  Parham  v. 
Green,  64  N.  Ca.  436 ;  Wilson  v.  Stewart,  24  Oh.  St.  504  ;  Farmers'  Bank  v.  Teeters,  31 
Oh.  St.  36;  Farmers'  Bank  v.  Snodgrass,  29  Oreg.  395  ;  Agneww.  Bell,  4  Watts,  31  ; 
Shaeffer  v.  Clendenin,  100  Pa.  565 ;  Field  v.  Pelot,  McMull.  Eq.  369  ;  Bobbitt  v.  Flow- 
ers, 1  Swan,  511 ;  Glasscock  v.  Hamilton,  62  Tex.  143  ;  Lacy  v.  Rollins,  74  Tex.  566 
{semble);  Urbahn  v.  Martin,  19  Tex.  Civ.  Ap.  93;  Miller  v.  Sawyer,  30  Vt.  412; 
Aldrich  v.  Hapgood,  39  Vt.  617;  Somers  v.  Johnson,  57  Vt.  274  (semble);  West  v. 
Belches,  5  Munf.  187  ;  McMahon  v.  Fawcett,  2  Rand.  514;  Neely  v.  Bee,  32  W.  Va. 
519  ;  Latouche  ?:.  Pallas,  Hayes,  450,  Accord. 

The  rule  is  the  same  when  the  surety,  instead  of  receiving  a  security  from  the  prin- 
cipal "directly,  obtains  it  by  assignllienr  from  the  creditor  on  paving  the  claim  nf~thp> 
latter.     In  re  Arcedeckne,  24  Ch.  D.  709. 

If  the  sureties  have  paid  their  respective  shares  of  what  is  due  the  creditor,  and  one 
of  tlieriT  afterwards  reL'BlvtJti  from  Lll(j  principal  any  property  as  an  indemnity7"*he  is 
under  no  duty  to  snare  tins  indemnity  with  his  co-sureties.  Harrison  v.  Phillips,  46 
Mo.  520;  Messer  v.  Swan,  4  N.  H.  481  J  Hall  v.  Cusliman,  16  N.  H.  462;  Allen  v. 
Wood,  3  Ired.  Eq.  386  ;  Urbahn  v.  Martin,  19  Tex.  Civ.  Ap.  93,  97. 

The  general  rule  which  requires  a  surety  who  receives  a  security  for  his  own  in- 
demnify to  share  it  with  his  co-sureties,  does  not  apply  unless  the  suretyship  of  fiach 
is  for  what  is  substantially  the  same  liability  of  the  principal.  Lacy  v.  Rollins,  74 
Tex.  566  ;  Somers  v.  Johnson,  57  Vt.  274. 

In  Leggett  v.  McClelland,  39  Oh.  St.  624,  it  was  decided  that  the  rule  hy  which  an 
indemnity  to  one  surety  enures  to  the  benefit  of  the  co-sureties  does  not  apply  ta  •= 
property  conveyed  to  one  surety  by  a  stranger]     See  also  Pfluger  v.  Wilshusen,  17 
N.  Y.  Sup.  5167  Compare  Shaeffer  v.  Clendenin,  100  Pa.  565.  — Ed. 

1  11th  ed.  pi.  499.  2  30  Vt.  412. 


570  STEEL   V.   DIXON.  [CHAP.  III. 

applied  in  settling  the  rights  and  duties  of  parties.  It  may  be  compre- 
hensively stated,  that  persons  subject  to  a  common  burden  stand  in  their 
relation  to  each  other  upon  a  common  ground  of  interest  and  of  right, 
and  whatever  relief,  by  way  of  indemnity,  is  furnished  to  either  by  him 
for  whom  the  burden  is  assumed,  enures  equally  to  the  relief  of  all 
the  common  associates  ;  "  and  in  the  course  of  his  judgment  he  refers, 
amoiF  other  cases,  to  that  of  Hall  v.  Robinson,1  in  which  Chief  Justice 
Ruffin  said:  "The  relief  between  co-sureties  in  equity  proceeds  upon 
the  maxim  that  equality  is  equity,  and  that  maxim  is  but  a  principle  of 
the  simplest  natural  justice.  It  is  a  plain  corollary  from  it  that,  when 
two  or  more  embark  in  the  common  risk  of  being  sureties  for  another, 
ana  one  ot  tnem  subsequently  obtains  from  the  principal  an  indemnit}" 
or  counter-security  to  any_extent,_it  enures  to  the  benefit  of'jtll.  The 
risk  and  the  relief  ought  to  be  coextensive."  These  American  decisions 
are,  as  it  seems  to  me,  exactly  in  point. 

Mr.  North  has  urged  that  a  difference  may  arise  where  the  security 
taken  by  one  co-surety  is  taken  by  virtue  of  a  bargain  entered  into  be- 
tween him  and  the  principal  debtor  at  the  time  of  his  becoming  surety. 
In  my  judgment  that  is  immaterial.  I  think  it  does  not  affect  the  prin- 
ciple  of  equity  to  which  I  have  referred  whether  the  security _is  the 
result  of  a  contract  witTFthe  debtor  at  the  time  when  the  co-surety 
becomes  a  surety,  or  is  voluntarily  given  subsequently,  or  arises  in 
any  other  manner  whatever.  1  repeat  that  whatever  goes  to  diminish 
the  total  amount  of  the  burden  must,  in  my  judgment,  be  broughtTTnto 
hotchpot. 

In  saying  that,  however,  I  wish  to  guard  myself  against  its  being 
supposed  that  this  equity  may  not  in  any  case  be  varied  or  departed 
from.  Those  to  whose  benefit  the  security  enures  may,  of  course,  con- 
tract themselves  out  of  the  benefit, 'z  and  the  question  may  therefore  well 
have  to  be  considered  in  each  case  whether  there  has  been  such  a  con- 
tract between  the  co-sureties.  But  a  contract  between  one  surety  and 
the  debtor  is  not  to  be  confounded  with  a  contract  between  the  co-sure- 
ties —  a  contract  by  which  one  co-surety  renounces  his  equity  in  favor 
of  another.3  In  the  next  place,  cases  ma}'  arise  in  which  one  co-surety,  by 
reason  of  his  default  in  performing  his  duty  towards  the  other,  may  estop 
himself  from  asserting  the  equity  which  he  would  otherwise  have  had 
against  him.  Some  such  cases  have  been  suggested  by  Mr.  North  in 
the  course  of  his  argument.  But  neither  of  those  principles  appears  to 
me  to  apply  in  the  present  case,  because  here  the  contract  upon  which 
the  security  was  given  was  made  between  the  debtor  and  two  of  the 
co-sureties,  and  was  not  communicated  at  the  time  of  their  contract  of 
suretyship  to  the  other  co-sureties,  and  there  appears  to  me  to  be  nothing 

1  8  Iredell,  56. 

2  White  v.  Banks,  21  Ala.  705,  712  (semble)  ;  Moore  i>.  Moore,  4  Hawks,  358; 
Long  v.  Barnett,  3  Ired.  Eq.  631  (semble) ;  Leggett  v.  McClelland,  39  Oh.  St.  624,  626 
(semble),  Accord. —  Ei>. 

3  Thompson  v.  Adams,  Freem.  Ch.  (Miss.)  225,  Contra.  —  Ed. 


SECT. 


in.] 


PAULIN    V.    KAIGHN. 


571 


in  the  conduct  of  the  plaintiffs  (upon  the  assumption  on  which  I  am  now 
proceeding)  which  can  deprive  them  of  the  benefit  of  their  right  against 
the  co-sureties.  Therefore,  on  this  assumption  I  hold  that  the  plaintiffs 
would  be  entitled  to  the  benefit  which  they  claim.1 


STEPHEN  F.  PAULIN  v.  CHARLES  KAIGHN. 

In  the  Court  of  Errors  and  Appeals,  New  Jersey,  June  Term, 

1861. 

[Reported  in  29  New  Jersey  Reports,  480.] 

Haines,  J.  This  was  an  action  of  assumpsit  brought  by  Kaighn 
against  Paulin. 

The  plaintiff  below,  at  the  trial,  proved  that  he  and  the  defendant 
below,  together  with  one  Cooper,  executed  to  William  Champion  a 
joint  bond  for  the  payment  of  money  due  to  Champion  from  the  South 
Camden  Ferry  Company,  whose  joint  sureties  they  thereby  became. 
It  further  appeared  that  Champion  had  recovered  judgment  against  all 

1  In  Berridge  v.  Berridge,  44  Ch.  D.  168,  there  were  five  co-sureties  on  a  guaranty  of 
£2,000.  A  policy  of  life  insurance  had  been  assigned  by  the  principal  to  one  of  the 
co-sureties.  The  sureties  paid  their  respective  shares  of  the  £2,000  to  the  creditor. 
North.  J.,  said  :  — 

"  Then  the  plaintiffs  are  also  entitled  to  the  £400  which  they  paid  to  the  bank  on 
account  of  the  £2,000;  and  when  that  £400  has  been  paid  to  the  plaintiffs  or  retained 
by  them,  it  cannot  be  applied  solely  in  satisfying  them  ;  but  it  must,  according  to  the 
doctrine  of  Steel  v.  Dixon,  17  Ch.  D.  825,  be  shared  between  them  and  the  other  co- 
sureties. Then,  will  the  plaintiffs  be  entitled  to  receive  anything  more  1  In  my 
opinion  they  will,  because  otherwise  the  estate  of  their  testator  will  not  have  been 
released  '  from  all  liability  in  respect  of  the  suretyship.'  It  will  only  have  been  repaid 
one-fifth  part  of  the  £400  which  it  has  paid  to  the  bank,  because  the  rest  of  the  £400 
will  have  gone  to  pay  the  co-sureties,  who,  on  the  principle  of  Steel  v.  Dixon,  17  Ch. 
D.  825,  had  a  legal  right  to  share  in  the  £400.  That  being  so,  something  more  must 
be  paid  to  the  plaintiffs.  There  must  be  paid  to  them  such  a  further  sum  as  will 
make  up  to  them  that  which  has  been  taken  away  from  them  by  reason  of  the  claim 
of  the  other  co-sureties  to  share  in  the  £400.  Then,  again,  that  further  sum,  when  it 
has  been  paid  to  them,  will  have  to  be  distributed  in  a  similar  manner,  and  therefore, 
if  the  rights  were  worked  out  in  that  way,  there  would  be  successive  payments  made 
out  of  the  policy  money  to  the  plaintiffs  until  the  rights  of  all  the  co-sureties  had 
been  satisfied,  and  then  only  the  plaintiffs  would  be  in  a  position  to  say  that  they  had 
got  the  £400  to  which  they  are  entitled  under  the  deed  of  August,  1884. 

"In  my  opinion,  this  result  necessarily  flows  from  the  doctrine  of  Steel  v.  Dixon, 
though  I  do  not  think  that  the  point  was  actually  decided  there.  In  that  case,  the 
plaintiffs,  for  some  reason  I  could  never  understand,  limited  their  claim  to  a  share  of 
the  first  payment  received  by  their  co-surety  by  means  of  his  counter-indemnity,  and 
did  not  ask  to  share  in  any  subsequent  payments  made  to  him.  They  did  not  claim  to 
share  in  the  whole  of  the  proceeds  of  the  counter-security,  but  only  to  the  extent  of 
the  £400.  I  think  the  principle  of  the  decision  would  have  entitled  them  to  more,  if 
they  had  asked  for  it,  and  I  think  it  entitles  the  co-sureties  in  the  present  case  to  th« 
telief  which  I  have  mentioned."  —  Ed. 


^ 


*~JL  /? 


st*jeJ2,  Pzz+P-S  ^ZZ***^ 


<r~ 


"~1   ^  ^*+%,r%-u%lTp 


-^C^-^Ql 


572  PAULIN   V.    KAIGHN.  [CHAP.  III. 

the  sureties,  and  that  Kaighn  and  Cooper  satisfied  the  judgment,  each 
paying  one-half  of  its  amount. 

This  action  is  to  compel  Paulin  to  contribute  to  Kaighn  the  one-third 
of  the  one-half  which  he  was  compelled  to  pay,  and  the  proof  so  made 
established  a  prima  facie  right  to  recover. 

The  errors  assigned  are  upon  the  rejection  of  the  evidence  offered  on 
the  defence,  and  the  question  is  whether  the  proof  so  offered  consti- 
tuted, in  whole  or  in  part,  a  legal  defence  to  the  action. 

The  offer  was  to  prove,  first,  that  Kaighn  was  president  and  a 
director  of  the  South  Camden  Ferry  Company  during  the  time  of  these 
transactions,  and  that  Cooper  was  also  a  director  during  the  same 
time  ;  that  the  ferry  companj',  being  the  principal  debtor,  executed 
and  delivered  to  Kaighn  and  Cooper  certain  securities  to  indemnify 
them  and  Paulin  against  this  and  other  liabilities  incurred,  and  to  be 
incurred,  by  them  in  behalf  of  the  compan}-,  and  that  those  securities 
were  surrendered  and  given  up  to  the  company  by  Kaighn  and  Cooper 
without  the  consent  of  Paulin. 

It  is  not  questioned  but  that  co-sureties  are  entitled  not  only  to  con- 
tribution from  each  other  towards  the  moneys  paid  in  discharge  of  their 
joint  liability,  but  also  to  the  benefits  of  all  the  securities  which  any  of 
them  may  have  taken  to  indemnify  himself.  Nor  is  it  disputed  that 
where  one  suret}'  holds  securities  for  his  indemnity,  the  mere  fact  of 
his  holding  such  securities  will  not  bar  a  recovery  in  an  action  for  con- 
tribution.1 After  such  recoveiy  and  payment  of  the  judgment,  the 
defendant  may,  in  a  proper  tribunal,  enforce  his  right  of  subrogation 
to,  and  so  obtain  the  benefit  of  them.  If,  however,  the  surety  before 
the  action  for  contribution  shall  have  converted  the  securities  for  in- 
demnity into  money,  that  will  go  pro  tanto  in  liquidation  of  the  amount 
paid  on  the  liability  ;  and  it  is  competent  for  the  co-surety,  in  the  ac- 
tion against  him,  to  show  that  money  has  been  so  realized.  It  is  a 
payment  of  so  much  by  the  original  debtor,  and  so  far  an  extinguish- 
ment of  the  liabilitj'.  All  the  sureties  have  an  equal  interest  in  the 
indemnity,  and  in  the  money  realized  from  it.  The  surety  who  held  it 
has  no  right  to  appropriate  to  his  own  use  the  whole  money  so  realized, 
nor  has  he  a  right  to  deprive  his  co-sureties,  without  their  consent,  of 
the  benefits  to  be  derived  from  it.  He  becomes  their  trustee,  and  as 
such  must  faithfully  hold  the  securities  for  the  benefit  of  all  his  co- 
sureties, and  he  has  no  right,  without  their  consent,  to  transfer,  sur- 
render, or  cancel  them. 

The  offer  was  to  show  that  these  securities  were  intrusted  to  Kaighn 
and  Cooper  for  the  benefit  of  themselves  and  of  Paulin,  and  that  they 
surrendered  them  to  the  company  of  which  the}-  were  officers  without 

1  Done  v.  Walley,  2  Ex.  198;  Anthony  v.  Percifull,  8  Ark.  494  ;  Williams  v.  Kiehl 
(California,  1899),  59  Pac.  R.  762;  Johnson  v.  Vaughan,  65  ill.  425;  Bachelder  v. 
Fiske,  17  Mass.  464  ;  Mosely  u.  Fullerton,  59  Mo.  Ap.  143  ;  Vliet  v.  Wickoff,  42  N.  J. 
Eq   642,  644,  Accord. 

Morrison  v.  Taylor,  21  Ala.  779  ;   Morrison  v.  Poyntz,  7  Dana,  307,  Contra.  —  Ed. 


SECT.  III.]  rAULIN    V.    KAIGHX.  573 

the  consent  of  Paulin.  It  was  held  by  the  court  below  that  the  testi- 
mony was  lawfully  overruled,  on  the  ground  that  it  constitutes  no  de- 
fence at  law,  and  that  the  defendant  must  submit  to  a  recover}'  against 
him,  and  then  seek  his  redress  in  a  court  of  equity. 

This  would  undoubtedly  have  been  true  if  the  securities  had  been 
held,  and  not  collected  or  surrendered.  The  surrender,  without  the 
consent  of  Paulin,  was  a  fraud  upon  him  ;  it  unjustly  deprived  him  of 
the  means  of  indemnity,  on  which  he  had  a  right  to  rely.  And  whether 
it  was  an  actual  and  intentional,  or  a  constructive  fraud,  it  was  equally 
injurious  to  him  ;  and  I  can  see  no  reason  why  it  may  not  be  shown  in 
a  court  of  law.1  Whether  it  was  fraud  in  fact  or  in  law  was  not  opened 
in  the  offer.  The  facts  were  opened  and  offered  ;  the  result  of  them 
was  a  question  of  law,  depending  on  the  circumstances  to  be  proved, 
the  quo  animo  with  which  the  surrender  was  made. 

Fraud,  whether  of  fact  or  of  law,  is  within  the  jurisdiction  of  a  court 
of  law,  and,  in  many  cases,  may  be  considered  there. 

It  is  clear  and  admitted  that  such  surrender  may'  be  shown  in  equity. 
Why  not  at  law  ?  The  action  selected  by  the  plaintiff  is  of  itself  equi- 
table, and  any  defence  is  competent  which  tends  to  show  that  the  plain- 
tiff, in  justice  and  equity,  ought  not  to  recover.2  .  .  . 

It  was  further  objected  that  the  testimony  offered  was  incompetent 
because  it  was  not  accompanied  by  an  offer  to  show  that  the  securities 
were  of  some  value. 

The  securities  are  presumed  to  be  of  the  value  expressed  on  their 
face,  and  for  which  they'  were  taken.  The  holders,  who  surrendered 
them,  assume  the  burden  of  showing  that  they  were  of  less  value  ;  and 
in  his  reply  the  plaintiff  would  have  been  at  liberty  to  show  that  they 
were  of  less  value  than  the  face,  or  of  no  value  at  all,  and  have  limited 
the  discharge  to  the  amount  of  such  value. 

He  would  also  have  been  at  liberty'  to  show  that  they  were  surren- 
dered for  some  sufficient  reason.  If  they  were  also  to  indemnify  against 
other  debts  or  liabilities  that  could  also  have  been  shown  between  these 
parties  without  making  other  persons  parties,  and  the  true  proportion- 
ate value  applied  to  this  claim. 

The  whole  question  would  have  been  opened  to  the  parties  as  fully 
as  if  they  had  been  in  a  court  of  equity. 

For  affirmance,  Judges  Brown,  Cornelison,  and  Swain. 

For  reversal,  Judges  Haines,  Van  Dyke,  Combs,  Kennedy,  and 
Wood. 

1  Vandiver  v.  Pollak,  107  Ala.  547;  Ramsey  v.  Lewis,  30  Barb.  403,  Accord. 
Similarly  if  the  surety  wastes  the  collateral  security  in  his  hands,  or  negligently 

suffers  it  to  be  lost  or  impaired  in  value,  he  must  account  to  his  co-surety  for  such 
waste,  loss,  or  depreciation.  Steele  v.  Mealing,  24  Ala.  285 ;  Taylor  v.  Morrison,  26 
Ala.  728 ;  Simmons  v.  Camp,  71  Ga.  54  ;  Frink  v.  Peabody,  26  111.  Ap.  390 ;  White  v. 
Carlton,  52  Ind.  371  (semble) ;  Goodloe  v.  Clay,  6  B.  Mon.  236;  Teeter  v.  Pierce,  11 
B.  Mon.  399  ;  Schmidt  v.  Coulton,  6  Minn.  492  ;  Chilton  v.  Chapman,  13  Mo.  470; 
Crisfield  v.  Murdock,  127  N.  Y.  315  ;  Ramsey  v.  Lewis,  30  Barb.  403;  Kerns  v.  Cham- 
bers, 3  Ired.  Eq.  576  ;  Neely  v.  Bee,  32  W.  Va.  519.  —  Ed. 

2  The  learned  judge  here  stated  at  some  length  the  reasons  why  the  surety's  sru> 


574  SANDERS   V.   WEELBURG.  [CHAP.  IIL 


SANDERS   v.   WEELBURG,   Executrix. 
In  the  Supreme  Court,  Indiana,   May  Term,  1886. 
[Reported  in  107  Indiana  Reports,  266.] 

Howk,  C.  J.1  Appellant  shows  in  his  complaint,  as  we  have  seen, 
that  he  and  the  appellee  were  co-sureties  of  one  Frederick  Weelburg, 
as  principal  debtor,  in  a  certain  judgment  rendered  against  all  of  them, 
on  January  29,  1879,  in  and  by  the  Superior  Court  of  Marion  County; 
that  on  April  9,  1879,  appellant  paid  the  balance  then  due  of  such 
judgment,  interest  and  costs,  to  wit,  the  sum  of  $1,811.50;  that  on  the 
next  day,  April  10,  1879,  an  execution  was  issued  on  such  judgment 
in  favor  of  appellant,  as  such  co-surety,  and  delivered  to  the  sheriff  of 
Marion  Count}' ;  that  by  virtue  of  such  execution,  such  sheriff  offered 
and  sold  to  appellant  certain  property  of  the  principal  debtor,  on  April 
26,  1879,  for  $378,  and,  on  May  31,  1879,  certain  real  estate  and  lease- 
hold interests  of  such  principal  debtor,  for  $50,  and,  on  July  14,  1879, 
certain  personal  property  of  the  principal  in  such  judgment,  for  $28.29  ; 
and  that  on  April  2,  1880,  such  execution  was  returned,  no  other  prop- 
erty found  of  Frederick  Weelburg,  principal  in  such  judgment,  whereon 
to  levy.  On  such  several  sales  to  appellant,  his  complaint  shows  that 
he  paid  the  costs  and  credited  the  remainder  of  his  several  bids  on  the 
judgment. 

After  his  several  purchases  of  the  property  of  Frederick  Weelburg, 
principal  in  such  judgment,  and  after  he  had  credited  the  judgment  with 
the  net  amounts  of  his  several  bids  for  such  property,  as  stated  in  his 
complaint,  appellant  filed  his  claim  herein  to  recover  of  the  appellee, 
as  his  co-surety  in  such  judgment,  by  way  of  contribution,  the  sum  of 
$700  and  interest  thereon  at  the  rate  of  eight  per  cent  per  annum  from 
and  after  March  13,  1879.  It  is  claimed  on  behalf  of  the  appellant, 
that  he  purchased  the  property  of  the  principal  in  the  judgment,  at 
public  sales  thereof  by  the  sheriff  of  the  count}',  where  all  parties,  the 
appellee  included,  had  the  right  to  appear  and  bid  therefor ;  that  he 
had  the  lawful  right  to  purchase  such  property,  at  such  sales,  and  as 
no  one  would  or  did  bid  more  therefor  than  he,  to  purchase  the  same 
at  and  for  the  amounts  of  his  several  bids,  without  regard  to  the  actual 
value  thereof;  and  that,  having  so  purchased  such  property,  he  cannot 
be  required  to  account  therefor  even  to  the  appellee,  as  his  co-surety, 
at  its  actual  value,  or  at  an}'  greater  value  than  the  aggregate  amount 
of  his  several  bids. 

On  the  other  hand,  it  is  claimed  on  behalf  of  appellee  that,  as  she 

render  of  securities  should  at  law  defeat  his  claim  for  contribution  from  his  co-surety. 
The  concurring  opinion  of  Van  Dyke,  J.,  on  this  point,  and  the  dissenting  opinion  of 
Brown,  J.,  are  omitted.  —  Ed. 

1  Only  a  part  of  the  opinion  of  the  Court  is  given.  —  Ed. 


'  SECT.  III.]  SANDERS   V.    WEELBURG.  575 

was  the  co-surety  of  appellant  in  such  judgment,  equity,  good  consci- 
ence, and  fair  dealing  exacted  of  him  the  utmost  good  faith  in  his  trans- 
actions with  her  in  relation  to  the  judgment,  and  in  connection  with 
the  property  of  the  principal  in  such  judgment ;  that  as  the  judg- 
ment was  a  common  burden  to  her  and  appellant,  as  such  co-sureties, 
so  the  property  of  the  principal  in  the  judgment  became  and  was  a 
common  fund  for  the  benefit  and  protection  alike  of  each  and  both  of 
them  ;  that  b}-  suing  out  and  delivering  to  the  sheriff  of  the  count}'  an 
execution  on  such  judgment,  in  appellant's  favor,  he  acquired  a  security 
for  the  payment  of  the  judgment,  by  the  lien  of  the  execution  on  the 
property  of  the  principal  therein,  which  security  enured  to  the  benefit 
and  for  the  protection  of  the  appellee,  as  his  co-surety  ;  that  by  appel- 
lant's acts  in  procuring  forced  sales  of  such  property  of  the  principal  in 
the  judgment,  and  in  becoming  the  purchaser  thereof  at  prices  rela- 
tively nominal,  the  value  of  such  security  became  and  was  largely 
depreciated,  if  not  wholly  lost ;  and  that,  by  means  of  the  premises, 
appellant  became  and  was  justly  chargeable  with  the  fair  and  reason- 
able value  of  such  security  to  the  appellee,  as  his  co-surety,  in  the 
equitable  adjustment  of  appellant's  claim  herein  to  contribution. 

These  conflicting  claims  of  the  parties  respectively  involve,  as  it  seems 
to  us,  the  entire  merits  of  the  controversy  in  this  cause.  If  appellant 
is  right  in  his  claim  or  contention,  as  we  have  heretofore  stated  it,  the 
general  verdict  for  appellee  is  wrong,  and  the  judgment  thereon  cannot 
stand,  but  must  be  reversed,  because  the  record  before  us  clearly  shows 
that  the  case  was  tried  below  upon  a  theory  which  antagonizes  and  is 
irreconcilable  with  appellant's  claim  or  contention.  If,  on  the  other 
hand,  appellee's  claim  or  contention,  as  it  is  heretofore  stated,  is  the 
correct  one,  as  we  think  it  is,  the  general  verdict  is  right  upon  the  evi- 
dence, and  the  judgment  below  must  be  affirmed.  It  is  abundantly 
shown  by  the  evidence  in  the  record,  that  the  fair  and  reasonable  value 
of  the  property  of  the  principal  in  the  judgment,  which  was  levied  upon 
and  sold  by  the  sheriff  upon  the  execution  in  favor  of  appellant,  and 
of  which  he  became  the  purchaser  as  aforesaid,  largely  exceeded  in  the 
aggregate  the  full  amount  due  him  on  such  judgment,  of  principal, 
interest,  and  costs. 

Appellant,  having  fully  paid  and  satisfied  the  judgment  to  the  judg- 
ment creditor  or  plaintiff,  b}T  means  of  such  pa}'ment,  acquired  at  the 
time  a  cause  of  action  against  the  appellee,  as  his  co-surety  in  such 
judgment ;  but  in  his  suit  on  such  cause  of  action,  it  is  clear,  we  think, 
that  under  our  law  he  could  not  recover  of  the  appellee  any  more  than 
she  was  "  equitably  bound  to  pay."  Prima  facie,  appellee  as  the 
co-surety  of  appellant  was  liable  to  him  for  the  one-half  of  the  sum 
paid  by  him  to  the  judgment  plaintiff,  in  satisfaction  of  such  judgment ; 
but  this  prima  facie  liability  was  subject  to  reduction  by  whatever 
sums  could  be  realized  from  the  property  of  the  principal  in  such  judg- 
ment. The  property  of  the  principal  in  the  judgment  was  a  common 
fund  for  the  benefit  and  protection  of  both  the  sureties  alike,  the  ap- 


576  SANDERS    V.    WEELBURG.  [CHAP.  IIL 

pellee  as  well  as  the  appellant.  By  bis  payment  of  the  judgment  to  the 
judgment  plaintiff,  appellant  became  and  was  practically,  at  least,  the 
owner  thereof,  and  was  fully  authorized  to  sue  out  execution  thereon 
for  his  own  use,  under  the  provisions  of  section  1214,  R.  S.  1881.  The 
judgment  was  then  a  lien  on  the  real  estate  and  chattels  real  of  the 
principal  therein  ;  and  when,  on  the  next  da}' "after  his  payment  of  such 
judgment,  appellant  sued  out  an  execution  thereon,  in  bis  own  favor, 
and  delivered  the  same  to  the  sheriff  of  the  county,  be  thereby  acquired 
a  valid  lien  on  all  the  personal  property  of  such  principal.  These 
liens  upon  the  real  and  personal  property  of  the  principal  in  the  judg- 
ment were  a  security  which  appellant  had  acquired  and  held  as  afore- 
said ;  but  such  security  enured  in  equity  to  the  benefit  and  for  the 
protection  of  the  appellee,  as  the  co-surety  of  appellant  in  such 
judgment. 

In  Sheldon  on  Subrogation,  section  143,  the  law  on  the  subject  under 
consideration  is  thus  stated  :  "  When  one  of  two  or  more  co-sureties 
obtains  in  any  manner  a  security  for  the  payment  of  the  debt,  be  does 
this  for  the  benefit  of  all  the  sureties  ;  he  is  a  trustee  for  his  co-sureties 
as  to  such  security,  and  is  held  for  them  to  the  duties  which  arise  from 
that  relation,  and  must  do  no  act,  or  voluntarily  omit  to  do  any  act, 
by  which  such  security  will  be  depreciated  or  lost,  but  must  faithfully 
apply  it  to  the  payment  of  the  debt ;  or  he  will  be  chargeable  to  his 
co-sureties  with  the  amount  of  the  security,  in  the  adjustment  of  their 
proportions  of  the  debt."  The  language  quoted  and  the  doctrine  de- 
clared are  fully  supported  by  the  numerous  authorities  cited  in  the 
foot-notes  b}r  the  learned  author.1  .  .   . 

Where  one  surety  obtains  a  security,  it  enures  at  once  to  the  benefit 
alike  of  himself  and  his  co-surety.  He  cannot  deal  with  such  security 
to  his  own  advantage,  and  to  the  prejudice  of  his  co-surety,  without 
consulting  the  latter  and  without  his  assent.  He  occupies  the  position 
of  a  trustee  for  his  co-surety,  and  cannot  deal  with  the  fund  to  the 
prejudice  of  the  latter,  without  his  authority  or  consent.  In  such  case, 
where  the  surety  has  it  in  his  power,  for  his  own  advantage,  to  sacrifice 
the  common  fund  which,  in  good  conscience,  he  is  bound  to  protect, 
the  general  doctrine  is  that  he  will  not  be  permitted  to  avail  himself  of 
any  such  advantage  to  his  own  profit,  and  to  the  loss  and  detriment  of 
bis  co-surety. 

We  do  not  decide,  in  this  case,  that  appellant  did  not  have  the  right 
to  sue  out  execution  on  the  judgment,  and  procure  the  sale  by  the 
sheriff  of  the  principal's  property  ;  for  this  right  he  clearly  had.  What 
we  do  decide  is  that  if  the  appellant,  at  such  sales,  purchased  the  prop- 
erty' of  the  principal,  at  comparatively  nominal  prices,  and  then  sued 
his  co-surety  for  contribution,  she  had  the  right,  in  bar  of  such  suit,  to 

1  The  Court  here  discussed  Hall  v.  Robinson,  8  Ired.  56  ;  Owen  v.  McGehee,  61 
Ala.  440 ;  Schmidt  v.  Coulter,  6  Minn.  492 ;  and  Comegys  v.  State  Bank,  6  Ind.  357. 
—  Ed. 


***)  ~^^<-e^  -^'   ' 


^- 


show,  as  she  did,  that  such  property,  at  its  fair  value,  was  more  than  •  -*^->% 
sufficient  to  satisfy  such  judgment. 

Our  conclusion  is  that  the  Court  committed  no  available  error  in  over- 
ruling appellant's  motion  for  a  new  trial  of  this  cause.  /  ~* 

The  judgment  is  affirmed,  with  costs.1 


*2> 


f    a-~)  V*. 


H, 


TITCOMB  v.  JO 


JOHN 


ILLIAM 

he  Supreme  Judicial  Court*  Maine 
[Keporteaii 


^— O     ^ — 

MCALLISTER.  - 3     _>a_ 

March  i4L^1889.  _    /,  ClN 

eportecTin  81  Hldine  Reports,  399/] 


:*^D 


N 


Haskell,  J.2 


The  plaintiff,  being  accommodation  indorser  upon  *-/p~~^J-  'Irt 
demand  note  for  $1,000,  became  co-surety  with  the  defendant  upon  fj  r 

another  demand  note,  of  the  same  promisors,  for  $1,600  ;  and,  to  secure 
himself  on  both  notes,  the  plaintiff  took  from  the  makers  of  them  a 
mortgage~ofo*ne-sixteenth  of  the "rJarkeutine  "  Addle  E.  Sleeper,"  con- 
ditioned to  retransfer  the  security  upon  payment  of  both  notes.  Tit- 
comb  v.  McAllister.3 

It  is  contended  that  the  security  should  be  applied  to  both  notes  pro         '  - 
rata;  and  certain  admissions  of  the  plaintiff  are  relied  upon  to  work 
out  that  result. 

The  mortgage  recites  :  "I  have  this  day  received  a  bill  of  sale,  &c, 
as  collateral  security  for  the  payment  of  said  two  notes."  The  ad- 
missions amount  to  no  more  than  that  the  plaintiff  believed  the  security 
sufficient  to  save  him  harmless  from  both  notes.  He  took  the  security 
primarily  for  his  own  benefit.  The  defendant  has  no  right  to  it  by  con- 
tract ;  but  only  such  equity  as  works  equality  among  those  of  equal 
merit.  This  is  not  wholly  the  case  of  a  surety  who,  gaining  security 
for  the  debt,  is  held  in  equity  to  share  it  with  his  co-sureties,  by  ap- 

1  Livingston  v.  Van  Rensselaer,  6  Wend.  63,  Accord.  In  this  case  Sutherland,  J., 
said,  p.  73  :  "  If  the  mortgage  sale  had  been  for  a  substantial  though  inadequate 
price,  instead  of  a  merely  nominal  one,  it  would  have  admitted  of  very  serious  doubt 
whether  Livingston  would  not  have  been  concluded  from  instituting  an  inquiry  into 
the  actual  value  of  the  lands  at  that  time.  He  certainly  would,  if  he  had  had  actual 
instead  of  constructive  notice  of  the  sale.  He  might  have  attended  the  sale,  and  have 
taken  care  of  his  own  interest  by  bidding  more,  if  he  thought  the  lands  were  worth 
more.  He  could  not  have  folded  his  arms,  and  have  retained  the  privilege  of  consid- 
ering Van  Rensselaer  either  an  absolute  purchaser,  or  as  his  trustee  in  the  transaction, 
according  as  circumstances  should  determine  the  one  or  the  other  to  be  most  beneficial 
to  himself.  Equity  will  not  permit  a  co-surety  voluntarily  to  assume  a  position  which 
will  secure  to  him  all  the  advantages,  without  exposing  him  to  any  of  the  perils  which 
may  result  from  the  acts  of  his  associate  ;  but  under  the  circumstances  of  this  case, 
the  sale  was  properly  considered  by  the  Chancellor  as  affording  no  legal  evidence  of 
the  value  of  the  mortgaged  premises  at  the  time  of  the  sale."  See  also  Moorman  v 
Hudson,  125  Ind.  504,  506-507.  —Ed. 

2  Only  a  portion  of  the  opinion  of  the  Court  is  given.  —  Ed. 
8  77  Maine,  353. 

37 


-----  -*— y   rj/ 


L-g-fc.~-    —       ^7        ^C--t*-C-<<Jt-<- 


X.    GOULD   V.    FULLER.  [CHAP.  III. 


~Z£y 


^ 


plying  it  to  the  debt  as  far  as  it  will  go.  It  is  the  case  of  one  attempting 
to  indemnify  himself  from  liability  incurred  for  another's  accommoda- 
tion ;  and  it  would  be  inequitable  and  unjust  to  strip  the  plaintiff  of  his 
security  for  signing  the  first  note,  and  compel  him  to  share  it  with  the 
defendant,  as  if  a  co-surety  upon  both  notes. 

By  the  payment  of  both  notes,  the  plaintiff  became  the  creditor  of 
the  makers  of  them,  and  of  the  defendant,  for  his  moiet}'  of  the  last  one. 
The  plaintiff  then  held  his  debtor's  property  to  secure  several  debts, 
upon  one  of  which  the  defendant  was  liable  as  surety.  Can  a  surety 
compel  the  creditor  to  apply  securit}',  taken  from  the  debtor  to  secure 
several  debts,  to  that  debt  upon  which  the  surety  is  liable,  in  preference 
to  the  other  debts,  or  to  apply  it  pro  rata  upon  all  of  them  ?  In  Wil- 
cox v.  Fairhaven  Bank,1  the  Court  held  that  he  could  not.  The  doc- 
trines  there  laid  down  are  decisive  of  this  point  in  the  case  at  bar. 
The  plaintiff  ma3'  first  apply  his  security  to  the  first  note. 

The  plaintiff  paid,  Uct.  24,  1879,  $1,800.80  upon  the  note,  whereon 
the  defendant  was  his  co-surety. 

Judgment  for  plaintiff for  $900.40,  with  interest  from  October  1^ 
1879.2  -  ,_.  \ 


<£*S?~a 


s? 


ILLIA^f7v2bjLLE 
>7  '-A-»~-»7   ^-/-A^;  ^a-»**-r 

jjkt,  Ma4ne,  June  Term,  1841. 


aine 


ieports,  364.] 

Exceptions  from  the  Middle  District  Court,  Redington,  J.,  presiding. 

Assumpsit  for  money  paid,  laid  out  and  expended,  the  suit  having 
been  commenced  July  22,  1839.  The  plaintiff  and  defendant  had  been 
sureties  for  Asa  H.  Hankerson  in  a  note  to  G.  W.  Stanley.  Fuller  re- 
ceived certain  property  of  Hankerson  to  be  appropriated  to  the  pay- 
ment of  the  note,  and  it  was  disposed  of,  and  the  proceeds  paid  over  to 
Stanley  at  different  times,  the  last  payment  having  been  made  March  12, 
1834.  In  October,  1838,  the  plaintiff  paid  to  Stanley  the  balance  then 
due  on  the  note,  amounting  to  $83.05. 

The  defendant  proved,  that  on  March  6,  1839,  the  plaintiff  settled 
with  Hankerson  for  one  half  the  amount  he  had  paid  on  his  account, 
and  gave  him  a  receipt  as  follows:  "March  6,  1839.  This  da}- re- 
ceived of  Asa  H.  Hankerson  forty-five  dollars  in  full  for  my  half  of  a 
note  signed  by  myself  and  William  C.  Fuller,  and  Asa  H.  Hankerson 
as  principal,  dated  September,  1832.  The  property  I  received  for  this 
was  for  my  special  benefit.  Horace  Gould."  And  at  the  same  time 
Hankerson  gave  Gould  a  writing  of  this  tenor  :  "  This  may  certify  that 
the  money  I  paid  Horace  Gould  is  for  his  separate  benefit,  and  not  for 


1  7  Allen,  270. 

2  Moore  v.  Moberly,  7  B.  Mon.  299,  Contra. 

Compare  Mueller  v.  Barge,  54  Minn.  314;  Brown  v.  Ray,  18  N.  H.  102.- 


Ed. 


SECT.  III.]  GOULD    V.    FULLER.  579 

William  C.  Fuller's  and  his  together.  March  6,  1839.  Asa  H.  Hank- 
erson." 

The  plaintiff  requested  the  judge  to  instruct  the  jury  that  the  plain- 
tiff was  entitled  to  recover  of  the  defendant  the  other  half  of  the  amount 
which  had  been  paid  by  him  with  interest  from  the  time  it  was  paid. 
The  judge  declined  to  give  this  instruction,  and  among  other  things 
did  instruct  them,  that  if  all  of  the  indorsements  upon  the  back  of  said 
note  were  paid  from  the  funds  of  Hankerson,  and  if  defendant  had  paid 
on  the  note  no  more  than  he  had  received  from  said  funds,  then  the 
plaintiff  would  be  entitled  to  recover  of  the  defendant  only  one  half  of 
such  sum  as  should  remain,  after  deducting  from  the  amount  paid  by 
him  all  the  moneys  which  he  had  received  in  pa3*ment  for  his  part  of 
the  note  on  March  6,  1839,  with  interest  on  the  same  from  the  date  of 
the  writ,  this  being  one  half  the  actual  loss  which  the  plaintiff  had  sus- 
tained. The  jury  found  a  verdict  for  the  plaintiff,  assessing  the 
damages  at  $12.72. 

The  plaintiff  filed  exceptions  to  the  instructions,  and  to  the  refusal 
to  instruct. 

May,  for  the  plaintiff.1 

E.  Fuller,  for  the  defendant. 

The  opinion  of  the  Court  was  by 

Weston,  C.  J.  Where  one  of  several  co-sureties  receives  security 
or  moneys  from  the  principal,  the  whole  enures  to  the  benefit  of  all 
the  sureties.  It  has  the  same  effect  as  if  so  much  had  been  paid  by 
the  principal  himself  to  the  creditor.  Until  an  adjustment  is  made, 
whatever  indemnity  of  payment  one  receives,  he  must  account  for  with 
his  co-sureties.  So  the  law  was  laid  down  by  Jackson,  J.,  in  Bachelder 
v.  Fiske  et  al?  To  the  same  effect  are  the  cases  of  Messer  v.  Swan 8 
and  of  Low  v.  Smart.4  In  Messer  v.  Swan  it  was  held  that,  in  general, 
whatever  pa}'ment  one  surety  may  receive  from  the  principal,  shall 
enure  to  the  benefit  of  all.  It  was,  however,  there  intimated,  that  where 
payment  has  been  made,  and  the  matter  of  contribution  has  been  ad- 
justed, each  maj^look  to  the  pt'liretpal  for  a  reimbursement  of  his  share, 
on  his  separate  account. 

In  the  case  before  us, "the  plaintiff,  in  October,  1838,  paid  the  bal- 
ance of  the  whole  debt,  for  which  the  defendant  stood  equally  bound. 
This  gave  him  a  right  to  call  upon  the  defendant  for  the  one  half  of 
this  sum,  and  for  the  other  his  remedy  was  against  the  principal.  And 
it  ought  not  to  be  impaired  by  the  neglect  of  the  co-surety  to  pay  his 
just  proportion.  When  the  whole  of  the  obligation,  for  which  both 
were  liable,  was  discharged,  the  plaintiff's  claim  for  reimbursement 
against  his  co-surety  and  the  principal,  each  for  one  half,  became 
fixed.5 

1  The  argument  for  plaintiff  is  omitted.  —  Ed. 

2  17  Mass.  464.  !  4  N.  H.  481.  4  5  N.  H.  353. 

5  In  Strong  v.  Blanchard,  4  All.  538,  it  was  decided  that  one  of  two  sureties  on  pay-   y^^ 
ing  the  creditor  in  full  acquired  a  right  to  recover  tne  nul  amount  irom  tne  principal,  <^ 


580 


(S        c~  w    «»■■.■»  ^ 


DAVIS   V.   TOULMIN. 


t^^o-s. 


[chap.  III. 


This  should  give  to  him  all  the  rights  which  would  result  from  an 
actual  adjustment  between  the  parties.  It  is  in  fact  an  adjustment, 
which  the  law  makes,  arising  from  the  equity  of  the  case.  The  claim 
for  contribution  depends  upon  a  doctrine  purely  equitable.  Hence  it 
is  not  enforced  in  favor  of  one  suret}'  against  another,  who  became  such 
at  his  request.  Turner  v.  Davies.  So  if  one  surety  actually  pays,  we 
do  not  feel  the  force  of  the  equity,  which  would  suspend  his  right  to 
receive  for  his  several  benefit  a  reimbursement  of  one  half  from  his 
principal,  until  it  might  suit  the  convenience  of  his  co-surety  to  make 
contribution  or  until  he  might  be  compelled  to  do  so  by  an  action  at 
law.  It  would  be  withholding  from  a  vigilant  suret}',  in  favor  of  a 
negligent  one,  an  advantage  to  which  he  is  well  entitled. 

If  the  paying  surety  subsequently  receive  a  sum  of  money  from  the 
principal,  not  claimed  or  specifically  paid  for  his  several  reimbursement, 
it  might  enure  to  the  joint  benefit  of  himself  and  his  co-surety.  But  if 
pajinent  is  paid  and  received,  as  it  was  here,  to  restore  to  him  what 
the  principal  alone,  and  not  the  co-surety,  was  bound  to  refund,  it  is 
only  carrying  out  an  adjustment  which  the  law  imposes,  and  we  per- 
ceive no  good  reason  why  the  liability  of  the  negligent  surety  should  be 
thereby  diminished.  In  our  opinion  the  instructions  requested  of  the 
presiding  judge  should  have  been  given. 

Exceptions  sustained. 

77— ^—^ 


S.  S.  DAVIS,  Respondent,  v.  H.  TOULMIN,  Appellant. 
In  the  CoupvT  op  Appeals,  New  York,  May,  1879. 

[Reported  i?i  77  New  York  Reports,  280.] 

Church,  C.  J.1  The  action  was  for  contribution  between  co-sureties. 
The  exception  raises  the  question  whether  in  such  an  action  it  is  com- 
petent for  the  defendant  to  avail  himself  of  an  indebtedness  of  the 
plaintiff  to  the  principal,  as  a  defence. 

The  authorities  are  decisive  against  it.  O'Blemis  v.  Karing  ;  2  Lasher 
y.  Williams  ;  8  Springer  v.  Dwyer.4  If  the  co-surety  suing  for  contribu- 
tion  has  received  any  money  or  property  as  payment,  or  security  from 

and  that  fl"'°  "'rfht  wtt  tW  lost,  although,  before  its  enforcement,  thejo-snretv  pair! 
him  a  moiety  by  way  of  contribution.  A.  moiety  of  the  amount  recovered  from  the 
principal  would,  of  course,  be  held  iu  trust  for  the  co-surety.  See  also  Pinkerton  v. 
lallaterro,  9  Ala  547.  In  Odlin  v.  Greenleaf,  3  N.  H.  270,  one  of  two  sureties  on  a 
note  paid  the  creditor  three  months  after  the  maturity  of  the  note,  and  four  years  later, 
when  his  right  to  recover  indemnity  from  the  principal  was  barred,  collected  a  moiety 
of  his  co-surety.  The  latter  was  allowed  to  maintain  a  count  against  the  principal  for 
money  paid.  —  Ed. 

1  Only  the  opinion  of  the  Court  is  given.  —  Ed. 

2  57  N.  Y.  649.  3  55  n.  Y.  619.  *  50  N.  Y.  19. 


/U- 


SECT.  III.] 


(/      ESHLEMAN    V.    BOLENIUS. 


the  principal,  he  will  be  obliged  to  account  for  the  same,  but  a  simple 
indebtedness  to  the  principal  cannot  be  availed  of  "by  the  defendant. 
In  case  of  insolvency  there  ma}'  be  cases  where  equity,  having  all  the 
parties  before  it,  might  relieve,1  but  no  such  question  is  presented  in 
this  case. 

We  concur  with  the  opinion  at  Special  Term. 

The  judgment  must  be  affirmed. 


All  concur. 


M. 


Judgment  affirmed,* 

OLENIUS^^/7  ^ 

October  5,  1J 


fsit  agai 


fy  In  the  Supreme  Court,  "Bennsylvani 

-    _  ~T  [Reported  in  144  Pattnsulvama  Renorts72 

On  June  3,  1890,  David    G.  Kshleman  brought  assum 
Robert  M.   Bolenius,  his  co-surety  in  the  bond  of    D.   M.  Harman 
administrator  of  the  estate  of  John  H.  Harman. 

The  defendant  filed  an  affidavit  of  defence  setting  forth  that  the 
plaintiff  was  attorney  for  the  administrator,  D.  M.  Harman,  as  well  as 
co-surety  with  the  defendant  on  the  said  administrator's  bond  ;  that  th 
plaintiff  as  such  attorney  collected  $1,374.61  and  deposited  the  same 
with  a  banker,  taking  a  certificate  of  deposit  payable  to  D.  M.  Harman, 
administrator,  twelve  months  after  date,  with  interest  at  four  per  cent ; 
that  this  conduct  of  the  plaintiff  was  unknown  to  the  defendant ;  and 
that  the  banker  died  insolvent  a  few  months  after  the  issue  of  the 
certificate  of  deposit.3 

Mr.  Justice  Green.  The  affidavit  of  defence  contains  a  positive 
averment  that  the  money  received  by  the  plaintiff  for  Daniel  M.  Har- 
man, administrator,  &c,  was  deposited  by  the  plaintiff  in  Henderson's 
bank,  and  that  he  took  therefor  a  certificate  of  deposit  payable  twelve 
months  ^after  date,  with  interest  at  four  per  cent.  This  certificate 
we  held,  in  Baer's  App.,4  to  be  a  loan  not  authorized  by _law2_"for 
whietrTfie  administrator  was  personally  liable.  It  seems  now  that 
Mr.  Eshleman,  who  was  attorney  for  the  administrator,  was  also  one 
of  the  sureties  on  his  bond,  and  paid  the  loss  himself.  He  seeks  to 
recover  in  the  present  action  one  half  the  loss  from  the  defendant,  who 
was  his  co-surety.  The  defendant  alleges  in  his  affidavit  of  defence 
that  the  loan  made  to  the  Henderson  bank  by  the  plaintiff  was  made 
without  his  knowledge  or  consent,  and  that  he  never  ratified  the  action 

1  Bezzell  v.  White,  13  Ala.  422 ;  Neely  v.  Bee,  32  W.  Va.  519  ;  Smith  v.  Dickinson, 
\00  Wis.  574  (semble),  Accord.  — Ed. 

2  O'Blemis  v.  Karing,  57  N.  Y.  649 ;  Smith  v.  Dickinson,  100  Wis.  574  {semble), 
Record. 

Goepel  v.  Swinden,  5  D.  &  L.  888,  Contra.  —  Ed. 

»  The  statement  of  the  case  has  been  abridged.  —  Ed. 

*  127  Pa.  360. 


<^> 


-*«-*- 


^Z**-*i^~  -^_ 


582  ESHLEMAN  V.    BOLENIUS.  [CHAP.  HI. 

of  the  plaintiff  in  making  the  loan.  The  loss  of  the  money  was  the 
result  exclusively  of  the  unauthorized  loan  made  by  the  plaintiff  to"The 
Henderson  bank,  and  it  is  difficult  to  understand  upon  what  principle 
the  defendant  can  be  held  responsible  lor  any  part  of  the  loss  as- 
between  him  and  the  planum,  ine  iacts  set  torthin  the  affidavit  "of 
defence  must  be  accepted  as  verity  for  the  purposes  of  the  case  as  it  is 
now  presented,  and  upon  these  facts  the  plaintiff's  own  action  was  the 
sole  cause  of  the  loss.  Had  the  loan  been  made  by  the  administrator, 
a  different  question  would  have  arisen.  But,  as  it  is,  conceding  the 
entire  good  faith  of  the  plaintitf,  the  case  must  be  determined  by  the 
very  familiar  principle,  that,  where  one  of  two  innocent  persons  must 
suffer,  he  must  bear  the  loss  whose  act  or  neglect  has  been  the  occasion 
of  the  suffering.  Jeffers  v.  Gill.1  It  was  the  plaintiff  himself  whose  act 
occasioned  the  loss,  according  to  tKe  facts  stated  in  the  affidavit  of 
defence,  and  therefore  he  cannot  recover  against  the  defendant,  who 
was  entirely  innocent  of  any  participation  lh  the  act. 

Judgment  reversed,  and  'procedendo  aicarded.2 

1  91  Pa.  290. 

2 


2ases 


The  surety's  right  to  contribution  was  forfeited  by  his  misconduct  in  the  following 
s":  Cnshel'd  "v.  MuTdock,  127  N.  X.  315;   Commw.  v.  Cooper  (Pennsylvania,  1892), 


24  A.  R.  339;  Flanagan  v.  Duncan,  133  Pa.  373.  —  Ed. 


-\ 


SECT.  IV.]  GIGLIS    V.   WELBY.  583  ^__^ 


N  SECTION   IV.  \S    , 

V y^tjut  */  —?r*        *  A  Exoneration.  '    /^/  «— 


/      r  SEBASTTANGIGLIS    v.    ROBERT   WfiLBY,    Priest.  „ 

In  Chancery,  before.  Lord  Morton,  C.  May  15,  T492. 


_^-       Jn  Chancery,  before.  Lord  Morton,  C.  May  15, 

[Reported  in  1  Calendars  fff  Rwceedmgs  in  Chancery,  cxx.] 

To  the  most  reverend  Fader  in  Godkfohn  Archbishop  of  Caunterbury 

and  Chaunceller  of  England.         ~*5vt«».  -^*fn*4yj/  /^t*-^L.  'fa**     ***} 

your  continue!!    i„     *t*^.*~*« 


Merely  besechith  3*our  good  and  gracious  lordshyp  you! 
orator  Sebastian  Giglis,  merchaunt  of  Venyce,  that  where  at  the  desire 
of  your  seid  besecher  and  by  his  lettre  writen  unto  one  Reale,  mar- 
cnaunt,  the  said  Reale  delivered  to  one  Robt  Welby,  preste,  XX.  li. 
to  the  use  of  the  seid  Robt  in  his  grete  necessitie,  and  for  suertie  of 
paiement  of  the  seyd  XX  li.,  the  seid  .  .  .  made  a  bille  unto  the  said 
Reale,  subscribed  with  his  owne  hand  to  repaie  ayen  the  seid  XX. 
li.  atte  a  day  nowe  past,  and  for  defaute  of  paiement  of  the  seid  XX.  li. 
Benet  Bonnyre  and  Nicholas  Michaell,  merchaunts,  and  factours  unto 
the  seid  Reale,  commensed  an  action  of  XX.  li.  in  London  uppon  the 
same  bille,  and  theruppon  the  seid  Robt  was  arested,  and  by  his 
subtile  meanes  caused  a  writte  to  be  had  oute  of  the  commen  place,  by 
meane  of  which  writte  he  was  removed,  and  there,  in  asmych  as  the 
seid  bille  was  notte  b}T  hym  enseled,  he  waged  his  lawe  as  an  untrue 
Cristenman  and  so  is  delivered ;  where  nowe  gracious  lord  the  seid 
Benet  and  Nicholas  purposen  to  have  recovered  of  the  seid  XX.  li. 
agenst  }*our  seid  besecher,  the  which  is  without  remedie  at  the  comen 
lawe  of  this  land  without  the  gracious  aide  of  your  good  grace  to  hym 
be  shewed  in  this  behalf,  and  to  thentent  to  punysshe  the  seid  Robt,  as 
well  for  the  seid  perjurie  as  to  compelle  hym,  accordyng  to  conscience, 
to  satisfie  his  seid  dutie  :  That  it  wold  please  your  seid  lordship,  the 
premysses  considered,  to  graunte  a  writte  sub  pena  direct  to  the  seid 
Robt.  coramaundyng  hym  by  the  same  to  appere  before  the  Kyng  in 
his  Chauncerie,  there  to  abide  the  jugement  of  your  seid  lordship  :  this 
at  the  reverence  of  God  and  in  the  wey  of  charitie. 

m 

ANSWER 

This  vs  thanswere  of  Robt  Welby,  preste,  to  the  byll  of  Sebastian 
Gylys. 

The  seid  Robt  seith,  that  the  seid  byll  is  slaunderous,  untrewe,  and 
feyned  and  the  mater  therof  is  mater  determynable  after  the  cours  of 
the  comen  lawe  and  not  in  this  courte,  as  it  appervd  pleynly  by  the 
mater  of  the  said  byll,  and  for  farder  answere  and  pleyn  declaracion  of 


584  GIGLIS   V.    WELBY.  [CHAP.  IIL 

the  trouth  touclryng  the  premysses  the  seid  Robert  seith,  that  Richard 
the  thirde  late  Kynge  of  Inglond  sent  the  seid  Robt  to  Bryggys  in  Flaun- 
derous,  there  to  tary  for  certen  maters  touchynge  &  concernjmge  the 
same  late  Kyng  ;  and  the  same  late  Kyng  causyd  John  de  Gylys,  than 
beyng  collector  unto  ou re  holy  father  the  Pope,  to  purvey  such  weys  and 
meanes  as  the  seid  Robt  myght  receyve  at  Bryggys  before  seide,  such 
thyngs  ans  sumes  of  monej'  as  shuld  be  necessary  for  the  seid  Robt 
concernyng  the  seid  maters  and  chargys,  the  seid  John  de  Gylys  delyv- 
ered  a  letter  to  the  seid  Robt,  he  to  delyver  the  same  unto  the  seid 
Reall  specyfyed  in  the  seid  byll  of  the  seid  Sebastian,  which  letter  the 
seid  Robt  delyvered  to  the  seid  Reall  at  Bryggys  afore  seid,  by  meane 
wherof  the  seid  Robt  receyvyed  ther  the  seid  sume  of  XX.  li.  to  the  use 
and  for  the  maters  of  the  seid  late  Kyng,  and  by  the  means  a  fore  spe- 
cyfyed, and  the  seid  Robt  wrote  a  byll  of  resceyte  of  the  seid  sume,  to 
thentent  that  the  seid  byll,  wyth  the  seid  odyr  meanes,  myght  have 
ben  a  remembrans  to  the  seid  late  Kyng  for  repayment  of  the  seid  sume 
of  XX.  li. ;  with  oute  that,  that  the  seid  Robt  resceyvyd  the  sume  or 
wrote  the  seid  byll  to  thentent  to  repaye  it  of  his  own  prop}T  money, 
and  with  owte  that,  that  the  seid  Robt  by  subtyll  meanes  caused  a 
wryte  to  be  hadd  oute  the  commen  place,  and  ther  wagyd  his  lawe  in 
maner  and  fourme  as  b}T  the  seid  bylle  of  the  seid  Sebastian  is  sub- 
rnytyd  ;  all  which  maters  the  seid  Robt  ys  redy  to  averr  and  prove  as 
this  courte  woll  award,  and  prayeth  to  be  dysmyssyd  owte  of  this 
courte  with  his  resonabyll  costs  and  damages  for  his  wrongfull  vexacion 
in  this  behalfe. 

REPLICATION 

This  is  the  Replicacion  of  Sebastian  G3'les  to  the  Answere  of  Robt 
Welby,  preste. 

The  seid  Sebastian  seith,  that  the  seid  Answere  is  insufficient  and 
but  mater  subtily  feyned  &  not  materiall  to  be  repbyed  unto,  neverthe- 
less for  clere  &  pl^'iie  trought  &  ferther  replicacion  to  the  seid  an- 
swere he  seith,  that  the  seid  Reale  delivered  to  the  seid  Robt  by  the 
wey  of  lone  the  seid  XX.  li.  to  the  only  use  of  the  same  Robt  Welby 
at  his  speciall  prayer,  requeste,  &  desire,  311  his  grete  nede,  for  repay- 
ment wherof  the  same  Robt  made  the  seid  bille  of  XX.  li.  unto  the  seid 
Reale,  and  subscribed  hit  with  his  owne  hande,  redy  to  be  shewed,  and 
ferthermore  the  same  Sebastian  seith,  yx\  all  ttryngs  as  he  in  his  seid 
bille  of  compleynt  hath  seid,  whiche  is  gode  &  true  yn  every  thynge 
therin  specified,  and  determynable  here  yn  this  courte  of  Chauncerie ; 
with  oute  that,  the  seid  Robt  ever  resceyved  the  seid  XX.  li.  of  the 
seid  Reale,  to  thuse  of  the  seid  late  Kyng  Richard,  or  for  eny  maters 
of  the  same  late  Kyng,  or  en}^  other  wyse,  but  onby  to  his  owne  use,  as 
is  afore  by  the  seid  Sebastian  shewed  ;  and  withoute  that,  the  seid 
Popes  collector  ever  purveyed  eny  weys  or  meanes  that  the  seid  Robt 
shulde  rescej've  the  seid  XX.  li.  of  the  seid  Reale  for  eny  suche  causes 
as  by  the  same  Robt  is  allegged  yn  his  seid  answere,  or  for  eny  other ; 


SECT.  IV.]  GIGLIS    V.   WELBY.  585 

all  whiche  maters  &  every  of  them  the  same  Sebastyan  is  redy  to  paye 
as  the  court  will  awarde,  and  prayeth  that  the  seid  Robt  may  be  com- 
pelled, by  th'  auctorite  of  this  court,  to  pay  the  seid  XX.  li.,  as  reason 
&  gode  conscience  requyres  yn  that  behalve. 

REJOINDER 

This  is  the  Rejoyndyr  of  Robert  Welby,  preste,  to  the  replicacion  of 
Sebastian  Gygles. 

The  Seyde  Robert  seythe,  alleggyth,  averryth  and  prayth  in  all 
thyngs  as  he  dyd  in  his  seyde  aunswer,  withowte  that,  that  the  seyde 
Reale  delivered  to  the  seyde  Robert  by  the  wey  of  lone  the  seyde  XX.  li. 
specify ed  in  the  bill  of  the  seide  Sebastian,  to  the  oonly  use  of  the  same 
Robert  Welby  at  the  speciall  prayer,  request,  and  des\Te  in  his  grete 
nede,  and  with  that,  that  for  repa}'ment  of  the  same  of  his  propur 
chergys  the  same  Robert  made  the  seyde  by  11  of  XX.  li.  unto  the  seid 
Reall,  and  subscribyd  itt  with  his  owne  hande,  in  the  maner  and  fourme 
as  the  seid  Sebastian  hath  alleggyd. 

DECREE,  RECORDED  ON  THE  BACK  OF  THE  BILL 

Memorandum  quod  quintodecimo  die  Maii  anno  regis  Henrici  septimi 
septimo  ista  peticione  per  infranominatum  Sebastianum  versus  infra- 
scriptum  Robertum  coram  dicto  domino  Rege  in  Cancellaria  sua  ex- 
hibita,  ac  responsione  et  replicacione  aliisque  probationibus  in  ex  parte 
factis  et  in  eadem  Cancellaria  apud  westmonasterium,  lectis,  auditis  et 
intellectis,  habitaque  superinde  matura  et  diligenti  deliberacione  per 
reverendissimnm  in  Christo  patrem  Johannem  Cantuari  Archiepiscopum, 
Cancellarium  Angliae  et  curiae  cancellariae  praedictae,  pro  eo  quod 
infranominatus  Robertus  dictas  viginti  libras  in  infrascripta  peticione 
specificatas  se  recepisse  et  habuisse  confessus  est,  nullamque  exonera- 
cionem  sive  persolucionem  summae  praedictae  sive  alicujus  partis 
ejusdem  in  eadem  Cancellaria  probavit,  nee  causam  aliquam  raciona- 
bilem  allegavit  et  probavit  ex  qua  a  solucione  infrascriptae  summae 
viginti  librarum  exonerari  debeat,  consideratum,  adjudicatum,  et  de- 
cretum  est  quod  dictus  Robertus  solvat  seu  solvi  faciat  infrascripto 
Sebastiano  dictas  viginti  libras,  juxta  formam  et  effectum  peticionis  et 
confessionis  praedioti.1 

1  The  Maner  of  kepyng  a  Courte  Baron  (circa  1535),  folio  32. 

Placita  de  pleqiis  non  acr/uietatis. 

Ceo  vous  monstre  W.  K.  qui  cy  est  et  soy  pleint  de  John  E.  qui  illonques  est  que 
mesme  cesty  John  luy  nad  pas  acquite  vers  Thomas  B.  de  Oxford  xx.  sh.  as  queux  il 
fuit  plegge  pur  ceo  que  le  dit  John  vient  ici  a  Oxfordea  achater  dun  Thomas  un  piece 
de  drap  de  layne  pur  les  dits  xx  sh.  a  paier  a  la  feste  de  noel  donques  prochin  ensuant 
et  pur  la  grender  surety  de  payment  des  dits  xx  sh.  le  dit  John  pria  le  dit  W  que  ore 
est  plaintif  destre  son  plegge  /  et  le  dit  W.  a  sa  pryer  et  requeste  illonques  devient 
son  plegge  a  payer  les  dits  xx.  sh  al  dit  Thomas  a  la  feste  suis  dit,  si  le  dit  John  ne  paier 
point  /  a  quel  feste  le  dit  John  ne  paier  point  ne  paier  ne  voloit  /  mesque  il  ust  este  a  ceo 
sovent  requis  /  par  quy  le  dit  T.  puis  ad  demande  de  le  dit  W  la  dit  somme,  et  pur  de- 
pute de  paiment  sur  luy  ad  affirme  un  pleint  de  dette  en  la  courte  notre  segniour  le 


586  rastell's  entries.  [chap.  hi. 


RASTELL'S   ENTRIES  (FrRST  Edition,  1566),  Folio  160. 

A  mercator  stapule  of  the  town  of  Galisie  demands  of  C.  merchant 
stapule  of  G.  8  /.  which  &c,  for  that  by  the  custom  of  the  city  of  London 
used  and  approved  from  time  wherof  memoiy  of  man  runneth  not  to 
the  contrary,  if  two  three  or  more  are  bound  within  the  citjT  by  an 
obligation  of  debt  and  each  one  in  solido  and  one  of  them  alone  pays 
the  whole  debt  or  the  whole  debt  is  recovered  against  one  of  the 
obligors  alone,  then  he  who  has  so  paid  the  whole  debt  or  who  is  so 
cast  in  a  judgment,  may  proceed  against  the  other  or  others  bound  with 
him  in  the  obligation  b}'  an  action  of  debt  jointly  or  severally  for  con- 
tribution so  that  each  one  of  them  shall  pay  %>ro  rata  according  to  the 
custom  of  the  said  city,  and  wheras  on  such  a  day  and  year  &c  in  the 
parish  &c,  and  ward  &c  the  said  A  together  with  the  said  C  by  their 
certain  writing  bound  themselves  and  each  of  them  for  himself  for  the 
whole  and  in  solido  to  B  a  citizen  and  goldsmith  of  London  in  16  Z 
good  and  lawful  mone}T  of  England  to  be  paid  to  the  said  B  at  such  a 
day  next  to  come  after  the  date  of  the  said  writing,  the  said  A,  to  wit,  on 
such  a  day  &c  in  the  parish  &c  paid  to  the  said  B  the  said  16  I  whereof 
the  ratable  proportion  of  the  said  C  amounts  to  8  7,  whereb}7  an  action 
hath  accrued  to  the  said  A  to  demand  of  the  said  C  the  said  8  I,  now 
demanded  according  to  the  custom,  which  said  8  I  the  said  C  hath  not- 
paid  to  the  said  A  although  often  requested,  to  the  damage  &C.1 

roy  en  le  Gyldhale  devaunt  le  Maire  Doxenford  /  par  force  de  quel  le  dit  W  ad  este 
som  attache  et  distr  par  proces  de  ley  de  respondre  en  mesme  la  courte,  et  condempne 
en  les  dits  xx.  sh.  et  v.  sh  pur  les  damages  et  costages  /  et  sovent  en  le  mesme  temps  le 
dit  W  ad  venu  al  dit  John  et  luy  requis  pur  luy  acquiter  vers  le  dit  T.  del  plegage  suis 
dit,  mes  il  acquiter  ne  voloist,  eins  luy  suffre  estre  vexe  et  condempne  en  defaute  de  sa 
non  acquytaunce  /  a  tort  et  as  damages  du  dit  pleintif  xl.  [xii.  ?]  d.  etc. 

Defende  tort  et  force  etc.  Sir,  vous  voies  bien  coment  il  ad  monstre  quil  fuit  nostre 
plegge,  et  quil  est  condempne  en  tiel  court  en  xx.  sh.  et  v.  sh  pur  damages  et  costages, 
mes  il  nad  mye  dit  que  il  paya  pur  nous  nulle  dener  /  et  pur  ceo  jugement  si  sauns  ceo 
aver  suppose  il  dort  accyon  devers  nous  mainteiner. 

Querens.  Sir,  nous  avons  monstre  coment  nous  sumus  son  plegge  a  sa  request,  et 
que  nous  avons  este  vexe  et  condempne  par  sa  defaute  de  nous  acquiter,  et  depuis  que 
jugement  sur  ceo  est  rendu,  le  quel  yl  covient  de  fine  force  estre  execute,  a  payer  la 
quel  le  chose  il  nad  mye  dedit  /  pur  quoy  nous  prions  jugement  et  pur  defaute  de  re- 
sponse que  il  soit  atteint 

Curia.     Saves  autre  chose  dire  ? 

Defendant.     Nul. 

Curia.  Donques  cest  courte  agarde  quele  pleintiff  recoura  devers  vous  xx.  sh  et  v. 
sh.  en  queux  il  fuit  condempne  pur  vous  /  et  XII.  d.  plus  pur  les  costages  et  damages 
a  cest  courte  et  le  defendant  en  la  mercy  etc. 

1  This  entry  was  cited  by  counsel  in  Shergold  v.  Bostwick,  1  Barnard.  142. 

In  "  The  City  Law  or  The  Course  and  Practice  in  all  manner  of  juridical  Proceed- 
ings in  the  Hustings  in  Guild-Hall,  London,"  englished  out  of  an  ancient  French  man- 
uscript, f.  42,  which  was  published  in  1647,  is  this  statement :  — 

"  Where  two  or  more  are  obliged  within  the  City  by  obligation  of  debt,  and  every 
of  them  in  the  whole  sum ;  then  if  one  of  the  obligees  [obligors  ?  ]  pay  the  whole,  or 
he  to  whom  the  obligation  is  made,  bringeth  a  suit  in  the  same  city,  and  recovers  th« 


SECT.  IV.]  MORGAN    V.    SEYMOUR.  587 

„      »-*j£_  OFFLEYjv,  JOHNSON^,  ^Vf    -^       .„  -,, 


OFFLEYjv,  JOHNSON^,  "l/ 

In  the  Kims  Bench,  Easter  Term,  1584. 

[Reported  in  2  Leonard,  166,  placitum  202. J 

Offlet  and  Johnson  were  bound  as  sureties  with  one  A  to  B,  who 
recovered  against  Johnson  in  London,  and  had  execution  against  him  ; 
and  now  Johnson  sued  Offle}',  to  have  of  him  contribution  to  the  said 
execution,  ut  uterque  eorum  oneretur  pro  rata,  according  to  the  cus- 
tom of  London :  Offley  removed  the  cause  by  privilege  into  the  King's 
Bench,  whereupon  came  Johnson,  and  pra3-ed  a  Procedendo ;  _and  be- 
cause upon  this  matter  no  action  lieth  by  the  course  of  the  common  law,  ^g 
but  onefy  by  custome  in  such  cities,  the  cause  was  remanded  ; *  for  oTTier-^ 
wise  the  piaintin  suouia  oe  without  remedy  :  See  the  BooTT  of  Entries, 
160.  '  ~ 


¥ 


'P 


MORGAN  v.    SEYMOUR 

In  Chancery,  before  Sir  Thomas   Coventry,  Lord   Keeper,  1637. 


XT' 


[Reported  in  1  Reports  in  Chancery,  120.] 


The  plaintiff,  with  Sir  Edward  Seymour  the  defendant,  being  bound 
with  Sir  William  St.  Johns  for  the  proper  debt  of  the  said  St.  Johns,  to 
the  defendant  Rowland  in  a  bond  of  £200  for  the  payment  of  £100,  and 
the  said  Rowland  sued  the  plaintiff  only  on  the  said  bond,  the  plaintiff 
seeks  to  have  the  said  Seymour  contribute  and  pay  his  part  of  the  said 
debt  and  damages,  the  said  St.  Johns  being  insolvent. 

This  Court  was  of  opinion,  that  the  said  Seymour  ought  to  contribute 
and  pa}r  one  moiety  to  the  said  Rowland,2  and  decreed  Rowland  to  as- 
sign over  the  said  bond  to  the  plaintiff  and  Seymour  to  help  themselves 
against  the  said  St.  Johns  for  the  said  Debt. 


*ol 


debt  against  one  of  the  obligees  [obligors  ?]  solely ;  then  he  that  hath  paid  the  debt 
or  is  so  condemned,  may  sue  against  the  other  obligees  [obligors  ?]  by  plaint  or  [of  ?] 
debt,  joyntly  or  severally  to  make  contribution  :  so  that  every  one  shall  pay  his  part, 
according  to  the  usage  of  the  City,  saving  reasonable  answer  to  the  parties."  —  Ed. 

1  Anon.,  Moo.  136  cited,  Arcord.  —  En. 

3  Hole  v.-  Harrison,  1  Ch.  Ca.  246,  Finch,  15,  203,  s.  c,  Accord.  —  Ed. 


v     588  WOLMERSHAUSEN   V.    GULLICK. 

t-4*~  *++  toimp:rsha^usen  v.  gullick. 


C^-/;*""1  ^/    Il^^HANCERY^^^^^WKIGIi^J.,   MAY    1.   1 
isz*h£%n)  *—  S^kfimtyd  in  l^"kep<Jtts,xmlk  ttanceryftU.]  *■ 

.  .O  "^^^Vright,  J.1  This  case  raises  an  important  question  with  respect 
to  which  there  is  a  remarkable  absence  of  express   authority.     The 

^ f  ,.^£_  plaintiff  is  the  executrix  of  a  person  who  became  surety  with  four 
others  for  a  large  sum  of  money  advanced  by  a  bank  to  a  company. 

+<4-«££L        The  surety's  estate  is  being  administered  in  the  court,  and  the  bankers 

^  «-_japut  in  a  claim  as  creditors  for  the  whole  amount  of  the  guarantee. 

r/f***'       The  plaintiff  resisted   the  claim   and   succeeded  in  reducing  it  from 

£6,000,  but  it  has  been  finally  allowed  for  a  sum  of  about  £4,500.     The 

f.  plaintiff  is  now  called  upon  to  pa}T  that  sum,  and  brings  this  action 

against  co-sureties  for  contribution.  The  plaintiff  has  not  yet  paid 
anything.  One  defendant  I  have  dismissed  from  the  action  on  the 
ground  that  he  is  discharged  by  a  composition  under  sect.  18  of  the 
Bankrupte}'  Act,  1883,  inasmuch  as  it  appears  to  me  that  his  liability 
to  contribute,  although  not  ascertained  at  the  time  of  the  bankruptcy 
proceedings,  nor  included  in  his  schedule  of  liabilities  or  in  the  claims 

7  fU{^LS  -  or  proofs,  and  not  a  debt  in  respect  of  which  an  adjudication  of  bank- 
ruptcy could  have  been  sustained,  was  a  liability  within  the  meaning  of 


€y   "w"'"*w=>     sect.  37  of  the  act,  and  therefore  a  debt  provable  in  the  bankruptcy. 

if-  £-  Hardy  v.  Fothergill.2 

n    -       The  principal  defence  of  the  other  defendant  is  that  the  plaintiff  is 
a"t-»-f^        not  entitled  to  maintain  this  action  until  she  has  paid  more  than  her 

£cJ*^A-*-«2y7  proportion,  or  at  any  rate  until  she  has  paid  her  proportion.  The 
plaintiff  is  willing  to  pa}'  her  proportion,  but  she  insists  that  the  actual 
pa}-ment  of  it  is  not  a  condition  precedent  to  her  right  to  sue,  and  says 
that  at  any  rate  she  is  not  obliged  to  pay  the  whole  in  the  first  instance 
and  then  sue  for  reimbursement.  If  she  is  obliged  to  pay  the  whole 
before  actual  contribution  from  the  co-surety,  the  business  in  which  the 
testator's  assets  are  invested  will  be  embarrassed  b}*  the  withdrawal  of 
so  much  of  the  capital  even  for  a  short  time.  Obviously  if  a  man  were 
surety  with  nine  others  for  £10,000,  it  might  be  a  ruinous  hardship  if 
he  were  compelled  to  raise  the  whole  £10,000  at  once  and  perhaps~to 
pay  interest,  on  the  £9,000  until  he  could  recover  the  £9,000  by  actions 
or  debtor  summonses  against  his  co-sureties. 

The  questions  are  whether  the  action  can  be  maintained,  and  what 
is  the  precise  extent  of  the  relief  (if  any)  which  can  be  given.  Ety  the 
Roman  law,  as  it  stood  in  the  time  of  Justinian,  sureties  had,  generally 
speaking,  a  right  to  compel  the  creditor  to  enforce  payment  against 
them  pro  rata  only.  The  Superior  Courts  of  common  law  in  this  coun- 
try have  never  entertained  any  action  for  contribution  by  a  surety 

1  Only  the  opinion  of  the  Court  is  given.  —  Ed. 

2  13  App.  Cas.  351. 


SECT.  IV.]  WOLMERSHAUSEN   V.    GULLICK.  589 

against  his  co-surety,  except  the  action  for  money  paid,  and  from  the 
time  of  Davies  v.  Humphreys,  which  was  decided  in  the  year  1840,  it 
has  been  treated  as  settled  law  that  the  surety  cannot  maintain  this 
action  until  he  has  actually  paid  more  than  his  own  proportion,  because 
this  action  assumes  a  debt  due  and  payable  to  the  plaintiff,  and  there 
is  no  legal  debt  due  and  payable,  and  the  creditor  may  yet  enforce  pay- 
ment  of  the  whole  balance  from  the  co-surety.  Nor  did  the  courts  of 
common  law  ever  give  in  the  case  of  co-sureties  the  equitable  relief 
which  they  were  accustomed  to  give  in  man}'  other  cases  of  joint  or 
common  liability,  by  compelling  contribution  after  judgment  and  before 
execution  by  means  of  a  writ  of  audita  querela  or  scire  facias  to  limit 
the  creditor's  execution  to  the  proper  share  payable  by  the  particular 
defendant.  This  will  be  seen  from  the  collection  of  ancient  cases  in 
3  Rep.,  pages  12  and  following. 

By  the  custom  of  the  city  of  London  an  equitable  action  lay  in  the 
city  courts  by  a  surety  before  he  had  paid  anything  to  have  it  ordered 
that  he  and  his  co-sureties  should  be  charged  2yro  rata  only — "  ut 
uterque  eorum  oneretur  pro  rata."  Offley  and  Johnson's  Case  (26 
Eliz.). 

In  the  earliest  reports  and  abridgments  of  cases  in  Chancer}7,  there 
is  frequent  mention  of  contribution,  but  there  seems  to  be  no  reported 
instance  of  contribution  between  sureties  before  the  17th  century,  and 
even  in  modern  times  there  is  very  little  express  authority  that  the 
surety  has  an}'  remedy  until  he  has  actually  paid  too  much,  and  still 
less  authority  to  show  the  precise  extent  of  the  relief  to  which  he  may 
be  entitled  before  such  payment.  In  nearly  eveiy  reported  case  the 
surety  had  before  action  paid  more  than  his  share.  Nearly  every  case 
and  text-book  refers  to  his  right  to  contribution  as  the  right  of  a  surety 
who  has  paid  more  than  his  proportion.  In  a  few  cases  the  ambiguous 
expression  is  used,  "  when  he  is  called  upon  to  pay  more  than  his 
proportion." 

The  following  are,  I  believe,  the  only  reported  cases  which  throw 
any  light  on  the  subject.  I  begin  with  two,  which  are  not  cases  of 
suretyship,  but  which  illustrate  a  principle  of  equity  apparently  estab- 
lished in  other  cases  of  contribution  and  applicable  to  this.  They  are 
cited  in  Vin.  Abr.,  tit.  Contribution,  from  Cary's  Reports. 

"  (27.)  If  a  man  grants  a  rent-charge  out  of  all  his  lands,  afterwards 
sells  his  lands  by  parcels  to  divers  persons,  and  the  grantee  of  the  rent 
will  from  time  to  time  levy  the  whole  rent  upon  one  of  the  purchasers 
only,  he  shall  be  eased  in  Chancer}'  by  a  contribution  from  the  rest  of 
the  purchasers,  and  the  grantee  shall  be  restrained  by  order  to  charge 
the  same  upon  him  only." 

"  (28.)  Sir  Edmund  Morgan  married  the  widow  of  Fortescue,  he  had 
his  wife's  lands  distrained  alone  by  the  grantee  of  a  rent-charge  from 
her  former  husband,  and  therefore  sued  the  grantee  in  Chancery,  to 
take  a  rateable  part  of  the  rent,  according  to  the  lands  he  held  subject 
to  the  distress,  and  notwithstanding  the  Lord  Chief  Justice  Popham's 


590  WOLMERSHAUSEN    V.    GULLICK.  [CHAP.  III. 

Report,  who  thought  this  reasonable,  the  Lord  Chancellor  Egerton 
would  give  him  on  this  bill  no  relief,  but  ordered  that  he  should  exhibit 
his  bill  against  the  rest  of  the  tenants  and  grantee  both,  the  one  to 
show  cause  why  they  should  not  contribute,  the  other  why  he  should 
not  accept  of  the  rent  equally ;  otherwise,  it  was  no  reason  to  take 
away  the  benefit  of  distress  from  the  grantee,  which  the  law  gave 
him." 

Three  cases  of  contribution  between  sureties  in  the  time  of  Charles  I. 
are  reported.  In  Peter  v.  Rich,  the  principle  was  established  that  in 
equit}',  if  one  of  several  co-sureties  is  insolvent,  the  others  contribute 
as  if  he  had  not  been  a  surety.  There  the  plaintiff  had  paid  the  wllole. 
In  Morgan'*'.  Seymour,  the  principle  upon  which  the  above-cited  cases 
from  Cary,  and  the  subsequent  leading  case  of  Deering  v.  Earl  of  Win- 
chelsea,  were  decided  seems  to  be  applied  in  the  fullest  extent  to  the 
case  of  co-sureties,  the  principal  creditor  being  made  a  party  to  the 
suit  and  the  co-surety  being  ordered  to  pay  direct  to  the  creditor. 
The  report  is  as  follows  :  — 

"  The  plaintiff,  with  Sir  Edward  Seymour,  the  defendant,  being 
bound  with  Sir  William  St.  Johns  for  the  proper  debt  of  the  said 
St.  Johns,  to  the  defendant  Rowland  in  a  bond  of  £200  for  the  pay- 
ment of  £100,  and  the  said  Rowland  sued  the  plaintiff  only  on  the  said 
bond,  the  plaintiff  seeks  to  have  the  said  Seymour  contribute  and  pay 
his  part  of  the  said  debt  and  damages,  the  said  St.  Johns  being  insol- 
vent. This  Court  was  of  opinion  that  the  said  Seymour  ought  to  con- 
tribute and  pa}-  one  moiety  to  the  said  Rowland,  and  decreed  Rowland 
to  assign  over  the  said  bond  to  the  plaintiff  and  Seymour,  to  help 
themselves  against  the  said  St.  Johns  for  the  said  debt." 

In  Swain  v.  Wall,  the  plaintiff  surety  had  paid  the  whole  of  the  cred- 
itor's demand,  and  the  only  point  decided  was  that  his  claim  for  contri- 
bution might  be  controlled  b}r  express  contract.  In  Hole  v.  Harrison 
(1673), 1  the  rule  in  Peter  v.  Rich  was  followed.  In  1786,  in  Lawson 
v.  Wright,2  the  plaintiff  co-surety  had  paid  off  the  whole  liability,  and 
he  sued  for  contribution.  Sir  Llo3'd  Kenyon  said  that  it  had  been 
established  ever  since  the  origin  of  the  courts  of  equity  that  one 
surety  had  a  right  to  call  upon  another  for  contribution  in  cases  of  this 
nature.  The  only  question  was  whether  proof  of  payment  by  the  surety 
was  enough  without  proof  that  the  principal  debtor  was  insolvent. 
The  arguments  seem  to  show  that  counsel  and  the  Court  thought  that 
an  action  could  be  maintained  b}'  a  surety  before  he  had  paid  anything, 
if  he  could  prove  the  principal  debtor  to  be  insolvent.  In  1787  the 
leading  case  of  Deering  v.  Earl  of  Winchelsea  was  decided  in  the  Ex- 
chequer as  a  court  of  equity  by  Lord  Chief  Baron  Eyre.  There  a 
surety  by  bond  for  £4,000  to  the  Crown  had  had  judgment  against  him 
at  the  suit  of  the  Crown  for  nearly  the  whole  amount,  and  he  filed  his 
bill  for  contribution  against  sureties  bound  by  distinct  bonds  to  the 
same  creditor  to  secure  the  same  liability  of  the  same  debtor,  and  the 

1  1  Ch.  Ca.  246 ;  Finch,  15,  203.  2  1  Cox,  275. 


SECT.  IV.] 


WOLMERSHAUSEN    V.    GULLICK. 


591 


only  point  reported  as  argued  or  decided  was  whether  there  should  be 
contribution  between  sureties  bound  under  distinct  contracts  of  surety- 
ship without  privity  of  contract  between  themselves.  After  deciding 
that  the  right  to  contribution  depends  primarily,  not  upon  contract, 
but  upon  the  equitable  principle  that  "  in  equali  jure  the  law  requires 
equality  —  the  charging  one  surety  discharges  the  other,  and  each 
therefore  ought  to  contribute  to  the  onus,"  the  Court  proceeded  to 
declare  the  plaintiff's  right  to  contribution,  and  ordered  the  other 
sureties  to  pa}'  their  shares  to  the  creditor.  No  similar  order  is  to  be 
found  in  an}'  other  case  of  sureties  except  Morgan  v.  Seymour.  But 
it  is  in  strict  accordance  with  the  principle  of  the  cases  cited  from 
Cary,  and  it  is  hardly  possible  to  suppose  that  so  obvious  and  impor- 
tant a  matter  as  the  jurisdiction  to  make  such  an  order  could  have  been 
overlooked.  It  appears,  from  the  report  of  the  case  in  2  Bos.  &  P., 
though  not  from  the  report  in  1  Cox,  that  the  Crown  as  creditor  was 
made  a  defendant  to  the  bill  under  the  name  of  the  Attorney-General ; 
and  there  could  not  have  been  any  object  in  this  except  that  the  Crown 
should  be  controlled  and  prevented  from  enforcing  its  legal  right  in- 
equitably against  one  alone  of  the  sureties.  That  nothing  so  impor- 
tant was  overlooked  may  be  inferred  from  the  remarkable  observations 
of  Lord  Eldon,  who  had  himself  argued  the  case,  and  who  said,  in 
Craythorne  v.  Swinburne  (1807)  :  — 

"  In  the  case  of  Deering  v.  Earl  of  Winchelsea,  which,  I  recollect, 
was  argued  with  great  perseverance,  ...  it  is  decided  that,  whether 
they  are  bound  by  several  instruments,  or  not,  whether  the  fact  is  or 
is  not  known,  whether  the  number  is  more  or  less,  the  principle  of 
equit}'  operates  in  both  cases  ;  upon  the  maxim,  that  equality  is  equity  : 
the  creditor,  who  can  call  upon  all,  shall  not  be  at  liberty  to  fix  one 
with  payment  of  the  whole  debt ;  and  upon  the  principle,  requiring  him 
to  do  justice,  if  he  will  not,  the  Court  will  do  it  for  him.  ...  I  argued 
that  case  ;  and  was  much  dissatisfied  with  the  whole  proceeding,  and 
with  the  judgment;  but  I  have  been  since  convinced  that  the  decision 
was  upon  right  principles.  Lord  Chief  Justice  Eyre  in  that  case 
decided  that  this  obligation  of  co-sureties  is  not  founded  in  contract: 
but  stands  upon  a  principle  of  equity ;  and  Sir  SVHomilly  has  very 
abl}'  put,  what  is  consistent  with  every  idea,  that,  after  that  principle 
of  equity  has  been  universally  acknowledged,  then  persons,  acting 
under  circumstances  to  which  it  applies,  may  properly  be  said  to  act 
under  the  head  of  contract,  implied  from  the  universality  of  that  prin- 
ciple. Upon  that  ground  stands  the  jurisdiction  assumed  by  courts  of 
law.  .  .  .  The  doctrine  of  contribution  .  .  .  stands  upon  this;  that 
all  sureties  are  equally  liable  to  the  creditor  ;  and  it  does  not  rest  wjth 
him  to  determine  upon  whom  theburden  shall  be  thrown  exclusively  ; 
that  equality  is  equity  ;  and,  if  he  will  not  make  them  contribute  equally, 
this  Court  will  finally,  by  arrangement,  secure  that  object." 

Several 


cases  of  contribution  between  sureties  occur  in  the 
books  in  Lord  Eldon's  time,  but  in  none  of  them  is  there  any  reference 


592  WOLMERSHAUSEN   V.    GULLICK.  [CHAP.  III. 

to  the  point  in  question.      In  Ex  parte  Gifford  (1802)  Lord  Eldon 
said  :  — 

"  The  principal  is  to  discharge  all  the  obligations  of  all  the  sureties  : 
but  they  stand  with  regard  to  each  other  in  a  relation,  which  gives  rise 
to  this  right  among  others  ;  that,  if  one  pays  more  than  his  proportion, 
there  shall  be  a  contribution  for  a  proportion  of  the  excess  beyond  the 
proportion,  which  in  all  events  he  is  to  pay.'' 

In  Craythorne  v.  Swinburne,  alreacby  cited,  Lord  Eldon  states  the 
right  of  the  surety  in  these  terms :  "It  has  been  long  settled,  that,  if 
there  are  co-sureties  by  the  same  instrument,  and  the  creditor  calls 
upon  either  of  them  to  pay  the  principal  debt,  or  an}'  part  of  it,  that 
surety  has  a  right  in  this  Court,  either  upon  a  principle  of  equity,  or 
upon  contract,  to  call  upon  his  co-surety  for  contribution." 

In  Antrobus  v.  Davidson  (1817),1  it  was  held  that  the  creditor  can- 
not  bring  an  action  jgpia  timet  against  a  surety  to  force  him  to  set 
apart  money  to  provide  for  the  possibility  of  a  debt  becoming  due 
from  the  principal  debtor. 

In  1821,  in  Stirling  v.  Forrester,2  in  the  House  of  Lords,  Lord 
Redesdale  said:  "The  principle  established  in  the  case  of  Deering  v. 
Lord  Winchelsea  is  universal,  that  the  right  and  duty  of  contribution 
is  founded  in  doctrines  of  equity  ;  it  does  not  depend  upon  contract. 
§Ti/t4TJ£L If  several  persons  are  indebted,  and  one  makes  the  payment,  the 
creditor  is  bound  in  conscience,  if  not  b}'  contract,  to  give  to  the 
-•   *****  party  paving  the  debt  all  his  remedies  against  the  other  debtors.     The 

cases  of  average  in  equity  rest  upon  the  same  principle.  It  would  be 
against  equity  for  the  creditor  to  exact  or  receive  payment  from  one, 
and  to  permit,  or  by  his  conduct  to  cause,  the  other  debtors  to  be 
exempt  from  payment.  He  is  bound,  seldom  by  contract,  but  always 
in  conscience,  as  far  as  he  is  able,  to  put  the  party  paving  the  debt 
upon  the  same  footing  with  those  who  are  equally  bound.  That  was 
the  principle  of  decision  in  Deering  v.  Lord  Winchelsea.  .  .  .  The  ques- 
tion depends  upon  equity,  not  upon  contract ;  and  in  this  case  a  con- 
tract is  to  be  implied.  The  decision  in  Deering  v.  Lord  Winchelsea 
proceeded  on  a  principle  of  law  which  must  exist  in  all  countries,  that 
where  several  persons  are  debtors,  all  shall  be  equal." 

In  1861,  in  Reynolds  v.  Wheeler,  which  was  an  action  for  money 
paid,  Erie,  C.  J.,  said:  "If  one  surety  is  called  on  to  pay  the  whole 
debt  he  is  entitled  to  have  contribution  from  his  co-surety,"  and  Wil- 
liams, J.,  said  :  "  It  is  now  well  established  by  many  cases  that  where 
two  parties  stand  in  the  relation  of  co-sureties,  and  one  of  them  is 
applied  to  for  more  than  his  share,  he  is  entitled  to  call  upon  his  com- 
panion for  reimbursement."  But  having  regard  to  the  common  law, 
as  settled  b}-  Davies  v.  Humphreys,  it  seems  plain  that  these  expres- 
sions must  be  understood  as  assuming  actual  payment  by  the  plaintiff 
of  more  than  his  share. 

In  1868,  in  Wooldridge  ?•.  Norris,8  executors  of  a  surety  obtained 

l  3  Mer.  569.  2  3  Bli.  575,  590,  596.  3  Law  Rep.  6  Eq.  410. 


SECT.  IV.]  WOLMERSHAUSEN   V.    GULLICK.  593 

an  order  for  indeinnit}-  and  payment  by  a  person  who  had  covenanted 
to  indemnify  the  testator  against  his  liability  as  surety,  although  the 
executors  had  not  paid  or  been  sued.  The  judgment,  however,  pro- 
ceeded on  the  particular  terms  of  the  covenant. 

In  the  same  year,  in  Cruse  v.  Paine,1  where  a  vendor  of  shares  was 
entitled  to  be  indemnified  by  his  vendee  against  calls,  Lord  Hatherley 
declared  the  liability  of  the  vendee  for  future  calls,  and  ordered  him 
to  indemnify  the  vendor's  estate,  and  to  procure  its  release  or  discharge 
"  either  by  payment  of  the  calls  or  otherwise,  with  liberty  to  apply  in 
Chambers,  &c." 

In  1872,  in  Bechervaise  v.  Lewis,  Willes,  J.,  said:  "The  surety, 
...  as  soon  as  his  obligation  to  pay  is  become  absolute,  has  a  right 
in  equity  to  be  exonerated  by  his  principal." 

In  1874,  in  Lace}-  v.  Hill,'2  upon  a  creditor's  claim  in  an  administra- 
tion, Jessel,  M.  R.,  said  :  — 

"  Whatever  may  be  the  case  at  law  ...  it  is  quite  plain  that  in  this 
Court  any  one  having  a  right  to  be  indemnified  has  a  right  to  have  a 
sufficient  sum  set  apart  for  that  indemnit}-.  It  is  not  very  material  to 
consider  whether  he  is  entitled  to  have  that  sum  paid  to  him,  or  whether 
it  must  be  paid  direct  over  to  the  creditor.  If  the  creditor  is  not  a 
part}-,  I  believe  that  it  has  been  decided  that  the  party  seeking  indem- 
nity may  be  entitled  to  have  the  money  paid  over  to  him." 

In  1877,  in  Lloyd  v.  Dimmack,3  Mr.  Justice  Fry  refused  to  declare 
prospectively  the  right  of  the  assignor  of  a  long  lease  to  indemnity 
against  future  breaches  of  covenant  by  the  assignee,  and  in  Hughes- 
Hallett  v.  Indian  Mammoth  Gold  Mines  Compan}-,4  the  same  learned 
judge  refused  to  make  an  order  quia  timet  against  a  person  for  whom 
the  plaintiff  held  shares  to  indemnify  the  plaintiff,  there  being  no  evi- 
dence that  calls  were  likely  to  be  made,  but  said:  "There  have  been, 
undoubted  1}T,  cases  in  which,  where  a  contract  for  indemnity  existed, 
and  a  right  to  sue  upon  that  contract  had  arisen,  the  Court  has  declared 
the  right  to  indemnity  generally,  and  has  put  matters  in  such  a  train 
that,  when  the  subsequent  right  to  indemnity  should  arise,  the  indem- 
nity might  be  worked  out.  Some  forms  of  judgments  in  that  class  of 
cases  are  to  be  found  in  the  last  edition  of  Seton  on  Decrees,  and  they 
show  that  where  a  person  has  taken  shares  for  another,  and  a  call  has 
been  made  which  has  not  been  met  by  the  person  liable  to  pay  it,  the 
trustee  who  is  entitled  to  an  indemnit}-  may  obtain  a  declaration  of  his 
title  generally,  and  may  possibly  obtain  libert}'  to  apply  from  time  to 
time  to  work  it  out."  So,  in  the  similar  case  of  Hobbs  v.  Wayet,5 
where  a  call  on  shares  was  also  threatened,  Mr.  Justice  Kekewich  made 
a  declaration  of  the  right  to  indemnity. 

The  preceding  cases  from  Cruse  v.  Paine,6  downwards,  have  been 

l  Law  Rep.  6  Eq.  641  ;  4  Ch.  441. 

«  Law  Rep.  18  Eq.  182,  191.  3  7  Ch.  D.  398. 

*  22  Ch.  D.  561,  565.  5  36  Ch.  D.  256. 

6  3  Law  Rep.  6  Eq.  641  ;  4  Ch.  441. 

38 


594  WOLMERSIIAUSEN   V.    GULLICK.  [CHAP.  III. 

referred  to,  not  as  having  any  direct  bearing  on  the  rights  of  co- 
sureties, but  as  throwing  some  light  on  the  nature  and  extent  of  the 
relief  which  can  be  given  in  equity  in  analogous  matters.  There  are 
only  two  remaining  authorities.  In  1881,  in  Ex  parte  Snowdon,1  a 
surety  who  had  paid  his  own  share  and  no  more,  and  who  had  not  been 
called  upon  to  pay  more,  issued  a  debtor's  summons  against  his  co- 
surety for  half  of  what  had  been  paid,  and  he  obtained  an  adjudication 
of  bankruptcy,  which  the  Court  of  Appeal  annulled  on  the  ground  that, 
until  a  surety  had  paid  more  than  his  share,  there  is  no  legal  or  equi- 
table debt  to  sustain  bankruptcy  proceedings.  Lord  Justice  James  is 
reported  to  have  said :  "  I  think  your  proper  remedy  is  to  call  on 
Snowdon  to  pay  the  bank  £541.  ...  I  believe  the  proper  course 
when  a  surety  is  called  upon  to  pay  a  part  of  the  whole  debt  for  which 
he  is  liable  would  be  to  bring  an  action  against  his  co-sureties  to  com- 
pel them  to  contribute  to  pay  the  debt  to  the  creditor,  just  as  he  would 
be  entitled  to  call  on  them  for  contribution  if  he  had  been  sued  by  the 
creditor,  asking  that  he  should  be  indemnified  by  his  co-sureties  against 
paying  the  whole  debt,  or  whatever  risk  he  ran."  The  report  in  the 
Law  Journal 2  is  as  follows  :  "  The  proper  course  when  a  surety  is 
called  upon  to  pay  the  whole  debt,  for  which  he  is  liable  with  his  co- 
surety, is  to  call  upon  his  co-surety  for  contribution  and  to  indemnify 
him  against  paying  the  whole  ;  and  the  only  mode  in  which  in  equity 
you  can  compel  a  co-surety  to  pay  his  proportion  of  the  debt  is  to 
show  that  you  have  paid  3'our  proportion,  or  more  than  your  propor- 
tion, of  the  debt,  and  are  liable  for  the  residue."  In  the  Weekly  Re- 
porter3 it  is,  "  The  proper  course  when  a  surety  is  called  upon  to  pay 
the  whole  debt  for  which  he  is  liable  would  be  to  call  upon  his  co- 
sureties for  contribution,  just  as  he  would  be  entitled  to  have  done  if  a 
bill  had  been  filed  against  him  hy  the  principal  creditor,  asking  that  he 
should  be  indemnified  against  paying  the  whole."  In  1883,  in  Mac- 
donald  v.  Whitfield,4  Lord  Watson,  pro  cur.,  declared  the  right  to  con- 
tribution of  a  surety  who  had  not  paid,  but  had  had  judgment  against 
him,  in  this  form,  "  Entitled  and  liable  to  equal  contribution  inter  se." 
In  Lord  Justice  Lindlej-'s  work  on  Partnership,5  it  is  observed  that 
"  before  the  passing  of  the  Judicature  Acts,  a  right  to  contribution  or 
indemnity,  arising  otherwise  than  by  special  agreement,  was  only  en- 
forceable at  law  b}T  a  person  who  could  prove  that  he  had  already  sus- 
tained a  loss.  But  in  equity  it  was  very  reasonably  held,  that  even  in 
the  absence  of  any  special  agreement,  a  person  who  was  entitled  to 
contribution  or  indemnity  from  another  could  enforce  his  right  before 
he  had  sustained  actual  loss,  provided  loss  was  imminent ;  and  this 
principle  will  now  prevail  in  all  divisions  of  the  High  Court.  There- 
fore a  person  who  is  entitled  to  be  thus  indemnified  against  loss  is  not 
obliged  to  wait  until  he  has  suffered,  and  perhaps  been  ruined,  before 

1  17  Ch.  D.  44,  46,  47.  2  50  L.  J.  Ch.  540,  541. 

3  29  W.  11.  654.  4  8  App.  Cas.  733,  750. 

5  5th  ed.  p.  374. 


SECT.  IV.]  WOLMEKSHAUSEN   V.    GULLICK.  595 

having  recourse  to  judicial  aid.  Thus,  in  the  ordinary  case  of  prin- 
cipal and  surety,  as  soon  as  the  creditor  has  acquired  a  right  to  imme- 
diate payment  from  the  surety,  the  latter  is  entitled  to  call  upon  the 
principal  debtor  to  pay  the  amount  of  the  debt  guaranteed,  so  as  to 
relieve  the  surety  from  his  obligation  ;  and  where  one  person  has 
covenanted  to  indemnify  another,  an  action  for  specific  performance 
may  be  sustained  before  the  plaintiff  has  actually  been  damnified;  and 
the  limit  of  the  defendant's  liability  to  the  plaintiff  is  the  full  amount 
for  which  he  is  liable  ;  or  if  he  is  dead  or  insolvent  the  full  amount 
provable  against  his  estate,  and  not  only  the  amount  of  dividend  which 
such  estate  can  pay.  In  strict  conformity  with  these  principles,  part- 
ners and  directors  who  are  individually  liable  to  be  sued  on  bonds  and 
notes,  which  as  between  them  and  their  copartners  are  to  be  regarded 
as  the  bonds  and  notes  of  the  firm  or  company,  are  entitled  to  call  for 
contribution  before  these  bonds  or  notes  have  been  actually  paid.  So 
a  trustee  of  shares  liable  to  calls  is  entitled  to  be  indemnified  b}r  his 
cestui  que  trust  against  them  before  they  are  paid."  This  statement 
of  the  law  is  an  authority  in  favor  of  the  view  that  some  relief  can  be 
given,  but  it  does  not  specify  the  form  or  limit  of  the  relief;  nor  do  any 
of  the  authorities  cited  in  the  notes  throw  any  further  light  on  the  mat- 
ter. Nor  have  I  been  able  to  obtain  assistance  from  English  or  Ameri- 
can writers  on  equity  or  on  the  law  of  suretyship.  The  plaintiff's 
difficulties  have  been  increased  by  this,  that  an  application  by  her  for 
leave  to  use  the  third  party  procedure  ordinarily  applicable  in  cases  of 
contribution  or  indemnity  was  refused  in  the  administration  action  on 
the  ground  that  the  procedure  is  not  available  in  an  administration 
action.  And  even  if  the  question  had  arisen  upon  third  party  pro- 
cedure, neariy  the  same  difficulties  would  have  occurred. 

In  this  state  of  the  authorities  I  think  that,  if  the  plaintiff  had  made 
the  creditor  a  defendant  to  the  present  action,  I  ought  to  have  field 
that  the  allowance  of  the  principal  creditor's  claim  in  the  administration 
action  was  equivalent  to  a  .judgment  against  the  plaintiff  lor  the  whole 
amount  of  the  guarantee,  and  that  on  the  precedents  of  Morgan  v. 
Seymour  and  Deering  v.  Earl  of  Winchelsea,  the  plaintiff  would  have 
been  entitled  to  a  declaration  of  her  right  to  contribution  and  to  an 
order  upon  the  solvent  co-surety  to  pa}^  his  proportion  to  the  principal 
creditor.  TMe  principal  creditor  "not  being  a  party,  I  think  that  I  can- 
not  order  payment  to  him  or  directly  prevent  him  from  enforcing  his 
judgment  against  the  plaintiff  alone.  Nor  can  I  at  present  order  the 
c6-suretv  to  pay  his  halt  to  the  plaintiff,  for  the  plaintiff  cannot  give 
him  a  discharge  as  against  the  principal  creditor,  and  this  case  is  not 
like  the  case  of  a  plaintiff  who  merely  claims  indemnity,  as  in  the  cases 
referred  to  by  Jessel,  M.  R.,  in  Lacey  v.  Hill,1  in  which  no  question 
arises  as  to  any  other  part)'.  But  I  think  that  I  can  declare  the  plain- 
tiffs right,  and  make  a  prospective  order  under  which,  whenever  she 
has  paid  any  sum  beyond  her  share,  she  can  get  it  back,  and  I  there- 

i  Law  Rep.  18  Eq.  182,  191. 


596  RANELAUGH   V.    HAYES.  [CHAP.  III. 

fore  declare  the  plaintiff's  right  to  contribution,  and  direct  that,  upon 
the  plaintiff  paying  her  own  share,  the  defendant  Gullick  is  to  indem- 
nify her  against  further  payment  or  liability,  and  is,  by  payment  to  her 
or  to  the  principal  creditor  or  otherwise,  to  exonerate  the  plaintiff  from 
liability  beyond  the  extent  of  her  own  share.  The  plaintiff  must  have 
liberty  to  apply  in  chambers  and  generally  to  apply. 

A  point  was  made  as  to  the  Statutes  of  Limitation.  The  principal 
creditor's  claim  was  put  in  in  1879.  But  I  think  that  I  must  hold  that, 
even  if  the  statute  can  begin  to  run  before  the  surety  has  paid  more 
than  his  proportion,  at  any  rate  it  does  not  run  until  his  liability 
is  ascertained,  and  that  did  not  occur  until  1890. 

There  was  another  point  made  that  the  plaintiff  ought  to  have  proved 
against  the  estate  of  the  co-suret}'  Patton,  but  if  that  were  so,  so  might 
the  defendant  Gullick.  It  is  agreed  that,  if  such  proof  could  have  been 
and  had  been  made,  it  is  to  be  taken  that  £200  would  have  been  re- 
ceived. I  think  that  the  plaintiff  and  defendant  should  each  bear  half 
of  this,  and  the  defendant's  liability  to  the  plaintiff  will  be  reduced 
accordingly  by  $100.  I  think  that  the  plaintiff  acted  reasonably  and 
in  the  interest  of  all  parties  in  resisting  and  reducing  the  principal 
creditor's  claim,  and  that  the  defendant  ought  in  equity  to  contribute 
half  the  costs  of  those  proceedings.  See  Kemp  v.  Finden  ; l  Lawson 
v.  Wright ; 2  Hole  v.  Harrison.3  I  therefore  give  judgment  in  that  form 
in  favor  of  the  plaintiff,  _with  costs.4 

Vyi—r     ^L  COMES   RANELAUGH  fl^AYE&A  " — -> 

In  Chancery,  ^before  Lord  Sjilford,  Keeper,  October  30,  1683. 

^^  ^[Reported  in  1   Vernon,  189.;] 

The  Earl  of  Ranelaugh  assigns  several  shares  of  the  excise  in  Ireland 
to  Sir  James  Hayes,  and  Sir  James  covenants  to  save  the  Earl  harmless 
in  respect  of  that  assignment,  and  to  stand  in  his  place  touching  the 
pa37ments  to  the  King,  and  other  matters,  that  were  to  have  been  per- 
formed by  him.  The  plaintiff  the  Earl  of  Ranelaugh  suggests  in  his 
bill,  that  he  is  sued  by  the  King  for  £20,000,  and  that  the  defendant  Sir 
James  Hayes  by  the  agreement  ought  to  have  paid  it ;  and  therefore 
prays  the  defendant  may  be  decreed  to  perform  the  agreement  in  specie. 

It  was  insisted  for  the  defendant,  that  here  was  no  proper  subject  for 
equit}',   nor  anything  that  the  Court  could  decree ;    for  here  was  no 

1  12  M.  &  W.  421.  2  i  Cox,  275. 

3  1  Ch.  Ca.  246;  Finch,  15,  203. 

4  McKenna  v.  Witherspoon,  2  Rich.  Eq.  20,  Accord. 
To  the  same  effect  are  Hyde  v.  Tracy,  2  Day,  491,  Hodgson  ?\  Baldwin,  65  111 

532,  in  which  cases  no  judgment  had  been  obtained  against  the  surety  by  the  creditor 
—  Ed. 


< »  \<*.t  * 


SECT.  IV.]  RANELAUGH    V.    HAYES.  59? 

specific  covenant,  but  only  a  general  and  personal  covenant  for  indem- 
nity ;  and  that  was  not  decreeable  in  equity  ;  for  it  sounds  only  in 
damages,  which  cannot  be  ascertained  in  this  court;  especially  as  this 
case  is,  there  being  no  breach  of  the  covenant  assigned  in  the  bill ;  for 
a  suit  being  brought  by  the  King,  that  is  not  in  itself  any  breach,  for 
the  defendant  cannot  prevent  that.  He  will  defend  the  suit,  and  if 
nothing  is  recovered  there  is  no  breach. 

But  the  Lopd  Keeper  in  this  case  thought  fit  to  decree  that  Sir  James 
should  perform  his  covenants  ;  and  directed  it  to  a  Master,  and  that 
toties  (fuoties  any  breach  should  happen,  he  should  report  the  same 
specially  to  the  Court ;  and  the  Court  then  might,  if  there  should  be 
occasion,  direct  a  trial  at  law  in  a  quantum  dqmnificatus  ; 1  and  he  con- 
ceived it  reasonable,  that  Sir  James  Hayes  should  be  decreed  to  clear 
the  Earl  of  Ranelaugh  from  all  these  suits  and  incumbrances  within 
some  reasonable  time.  And  he  compared  it  to  the  case  of  a  counter- 
bond  ;  where  although  the  surety  is  not  troubled  or  molested  for  the 
debt,  yet  a£  any  time  after  the  money  becomes  payable  on  the  original 
rxmd,  this  Court  will  decree  the  principal  to  discharge  the  debt ; 2  it 
being  unreasonable  that  a  man  should  alwa}*s  have  such  a  cloud  hang 
over  mm. 

1  The  opinion  of  the  Lord  Keeper  as  to  future  hreaches  has  heen  overruled.  Lloyd 
r.  Dimmack,  7  Ch.  D.  398,  401 ;  Hughes- Hallett  v.  Indian  Co.,  22  Ch.  D.  561.  — Ed. 

2  Lee  v.  Rook  (1730)  Mosely,  318  (semble  per  Sir  Joseph  Jekyll,  M.  R.)  ;  Nisbet  v. 
Smith  (1789),  2  Bro.  C.  C.  578,  582  (semble);  Antrobus  v.  Davidson,  3  Mer.  569,  579 
(semble  per  Sir  William  Grant,  M.  R.) ;  Pad  wick  v.  Stanley,  9  Hare,  627,  628  (semble 
per  Sir  George  Turner,  V.  C.);  Wooldridge  v.  Norris,  6  Eq.  410;  Lloyd  v.  Dimmack, 
7  Ch.  D.  398;  Mathews  v.  Saurin,  L.  R.  31  Ir.  181,  Accord. 

In  Nisbet  v.  Smith,  supra,  Lord  Thurlow  said :  "  It  is  clear  and  never  has  been  dis. 
puted  that  a  surety,  generally  speaking,  may  come  into  this  court,  and  apply  lor  "the 
purpose  of  compelling  the  principal  debtor  tor  whom  he  is  surety  to  pay  in  the  money 
and  deliver  him  from  the  obligation/'  To  this  remark  of  Lord  TliurftTw.  Mr.  Belt 
makes  the  following  note :  "  But  it  must  be  observed  that  a  bill  will  not  lie  upon  any 
general  equity  by  a  surety  against  the  principal  debtor,  to  have  an  indemnity,  or  to 
have  the  money  paid  into  court,  where  no  further  time  has  been  given,  where  the  day 
of  payment  has  not  elapsed,  and  the  surety  has  not  been  damnified,  or  is  not  in  evident 
danger  of  being  so  ;  or  unless  a  distinct  agreement  can  be  proved  that  it  should  be  done 
whenever  the  plaintiff  called  on  him  for  it.  So  decreed,  per  totam  curiam,  in  the  Ex- 
chequer, Trinity  Term,  1808, 4th  July,  Dale  and  Perry  v.  Lolley,  where  the  bill  was  dis- 
missed with  costs.  And  the  Court  held  that  Lord  Thurlow's  allusion,  in  this  place,  to 
the  surety's  equity,  is  applicable  only  to  the  above,  and  that  any  other  decision  would 
quite  overthrow  the  very  reason  of  a  party's  becoming  surety  at  all,  and  be  absurd. 

"  Such  a  bill  lias  been  filed  and  a  decree  made,  which  ought  never  to  have  been  done  ; 
and  Lord  Eldon,  C,  observed  it  was  a  strange  and  anomalous  decree.  The  cause  was 
Clarke  v.  Stamford,  Chancery,  16th  June,  1801,  and  the  master's  report,  25th  June, 
1802.  The  decree  was  according  to  the  prayer,  that  the  principal  should  pay  the  debt 
and  discharge  the  plaintiff  as  surety.  The  obligee  was  a  party,  and  acted  upon  the 
decree.  This  was  observed  as  above  per  Lord  Eldon,  G,  26th  May,  1803,  first  seal  after 
Easter  Term,  upon  a  motion  by  Mr.  Hollist  in  the  above  cause.  [Mr.  Hollist  saying 
that,  in  fact,  such  a  decree  ought  never  to  have  been  made.]  " 


/. 


598  DOBIE  V.  FIDELITY   AND   CASUALTY  CO.  [CHAP.  IIL 


DOBIE,  Respondent,  v.  FIDELITY   AND   CASUALTY    CO., 

Appellant. 

In  the  Supreme  Court,  Wisconsin,  March  16,  1897. 

[Reported  in  95  Wisconsin  Reports,  540.] 

Newman,  J.1  The  question  presented  is  whether  the  complaint 
states  a  cause  of  action.  The  action  is  by  a  surety  to  compel  his  prin- 
cipal to  pay  the  debt  for  which  both  are  liable,  for  the  exoneration  of 
the  surety.  It  is  ultimately  the  defendant's  liability.  That  party  is 
the  principal  debtor,  who  is  ultimately  liable  for  the  debt.  The  ques- 
tion is  whether  a  surety  can,  in  equity,  compel  his  principal  to  exoner- 
ate him  from  liability,  by  extinguishing  the  obligation,  without  having 
first  paid  it  himself.  It  seems  to  be  well  settled  that  a  surety  against 
whom  a  judgment  has  been  rendered  may,  without  making  payment 
himselr,  proceed  in  equity  against  his  principal  to  subject  the  estate  of 
the  latter  to  the  payment  of  the  debt,  in  exoneration  of  the  surety.3 
2  Beach,  Mod.  Eq.  Jur.  §  903  ;  3  Pomeroy,  Eq.  Jur.  §  1417;  Wiflard, 
Eq.  Jur.  110  ;  United  N.  J.  R.  &  C.  Co.  v.  Long  Dock  Co  ; 3  Beaver  v. 
Beaver  ;  4  Gibbs  v.  Mennard  ;  5  Warner  v.  Beardsley.6 

By  the  Court.  The  judgment  of  the  Circuit  Court  for  Douglas 
county  is  affirmed. 


1  Only  the  opinion  of  the  Court  is  given.  — Ed. 

2  It  is  generally  agreed  in  this  country  that_ihe  surety  may  file  a  bill  against  the 
principal,  as  soon  as  the  obligation  matures,  to  compel  Trim  to  exonerate  the  "sTirety 

y  pa\Ti7g*tlie  creditor. 

Dennis  v.  Rider,  2  McL.  451,-456  (semble);  Merwin  v.  Austin,  58  Conn.  22,  24 
\semble) ;  West  v.  Chasten,  12  Fla.  315;  Ilaydeu  v.  Thrasher,  18  Fla.  795;  Macfie  v. 
KilaueaCo.,  6  Hawaiian,  440;  Moore  v.  Topliff,  107  111.  241  (semble) ;  Street  v.  Chicago 
Co.,  157  111.  605  ;  Roberts  v.  American  Co.,  83  111.  Ap.  469 ;  Reach  v.  Hamilton,  84  111. 
Ap.  413;  Ritenour  v.  Mathews,  42  Ind.  7,  14  (semble);  Medsker  v.  Parker,  70  Ind. 
509  ;  Hoppes  v.  Hoppes,  123  Ind.  397  ;  Morrison  v.  Poyntz,  7  Dana,  307,  308  (semble) ; 
Meador  v.  Meador,  88  Ky.  217  ;  Hoffman  v.  Johnson,  1  Bland,  103, 105  (semble) ;  Whit- 
ridge  v.  Durkee,  2  Md.  Ch.  442  (semble)  ;  Bellows  v.  Lovell,  5  Pick.  307,  310  (semble) ; 
Huey  v.  Pinney,  5  Minn.  310,  322  (statutory)  ;  Irick  v.  Black,  17  N.  J.  Eq.  189,  195 
(semble)  ;  Delaware  Co.  v.  Oxford  Co.,  38  N.  J.  Eq.  151  (semble)  ;  Warner  v.  Beardsley, 
8  Wend.  194,  199  (semble) ;  Gibbs  v.  Mennard,  6  Paige,  258  (semble) ;  Marsh  v.  Pike, 
10  Paige,  595 ;  Haunay  v.  Pell,  3  E.  D.  Sm.  432  ;  Ferrer  v.  Barrett,  4  Jones,  Eq.  455 
(semble)  ;  Miller  v.  Miller,  Phill.  (N.  Ca.)  85,  88  (semble) ;  Thigpen  v.  Price,  Phill.  (N. 
Ca.)  146 ;  Taylor  v.  Miller,  Phill.  (N.  Ca.)  365  (semble)  ;  Stump  v.  Rogers,  1  Oh.  533  ; 
McConnell  v.  Scott,  15  Oh.  401  ;  Hale  v.  Wetmore,  4  Oh.  St.  600;  Beaver  i>.  Beaver, 
23  Pa.  167  (semble)  ;  Ardesco  Co.  v.  N.  A.  Co.,  66  Pa.  375  (semble)  ;  Pride  v.  Boyce, 
Rice,  Eq.  275  ;  Norton  v.  Reed,  11  S.  Ca.  593  ;  Hellams  v.  Abercrombie,  15  S.  Ca.  110 
(semble)  ;  Washington  v.  Taite,  3  Humph.  543,  546 ;  Howell  v.  Cobb,  2  Cold.  104 ; 
Greene  v.  Starnes,  1  Heisk.  582 ;  Saylors  v.  Saylors,  3  Heisk.  525  (but  see  Gilliam  v. 
Esselman,  5  Sneed,  86)  ;  Bishop  v.  Tait,  13  Vt.  81 ;  Neal  v.  Buffington,  42  W.  Va, 
823 ;  Harris  v.  Newell,  42  Wis.  687,  691;  Mathews  v.  Saurin,  L.  R.  31  Ir.  181.— Ed. 

8  38  N.  J.  Eq.  142.  *  23  Pa.  St.  167.  5  6  Paige,  258. 

6  8  Wend.  194;  7  Am.  &  Eng.  Encyc.  of  Law,  486,  cases  in  note. 


SECT.  IV. J         _vv  RICHARDSON   V.   MERRIT'L  "'599 

WILLIAM   E.   RICHART)SON  v.   LEONIDAS   MERRITTT 

^^^^int'iiE"  Supreme  Court,  Minnesota,  November  80,  1898. 

[Reported  in  74  Minnesota  Reports,  354.]       «* — t^f^  '^vt-*^^^    -j  ^-r^  "I 

Canty,  J.1     From  April   12,  1893,  to  July  11,  1894,  defendant/^  ^ 
indebted  to  the  American  Loan  &  Trust  Company  in  the  sum  of  $3,000, 
for  which  it  held  his  promissoiy  note.    On  the  latter  day  the  trust  com-  ^fl+~,AoJL 
pany,  being  insolvent,  made  an  assignment  under  the  insolvency  law 
for  the  benefit  of  all  its  creditors.     The  assignee  accepted  the  trust, 
qualified,  and  brought  this  action  to  recover  the   amount  of  the   note. 
The  defendant  in  his  answer  admitted  the  making  of  the  note,  and 
alleged  that  on  April  16,  1892,  the  trust  company  as  principal,  and  he 
and  other  persons  as  sureties,  executed  to  the  county  of  St.  Louis  a  „ 
bond,  and  that  an  action  has  been   brought  against  him  and  the  other     ^* 
sureties  on  the  bond  to  recover  the  sum  of  $106,000.  *S 

On  the  trial,  the  Court  found  that  the  bond  was  executed  to  secure 
the  payment  of  such  moneys  of  said  county  as  should  be  deposited 
with  the  trust  compan}'  within  the  period  prescribed  in  the  bond,  and 
that  said  other  action  was  brought  to  recover  the  sum  of  $106,141.08, 
the  same  being  the  balance  claimed  by  the  county  to  be  due  it  from  the 
trust  company  for  county  funds  so  deposited  with  it  pursuant  to  the 
designation  of  it  as  a  depositary  of  county  funds  under  the  bond. 
The  Court  ordered  judgment  for  plaintiff  herein  for  the  full  amount 
due  on  the  note,  and  from  an  order  den}*ing  a  new  trial  defendant 
appeals. 

Appellant   contends   that  the  facts  found  by  the  Court,  as  above 
stated,  constitute  an  equitable  defence  to  the  action.     We  cannot  so 
hold.     We  are  of  the  opinion  that  the  facts  so  found  gave  defendant  a 
right  to  "a  stay  ot  proceedings  until  a  reasonable  time  had  "elapsed  to  /fcL-^^l 
enable  him  to  have  his  liability  on' the  T>ond  determined,  and  to  pay  " —    ~sr~ 
tue  amount  acrjucigeq  against  him  thereon,   and  plead  such  fact"  of  ( / 

payment  in  a  supplemental  answer  in  this  action.  ■"""• 

"  But  defendant  never  made  before  trial  any  motion  for  a  stay  of 
proceedings  in  this  action.  On  the  contrary,  he  went  to  trial  on  the 
merits  without  objection.  After  he  had  paid  the  amount  for  which  he 
is  liable  to  the  county  on  the  bond,  or  any  part  thereof,  he  would  have 
an  equitable  defence  on  the  merits  for  the  amount  so  paid,  even  though 
it  was  paid  after  this  action  was  commenced.2  Cosgrove  v.  McKasy  ; 
Thompson  v.  McClelland  ; 3  Beaver  v.  Beaver  ;  *  Brittain  v.  Quiet.5 

1  Only  the  opinion  of  the  Court  is  given.  —  Ed. 

2  Tuscumbia  Co.  v.  Rhodes,  8  Ala.  206 ;  Brittain  v.  Quiet,  1  Jones,  Eq.  328 ; 
Beaver  v.  Beaver,  23  Pa.  167  ;  Thompson  v.  McClelland,  29  Pa.  475  ;  Baily's  Est.,  156 
Pa.  634,  641,  Accord.  —Ed. 

Tyree  v.  Parham,  66  Ala.  424,  Cmdra. 

3  29  Pa.  St.  475.  *  23  Pa.  St.  167.  5  54  jj.  Ca.  328. 


600  RICHARDSON   V.   MERRITT.  [CHAP.  III. 

But  if,  by  reason  of  his  being  a  surety  on  the  bond,  he  has,  without 
making  any  payment  as  such  surety,  a  complete  defence  to  this  action, 
and  every  action  brought  by  plaintiff,  he  may  escape  liability-  on  the 
note  and  the  bond  both,  and  thereby  be  $3,000  ahead.  He  ma}'  suc- 
ceed in  preventing  a  final  determination  of  his  liability  on  the  bond 
until  the  statute  of  limitations  has  run  against  the  note,  and  then  it 
majT  turn  out  that  he  is  not  liable  on  the  bond  at  all.  In  the  meantime, 
no  action  can  be  maintained  on  the  note,  and  the  insolvent  estate  of 
the  trust  company  must  remain  unsettled,  perhaps  for  years. 

If  the  equity  for  which  defendant  contends  is  a  defence  on  the  trial, 
it  must  be  as  a  plea  in  bar,  which  entitles  him  to  judgment  on  the 
merits,  or  a  plea  in  abatement,  which  entitles  him  to  have  the  action  dis- 
missed. In  our  opinion,  it  is  neither.  He  has  certain  equitable  rights, 
to  protect  which,  under  the  old  practice,  a  bill  in  equity  would  lie  to 
enjoin  the  prosecution  of  this  action  until  a  sufficient  time  had  elapsed 
for  him  to  determine  his  liability  as  surety  on  tne  Dond.  .But  a  tempo- 
ran'  injunction  only  would  issue  for  this  purpose,~and,  after  he  had 
paid  the  amount  of  his  liability  as  surety,  a  final  hearing  would  be  had, 
and  a  permanent  injunction  would  then  issue.  Mattingly  v.  Sutton.1 
This  is  a  well-recognized  equitable  right.2     Brandt,  Sur.  §  227. 

Of  course,  if  it  was  determined  that  he  owed  nothing  as  suret}',  or 
owed  less  than  the  amount  claimed  to  be  due  from  him  to  his  insolvent 
principal,  the  temporary  injunction  would  be  dissolved  or  modified  ac- 
cordingly, and  the  action  so  enjoined  would  proceed  to  a  final  determi- 
nation. The  practice  of  issuing  such  an  injunction  is  now  abolished, 
and,  under  our  code  practice,  the  office  of  the  temporary  injunctiorTis 
performed  by  an  order  in  tne  action  staying  proceedings  before  "trial. 
Instead  of  the  tinal  hearing  for  a  permanent  injunction,  the  defendant 
should  file  a  supplemental  answer,  alleging  that  he  has  paid  the  amount 
of  his  liability  as  surety,  or  so  much  thereof  as  is  sufficient  to  offset  the 
amount  due  plaintiff,  and  then  proceed  to  trial. 

It  will  thus  be  seen  that,  neither  under  the  present  practice  nor  the 
old  common-law  and  equity  practice,  should  the  action  terminate  until 
defendant's  liability  as  surety  was  determined,  and,  if  he  was  held 
liable,  until  he  had  paid  enough  to  offset  the  claim  of  his  insolvent 
principal  against  him.  But,  of  course,  if  he  does  not  use  reasonable 
diligence  to  bring  about  this  result,  the  stay  of  proceedings  ma}-  be 
vacated. 

Defendant  has  proceeded  in  this  case  on  the  theory  that  he  had  a 
right  to  urge  on  the  trial  an  equit}^  which,  if  sustained,  should  have 
postponed  the  trial,  —  an  equity  which,  for  the  present,  should  prevent 

1  19  W.  Va.  19  (see  page  35). 

2  Sims  v.  Wallace,  6  B.  Mod.  410  ;  Abbey  v.  Van  Campen,  Freem.  Ch.  (Miss.)  273 ; 
Williams  v.  Helm,  1  Dev.  Eq.  151  ;  Battle  v.  Hart,  2  Dev.  Eq.  31 ;  Walker  v.  Dicks, 
80  N.  Ca.  263  ;  Scott  v.  Timberlake,  83  N.  Ca.  382 ;  Ross  v.  McKinney,  2  Rawle,  227  ; 
Beaver  v.  Beaver,  23  Pa.  167;  Feazle  v.  Dillard,  5  Leigh,  30;  Mattiugly  v.  Sutton, 
19  W.  Va.  19,  Accord.  —  Ed. 


SECT.  IV. J  COSGROVE    V.    McKASY.  601 

a  trial  without  abating  the  action.  This  course  is  approved  in  Walker 
v.  Dicks,1  but  in  that  case  the  defendant  had  paid  on  his  liability  as 
suret}-  more  than  sufficient  to  offset  the  amount  due  from  him  to  his 
insolvent  principal,  so  that  on  this  point  the  opinion  is  merely  obiter. 
However,  the  same  doctrine  was  laid  down  in  Scott  v.  Timberlake,2 
where  the  surety  had  paid  nothing.     We  cannot  follow  these  cases.3 

We  are  of  the  opinion  that  the  remedy  is  by  motion  to  stay  proceed- 
ings before  trial,  not  to  prove  on  the  trial  an  alleged  defence,  which 
should  have  no  effect  but  to  postpone  the  trial. 

But  we  are  of  the  opinion  that  the  trial  court  might  yet,  in  its  discre- 
tion, stay  proceedings  until  this  defendant's  liability  as  surety  is  de- 
termined, with  a  view  to  further  proceedings  to  be  instituted  by 
supplemental  pleadings,  and  the  introduction  of  further  evidence  there- 
in, when  defendant's  liability  as  surety  is  determined.  In  that  case 
the  issues  already  tried  would  be  disposed  of,  the  findings  already 
made  would  stand,  and  the  case  would  remain  open  a  reasonable  time 
for  further  issues,  and  a  trial  thereon,  when  such  liability  as  surety 
was  determined. 

The  order  appealed  from  is  affirmed,  with  leave  to  defendant  to 
apply  to  the  Court  below  so  to  stay  proceedings  and  open  the  case. 


J.  R.  S.  COSGROVE  and  Another  v.  J.   McKASY,   Assignee. 
In  the  Supreme  Court,  Minnesota,  July  8,  1896. 

[Reported  in  65  Minnesota  Reports,  426.] 

Petition  in  the  District  Court  for  Le  Sueur  County  in  the  matter  of 
the  assignment  of  Edson  R.  Smith  and  Rollin  E.  Smith,  partners  as 
E.  R.  Smith  &  Co.,  insolvents. 

Collins,  J.  Edson  R.  and  Rollin  E.  Smith  had  for  some  time  prior 
to  July  8,  1893,  been  copartners  in  business  in  Le  Sueur  County,  in 
this  State,  under  the  firm  name  of  E.  R.  Smith  &  Co.,  keeping  and  con- 
ducting a  bank  of  deposit  generally  known  as  the  "Bank  of  Le  Sueur." 
They  had  previously  executed  and  delivered  a  bond  to  the  county, 
which  bond  had  been  duly  approved,  and  said  firm  had  been  duly 
designated  as  a  depositary  of  county  funds,  as  provided  by  G.  S.  1894, 
§  729  et  seq.  The  Smiths  were  the  principal  obligors  on  this  bond, 
which  was  a  joint  and  several  obligation  ;  and  these  petitioners,  J.  R.  S. 
Cosgrove  and  J.  A.  Cosgrove,  with  three  other  persons,  were  sureties. 
On  said  day  there  was  due  from  the  firm  to  the  county  the  sum  of 
$4,180.09    on  account  of  deposits  theretofore  made,  and,  being  then 

1  80  N.  Ca.  26.3.  2  83  jr.  Ca.  383. 

8  A  surety  who  has  not  paid  has  no  legal  set-off.  Jones  v.  Wolcott,  15  Gray, 
541. -^Ed! " 


602  COSGKOVE   V.   McKASY.  [CHAP.  IIL 

insolvent,  said  copartners  duly  made  an  assignment,  in  accordance 
with  the  laws  of  this  State,  and  for  the  benefit  of  all  of  their  creditors, 
of  all  of  their  firm  and  individual  property  not  exempt  from  seizure 
and  sale  under  execution. 

Before  said  assignment,  June  1,  1893,  said  J.  R.  S.  and  J.  A.  Cos- 
grove  executed  and  delivered  their  promissory  note,  pajable  to  the 
order  of  said  E.  R.  Smith  &  Co.,  for  the  sum  of  $5,500,  payable  De- 
cember 1,  1893,  with  interest,  which  note  went  into  the  hands  of  the 
assignee  of  said  insolvents,  as  a  part  of  the  assets  of  their  estate. 
September  8,  1893,  the  petitioners,  as  sureties  upon  the  bond,  paid  to 
the  county  treasurer  the  sum  of  $2,090.05,  and  other  sureties  then  and 
there  paid  the  residue  of  the  amount  due  to  the  county.  They  then 
petitioned  the  District  Court  to  adjudge  that  the  amount  so  paid  by 
them  on  account  of  the  bond  be  declared  a  valid  set-off  as  against  the 
note,  and  to  direct  the  assignee  to  surrender  up  the  note  on  being  paid 
the  balance  found  due  thereon. 

Upon  an  answer  made  by  the  assignee,  a  trial  was  had,  and  the 
court  found  the  facts  as  before  stated.  It  also  found  that  the  note 
was  given  for  money  loaned  by  Smith  &  Co.  to  J.  R.  S.  Cosgrove,  that 
said  J.  A.  Cosgrove  signed  the  note  as  surety  only,  and  that  the  rela- 
tion still  existing  between  the  makers  of  the  note  was  that  of  principal 
and  suret}'.  As  conclusions  of  law,  the  court  adjudged  that  J.  R.  S. 
Cosgrove  was  entitled  to  have  the  sum  of  $1,045.03,  paid  by  him  to  the 
county,  applied  upon  the  note  as  a  payment,  —  the  assignee  being 
ordered  to  apply  that  sum, — and  that  J.  A.  Cosgrove  was  not  en- 
titled to  have  any  amount  whatsoever  applied.  Both  parties  appealed, 
—  the  Cosgroves,  from  that  part  of  the  order  which  denied  the  right 
of  set-off  to  J.  A.  Cosgrove,  the  suret}'  upon  the  note  as  well  as  upon 
the  bond,  and  the  assignee,  from  that  part  which  ordered  the  appli- 
cation of  the  amount  paid  by  J.  R.  S.  Cosgrove,  principal  upon  the 
note  and  surety  upon  the  bond.  Both  appeals  were  argued  and  sub- 
mitted together. 

The  court  below  was  clearly  right  in  holding  that  the  principal 
debtor  upon  the  note  was  entitled  to  an  offset,1  but  it  was  in  error 
when  it  ordered  the  same  to  the  amount  of  $1,045.03,  which  was  one- 
fourth  of  the  amount  due  to  the  county.  There  was  merely  an  allega- 
tion in  the  petition  that  the  Cosgroves  had  paid  the  sum  of  $2,090.05, 
or  one-half  of  the  amount  due  on  the  face  of  the  bond  when  the  as- 
signment was  made,  instead  of  two-fifths,  the  share  they  should  have 
paid.     The  rule  is  that,  where  two  or  more  sureties  stand  in  the  same 

1  Set-off  by  surety  against  assignee  of  principal.  —  Merwin  v.  Austin,  58  Conn.  22  ; 
Barney  v.  Grover,  28  Vt.  .391,  Accord. 

Adams  v.  Rodarmel,  19  Ind.  339;  "Walker  v.  McKay,  2  Met.  (Ky.)  294;  Ingalls 
v.  Bennett,  6  Me.  79  ;  Storts  v.  George,  150  Mo.  1  ;  Nettles  v.  Huggins,  8  Rich.  273, 
Contra. 

In  Kinsey  v.  Ring,  83  Wis.  536,  the  surety's  right  of  set-off  against  the  assignee  of 
the  principal  was  denied  because,  at  the  time  of  the  assignment,  the  obligation  of  the 
surety  had  not  matured.  —  Ed. 


SECT.  IV.]  baily's  estate.  603 

relation  to  a  principal,  they  must  bear  the  burdens  of  the  position 
equally.  There  were  five  sureties,  and  if  there  was  equality  of  pay- 
ment, as  there  should  have  been,  each  of  the  Cosgroves  would  have 
paid  one-fifth  of  the  debt,  or  $836.02.  In  no  event  would  J.  R.  S.  Cos- 
grove  be  entitled  to  offset  more  than  the  amount,  prima  facie,  of  his 
share  of  the  sum  due  upon  the  bond,  without  some  further  allegation 
in  his  petition  explanatory,  and  showing  the  necessity,  of  such  pay- 
ment ;  for  instance,  the  insolvency  of  another  surety.1 

We  have  stated  that  the  court  was  right  in  holding  that  the  peti- 
tioner last  mentioned  was  entitled  to  an  offset.  The  case  of  St.  Paul 
&  M.  Trust  Co.  y.  Leek2  is  authority  upon  this  point.  The  later 
cases  cited  by  counsel  for  the  assignee  —  Northern  Trust  Co.  v.  Healy  8 
and  Northern  Trust  Co.  v.  Hiltgen4 — have  no  bearing  on  the  claim  of 
offset  made  by  J.  R.  S.  Cosgrove. 

And  the  Court  was  also  right  when  it  held  that  J.  A.  Cosgrove  was 
not  entitled  to  offset  any  part  of  the  amount  paid  by  him  as  a  surety 
upon  the  bond,  as  against  the  note,  for  the  reason  that  it  was  not  his 
note.  He  was  not  the  principal  debtor,  but  a  surety  only,  and  the 
doctrine  of  equitable  set-off,  invoked  and  relied  on  by  him,  cannot  be 
extended  so  far  as  to  allow  a  surety  for  a  debt  due  to  an  assignee  in 
insolvency  to  offset,  as  against  it,  the  amount  of  an  obligation  which 
he  has  been  obliged  to  pa}'  as  a  surety  for  the  assignor.  The  latter  is, 
in  every  respect,  a  debt  due  to  the  surety  from  the  estate ;  but  the 
former  is  not,  strictly  speaking,  or  for  the  purpose  of  invoking  the 
equitable  powers  of  the  Court,  a  debt  due  from  the  surety.  It  is  in 
fact  the  debt  of  his  principal,  J.  R.  S.  Cosgrove.  A  surety  cannot  be  al- 
lowed to  have  reimbursement  for  the  loss  he  sustained  as  a  surety7  on 
the  bond  by  offsetting  the  amount  of  his  loss  as  against  a  debt  actually 
due  from  J.  R.  S.  Cosgrove. 

The  order  appealed  from  must  be  modified  so  as  to  reduce  the 
amount, of  offset  allowed  to  $836.02.  In  all  other  respects  it  is  af- 
firmed. 


BAILY'S   ESTATE.     JACKSON'S   APPEAL. 

In  the  Supreme  Court,  October  2,  1893. 

[Reported  in  156  Pennsylvania  Reports,  634.] 

Mr.  Justice  McCollum.s  Richard  B.  Baily  and  Francis  Worth 
were  co-sureties  jointly  and  severally  liable  for  the  default  of  their  prin- 
cipal, and  in  their  relation  to  each  other  each  was  a  principal  for  one- 
half  the  amount  recoverable  for  such  default,  and  a  surety  for  one-half 

1  As  in  Wayland  v.  Tucker,  4  Grat.  267.  —  Ed. 

2  57  Minn.  87,  58  N.  W.  826.  3  61  Minn.  230,  63  N.  W.  625. 

4  62  Minn.  361,  64  N.  W.  909. 

5  Only  the  opinion  of  the  Court  is  given.  —  Ed. 


604  baily's  estate.  [chap.  hi. 

of  it.  If  either  was  compelled  to  pay  the  whole  amount,  his  rights  and 
remedies  against  his  co-surety  for  the  half  were  the  same  as  against 
their  principal  for  the  whole.  Croft  v.  Moore  ; x  Mosier's  Appeal ; 2 
Hess's  Estate  ; 3  and  Wright  v.  Grover  &  Baker  S.  M.  Co.,  to  use  of 
Smith.  If  a  surety  gives  a  legacj'  to  his  principal  the  latter  cannot  re- 
cover it  from  the  estate  of  the  former  until  he  has  satisfied  or  furnished 
indemnity  against  the  demand  for  which  the  testator  was  his  surety. 
Ross  v.  McKinney.4  If  the  debt  of  the  principal  has  been  paid  by  the 
surety  or  his  estate,  such  payment  ma}'  be  relied  on  to  satisfy  or  re- 
duce the  amount  of  the  legacy,  and  this  is  so,  although  the  payment 
was  made  03-  the  estate  after  proceedings  for  the  recovery  of  the  legacy 
were  instituted.  Beaver  v.  Beaver.5  It  is  clear,  therefore,  that  in  a 
proceeding  by  Worth  for  the  collection  of  the  legacy  to  which  he  was 
entitled  under  and  by  virtue  of  the  will  of  Richard  B.  Baily,  the  estate 
could  deduct  therefrom  the  amount  it  was  compelled  to  pay  by  reason 
of  his  default  as  the  testator's  co-surety.  It  was  thought,  however, 
by  the  learned  Court  below,  that  as  Baker  purchased  the  legacy  before 
the  payment  was  made  by  the  estate,  such  payment  was  not  available 
as  a  partial  defence  to  his  claim  for  the  whole  of  it,  and  in  accordance 
with  this  view,  it,  less  the  collateral  inheritance  tax,  was  awarded  to 
him. 

In  support  of  this  decree,  it  is  urged  that  when  Worth  transferred 
the  legacy  the  estate  had  no  demand  against  him  which  was  applicable 
to  it,  nor  equity  for  the  protection  of  which  the  executors  could  with- 
hold from  him  the  whole  or  a  part  of  it  until  indemnity  was  furnished 
or  his  liability  as  co-surety  was  discharged.  We  think  this  contention, 
to  the  extent  that  it  denies  the  existence  of  such  an  equity  in  the  estate 
at  the  time  of  the  transfer,  is  unsound.  It  fails  to  give  proper  effect  to 
the  relation  between  co-sureties,  and  to  duly  consider  the  rights  and 
liabilities  which  spring  from  it.  Prima  facie  this  relation  is  established 
between  two  persons  when  they  unite  with  a  third  in  an  obligation  for 
the  payment  of  his  debt,  and  b}r  this  act  they  become,  as  we  have  al- 
ready seen,  his  sureties  for  the  whole  debt,  and  sureties  of  each  other 
for  half  of  it.  If  their  principal  fails  to  pay  his  debt  and  the  co-sureties 
pay  it  in  equal  proportions,  he  becomes  their  debtor  and  their  liabilities 
to  each  other  as  such  are  discharged,  but  if  one  of  them  is  compelled 
to  pay  the  whole  debt  he  is  entitled  to  contribution  from  his  co-surety, 
and  may  enforce  it  b}r  an  action  of  assumpsit,  or  by  subrogation  to 
the  rights  of  the  creditor.  While  the  action  for  it  cannot  be  maintained 
until  default  and  payment  as  above  stated,  it  is  nevertheless  true  that 
the  right  to  have  and  the  liability  to  make  contributions  inhere  in  the 
transaction  by  which  the  sureties  were  jointly  and  severally  bound  for 
the  debt  of  their  principal.  In  Agnew  v.  Bell,6  Kennedy,  J.,  in  deliv- 
ering the  opinion  of  the  Court,  said  :  "  It  is  certainly  too  well  established 

1  9  Watts,  451.  2  56  Pa.  76. 

3  69  Pa.  272.  •     4  2  Rawle,  227. 

5  23  Pa.  167.  6  4  Watts,  31. 


SECT.  IV.]  baily's  estate.  605 

now  to  be  questioned,  that  where  an}'  one  or  more  of  those  who  are 
co-sureties  have  had  to  pay,  as  such,  the  debt  of  their  principal  or  any 
part  thereof,  and  he  is  unable  to  reimburse  it,  the  loss  arising  therefrom 
must  be  borne  equally  by  all  of  them.     Hence  has  arisen  the  right  to 
contribution.      This    right  has   been  considered  as  depending  rather 
upoifa  principle  of  equity  than  upon  contract ;  but  it  may  well  be  con- 
sidered as  resting  alike  on  both  for  its  foundation ;  for,  although  gen- 
erally there  is  no  express  agreement  entered  into  between  joint  sureties, 
yet  from  the  uniform  and  almost  universal  understanding  which  seems 
to  pervade  the  whole  community  that  from  the  circumstance  alone  of 
their  agreeing  to  be  and  becoming  accordingly  co-sureties  of  the  prin- 
cipal, the}-  mutually  become  bound  to  each  other  to  divide  and  equalize 
any  loss  that  may  arise  therefrom  to  either  or  any  of  them,  it  may  with 
great  propriety   be  said  that   there    is    at  least  an  implied   contract. 
Deering  v.  Winchelsea ;  Craythorne  v.   Swinburne.     This  liability  be- 
tween sureties  to  contribution  in  case  of  loss  through  the  inability  of 
their  principal  to  pay,  being  known  to  them  at  the  time  of  their  becom- 
ing sureties,  may  well  be  considered  a  great  if  not  the  main  induce- 
ment  in   many  instances    to   their    becoming  such."     It   is   therefore 
incorrect  to  say  that  the  estate  before  payment  of  the  principal's  debt 
had  no  equity  against  the  testator's  co-surety  and  legatee  which  would 
enable  it  to  withhold  payment  of  the  legacy  until  it  was  indemnified  or 
the  liability  of  such  co-surety  to  pay  one-half  of  that  debt  in  case  of 
the  principal's  inability  to  pay  it  was  discharged.     It  clearly  had  such 
an  equity,  which  in  a  suit  by  Worth  for  the  legacy  would  have  been,  to 
the  extent  mentioned,  available  as  a  defence.     This  equity  was  not  de- 
stroyed nor  the  defence  founded  upon  it  affected  by  the  assignment  of 
the  legacy  to  Baker.     He  acquired  by  his  purchase  such  right  to  the 
legacy  as  his  assignor  had,  and  this  right,  as  we  have  seen,  was  quali- 
fied by  the  estate's  equity  against  the  latter  as  co-surety  of  the  testator. 
The  learned  counsel  for  the  appellee   concedes  in  his  printed  argument 
that  "  if  the  decedent  was  surety  for  Worth,  and  that  relation  existed 
at  the  time  of  the  transfer,  the  legacy  would  be  abatable  by  the  amount 
subsequently  paid  by  the  estate,  or  the  legacy  might  be  held  to  await 
the  determination  of  the  liability  of  the  estate."     It  seems  to  us  that 
this  concession  is  fatal  to  the  appellee's  claim  because,  in  the  relation 
of  co-sureties  established  between  Baily  and  Worth,  there  was  an  im- 
plied promise  by  each  to  the  other  to  pay  one-half  of  their  principal's 
debt  in  case  of  his  inability  to  pay  it,  and  as  they  were  jointly  and 
severally  bound  for  such  debt  their  relation  to  each  other  for  half  of  it 
was  that  of  principal  and  surety. 

Decree  reversed  and  record  remitted  to  the  court  below,  with  instruc- 
tions to  enter  a  decree  in  accordance  with  this  opinion.1 

1  Wayland  v.  Tucker,  4  Grat.  267,  Accord.  —  Ed. 


[chap.  III. 
^ 1 


isp: 

eis6j/,  657.] 


<3    -** 


-&*-&- 


L/606  '  LOOSEMORE   V.    RADFOKD. 

^       LOOSEMORE  v.  RA£)FORD 

^*  W  THE  '^XME^TH^f^KILl^'  XML^ \ 

Covenant.  /Toe  declaration  stated,  tb^r  whereas  the  defendant,  be- 
fore and  at  the  time  of  the  making  of  the  indenture  hereinafter  men- 
tioned, was  indebted  to  H.  D.  and  G.  B.  in  the  sum  of  £400,  secured  to 
them  by  a  promissory  note  made  by  the  defendant,  and  by  the  plaintiff 
as  the  defendant's  surety,  and  in  £95  5s.  9d.  for  interest  thereon ;  and 
thereupon,  by  a  certain  indorsement  [instrument?]  bearing  date,  &c, 
made  between  the  defendant  of  the  one  part,  and  the  plaintiff  of  the 
other  part,  the  defendant  covenanted  with  the  plaintiff,  that  he  the 
defendant  would  well  and  truly  pay  to  the  said  H.  D.  and  G.  B. 
the  sum  of  £400,  with  interest  as  aforesaid,  on  the  13th  day  of 
August  then  next.  Breach,  that  the  defendant  did  not  pay  to  the 
said  H.  D.  and  G.  B.,  or  either  of  them,  the  said  sum  of  £400  and 
interest,  or  an}'  part  thereof,  on  the  said  13th  day  of  August,  or  at 
any  other  time. 

The  defendant  pleaded  payment  into  court  of  Is.  and  no  damages 
ultra,  which  latter  averment  was  traversed  by  the  replication. 

At  the  trial  before  Lord  Abinger,  C.  B.,  at  the  Middlesex  Sittings 
after  Hilary  Term,  it  appeared  that  the  defendant  being  in  embar- 
rassed circumstances,  the  payees  had  informed  the  plaintiff  that  they 
should  hold  him  liable  upon  the  note,  wmereupon  he  obtained  from  the 
defendant  the  deed  mentioned  in  the  declaration.  The  note  was  still 
unpaid  at  the  time  of  the  trial :  and  it  was  objected  that  the  plaintiff 
was  therefore  entitled  to  recover  nominal  damages  only.  The  Lord 
Chief  Baron  overruled  the  objection,  and  under  his  direction  the  plain- 
tiff had  a  verdict ;  damages,  £500. 

Erie  now  moved  for  a  new  trial,  on  the  ground  of  misdirection. 
The  plaintiff,  not  having  aetualby  paid  an}7  money  on  the  note,  has 
suffered  no  substantial  injury,  and  is  entitled  to  nominal  damages  only. 
The  money  might  have  been  paid  by  the  defendant  after  the  day  of 
payment  mentioned  in  the  covenant.  There  is  nothing  to  prevent  the 
payees  of  the  note  from  suing  the  defendant,  in  which  case  he  will  hava 
to  pay  the  money  twice  over. 

Parke,  B.  I  think  there  ought  to  be  no  rule.  This  is  an  absolute 
and  positive  covenant  by  the  defendant  to  pay  a  sum  of  money  on  a 
day  certain.  The  money  was  not  paid  on  that  day,  nor  has  it  been 
paid  since.  Under  these  circumstances,  I  think  the  jury  were  war- 
ranted in  giving  the  plaintiff  the  full  amount  of  the  money  due  upon 
the  covenant.  If  any  money  had  been  paid  in  respect  of  the  note  since 
the  day  fixed  for  the  payment,  that  would  relieve  the  plaintiff  pro  tanto 
from  his  responsibility.  The  defendant  may  perhaps  have  an  equity 
that  the  money  he  may  pay  to  the  plaintiff  shall  be  applied  in  discharge 


SECT.  IV.]  BEARDMORE  V.    ORUTTENDEN.  607 

of  his  debt ;  but  at  law  the  plaintiff  is  entitled  to  be  placed  in  the  same 
situation  under  this  agreement,  as  if  he  had  paid  the  money  to  the 
payees  of  the  bill. 

Alderson,  B.  The  question  is,  to  what  extent  has  the  plaintiff  been 
injured  by  the  defendant's  default?  Certainly  to  the  amount  of  the 
money  that  the  defendant  ought  to  have  paid  according  to  his 
covenant.  The  case  resembles  that  of  an  action  of  trover  for  title- 
deeds,  where  the  jury  may  give  the  full  value  of  the  estate  to  which 
they  belong  by  way  of  damages,  although  they  are  generally  reduced 
to  40s.  on  the  deeds  being  given  up. 

Gurney,  B.,  and  Rolfe,  B.,  concurred.  Rule  refused.1 


BEARDMORE  v.  CRUTTENDEN. 
In  Chancery,  before  Lord  Thurlow,  C,  Hilary  Term,  1791. 

[Reported  in  Cooke,  Bankrupt  Laws  (8th  edition),  232.] 

Bill  by  surety  in  a  bond  against  the  obligee,  who  is  a  mere  trustee, 
and  his  cestui  que  trust,  to  compel  them  to  prove  under  the  commission 
against  the  obligor.  Injunction  for  want  of  an  answer,  and  upon  mo- 
tion to  dissolve  it  the  defendants  were  ordered  to  prove  upon  plaintiff's 
bringing  money  into  court.2 

1  Robinson  v.  Robinson,  24  Law  Times,  112;  Lathrop  v.  Atwood,  21  Conn.  117 
(Waite,  J.,  diss.)  ;  Gage  v.  Lewis,  68  111.  604  ;  Devol  v.  Mcintosh,  23  Ind.  529;  Lee  v. 
Burrell,  51  Mich.  132 ;  Furnas  v.  Durgin,  119  Mass.  500,  508  (semble)  ;  Locke  v.  Homer, 
131  Mass.  93,  96  (semble)  ;  Ham  v.  Hill,  29  Mo.  275;  Salmon  Falls  Bank  v.  Leyser, 
116  Mo.  51  ;  Sparkman  v.  Gove,  44  N.  J.  252,  255-256  (semble) ;  Poor  v.  Johnson,  17 
Johns.  239,  479  (but  see  Powell  v.  Smith,  8  Johns.  249)  ;  Wilson  v.  Stilwell,  9  Oh.  St. 
467,  Accord. 

Similarly  the  grantee  of  an  estate  who  assumes  to  pay  a  debt  ofthegrantor  secured 
by  a  mortgage  upon  the  property  conveyed  is  liable  to  the  grantor  for  the  full  amount 
of  the  debt,  if  he  fails  to  pay  the  mortgagee  when  the  debt  matures. Let h bridge  v. 
Mytton,2  B.  k.  Ad.  VV2  ;  Foster  v.  Stother,  42  Conn.  27T;  MaloTt  v.  Goff,  96  Ind.  496 ; 
Baldwin  v.  Emery,  89  Me.  496  ;  Furnas  v.  Durgin,  119  Mass.  500 ;  Locke  v.  Homer,  131 
Mass.  93 ;  Reed  v.  Paul,  131  Mass.  129 ;  Rice  v.  Sanders,  152  Mass.  108  ;  Sparkman  v. 
Gove,  44  N.  J.  252. 

In  Robinson  v.  Robinson,  supra,  Campbell,  C.  J.,  said :  "  It  is  true  that  the  defend- 
ant incurs  the  periljjf  having  to  pay  twice  ;  but  that  arises  from  his  own  default  in  not 
performing  his  covenant."  Erie,  J.,  in  the  same  case,  said :  "  I  would  observe  that  in 
Loosemore  v.  Radford  the  point  of  hardship  upon  the  defendant  was  fully  before  the 

Court ;  because  they  throw  out  that  the  plaintiff  would  hold  the  money  as  trustee  for  t 

the  defendant,  who  might,  perhaps,  have  a  remedy  in  equity  against  any  misapproj>ria-  V^ 
tion  of  it."     There  are  similar  suggestions  of  possible  equitable  relief  for  the  principal 
in  several  of  the  cases  cited  in  the  first  paragraph  of  this  note  and  also  in  Carman  v. 
Noble,  9  Barr,  366. 

The  doctrine  of  the  principal  case  is  criticised  in  Sedgwick,  Damages  (8th  ed.), 
§790.  — Ed. 

2  Wright  v.  Simpson,  6  Ves.  714,  733  (semble)  ;  Ex  parte  Rushforth,  10  Ves.  414 
(semble);   Ex  parte  Houston,  2  Gl.  &  J.  36,  42-43  (semble);  Jackson  v.  Magee,  3  Q.  B. 


608  HAYES   V.   WARD.  [CHAP.  III. 


HAYES   v.  WARD  and  Others. 
In  Chancery,  New  York,  before  James  Kent,  C,  September  6,  1819, 

[Reported  in  4  Johnson's  Chancer y,  123.] 

The  Chancellor.1  It  appears  from  the  case  that  the  defendant 
Beach  is  the  principal  debtor  to  the  defendant  Ward,  on  the  note  in 
question,  and  that  the  plaintiff,  who  indorsed  it,  stands  in  the  character 
of  surety.  The  plaintiff  originally  indorsed  the  note  without  consid- 
eration, for  the  benefit  of  the  drawers,  W.  &  H.,  and  the  defendant  B. 
took  it  from  the  drawers,  in  consideration  of  lots  agreed  to  be  sold  to 
one  of  the  makers,  or  of  a  partnership,  into  which  one  of  them  was  to 
be  admitted.  This  consideration  failed,  for  the  lots  were  not  sold,  nor 
the  partnership  entered  into.  As  between  those  original  contracting 
parties,  the  note  was  without  consideration,  and  could  not  have  been 
enforced.  When  the  note  was  passed  by  the  defendant  B.  to  the  de- 
fendant W.  the  dealing  was  exclusively  between  these  two  defendants, 
and  the  plaintiff's  name  remained  on  the  note,  as  indorser,  without  any 
consideration  for  his  indorsement.  We  have  no  direct  evidence  that 
the  fact  of  his  being  a  naked  guarantor,  or  surety,  without  interest,  was 
known  to  the  defendant  W. ,  when  he  received  this  and  the  other  notes 
from  B.,  yet  the  facts  are  sufficient  to  justify  such  an  inference.  The 
note  was  not  received  by  the  defendant  W.  in  the  ordinary  course  of 
commercial  business.     It  was  taken  upon  the  sale  of  bank  shares ;  and 

48,  56  (semble) ;  Wilds  v.  Attix,  4  Del.  Ch.  253,  258  [semble) ;  Wright  v.  Austin,  56 
Barb.  13,  17  {semble),  Accord. 

In  Wright  v.  Simpson,  supra,  Lord  Eldon  said:  ••  As  to  the  case  of  principal  and 
surety,  in  general  cases  I  never  understood,  that  as  between  the  obligee  and  the  surety 
these  was  an  obligation  of  active  diligence  against  the  principal.  If  the  obligee  begins 
to  sue  the  principal,  and  afterwards  give  time,  there  the  surety  has  the  benefit  of  it. 
But  the  surety  is  a  guarantee ;  and  it  is  his  business  to  see,  whether  the  principal  pays, 
and  not  that  of  the  creditor.  The  holder  of  the  security,  therefore,  in  general  cases 
may  lay  hold  of  the  surety  ;  and  till  very  lately  even  in  circumstances  under  which 
the  surety  would  not  have  had  the  same  benefit  that  the  creditor  would  have  had. 
But  in  late  cases,  provided  there  was  no  risk,  delay,  or  expense,  as  in  the  case  put,  of 
the  money  in  the  next  room,  indemnifying  against  the  consequences  of  risk,  delay,  and 
expense,  the  surety  has  a  right  to  call  upon  the  creditor  to  do  the  most  he  can  for  his 
benefit ;  and  the  latter  cases  have  gone  farther.  It  is  now  clear,  that  if  the  surety 
deposits  the  money,  and  agrees  that  the  creditor  shall  be  at  no  expense,  he  may  com- 
pel the  creditor  to  prove  under  a  commission  of  bankruptcy,  and  give  the  benefit  of 
an  assignment  in  that  way.    That  case,  therefore,  perhaps  does  not  bear  much  upon  it. 

"  So  the  case  of  a  bankrupt  acceptor  and  the  holder  and  drawer  of  a  bill  would 
admit  the  same  answer  as  the  case  of  the  bankrupt ;  for  the  holder  may  be  compelled 
to  prove  for  the  benefit  of  the  drawer  ;  if  not,  the  drawer  sues  upon  a  contract,  th# 
terms  of  which  flow  out  of  the  original  contract,  of  the  benefit  of  which  he  could  na 
be  deprived  under  those  circumstances."  — Ed. 

1  Only  the  opinion  of  the  Court  is  given.  —  Ed. 


SECT.  IV.]  HAYES    V.   WARD.  609 

instead  of  relying  upon  the  credit  of  the  prior  parties  to  the  note,  ac- 
companied with  the  indorsement  of  the  defendant  B.,  he  took  a  bond 
and  mortgage  from  B.,  as  eventual  security  for  the  payment  of  the  note. 
This  and  the  other  notes  were  sold  by  B.  to  the  defendant  W.,  almost 
immediately,  after  they  were  drawn,  and  the  defendant  W.  admits 
that  they  were  received  by  B.  from  one  of  the  makers  ;  nor  does  he 
deny  a  knowledge  of  that  fact,  at  the  time  he  took  the  bond  and  mort- 
gage from  B. 

The  knowledge  of  that  fact  was  sufficient  notice  to  him,  that  the 
plaintiff  was  a  voluntary  indorser,  for  the  accommodation  of  the 
makers  ;  and  the  defendant  W.  appears,  from  the  pleadings  and  proofs, 
to  be  justly  chargeable  with  knowledge,  at  the  time  he  took  the  mort- 
gage, that  the  plaintiff  was  a  gratuitous  indorser.  The  plaintiff  is  then 
entitled,  in  equity,  to  all  the  privileges  with  which  a  surety  is  clothed, 
not  onty  as  it  respects  the  defendant  B.,  but  as  it  respects  the  defendant 
Ward,  the  present  holder.  I  shall,  therefore,  in  the  further  considera- 
tion of  this  case,  assume  the  fact  as  clearly  true,  and  well  established, 
that  between  the  plaintiff  and  the  defendants,  W.  and  B.,  the  relation- 
ship existed  of  creditor  on  the  one  part,  and  principal  debtor  and  surety 
on  the  other.  This  relationship  was  coeval  with  the  bond  and  mort- 
gage, and  the  parties  to  this  suit  are  entitled  to  all  the  rights,  and 
bound  b}'  all  the  duties,  resulting  from  that  relation. 

The  grave  and  difficult  question  then  presents  itself,  whether  the 
defendant  W.  ought  to  be  required  to  resort,  in  the  first  instance,  to 
the  mortgage  which  he  took  from  B.,  and  which  he  says  is  a  valid  lien, 
and  sufficient  to  satisfy  the  note? 

It  is  alleged  that  the  mortgage  security  is  destroyed  by  the  usury, 
and  that  it  would  be  unavailing  in  the  hands  of  the  plaintiff,  if  he  were 
to  pay  the  note,  and  have  the  bond  and  mortgage  assigned  to  him  (and 
which,  as  suret}',  he  would  have  a  right  to  demand)  by  way  of  substitu- 
tion and  indemnity.  It  is  further  alleged,  that  if  the  defendant  W.  has 
destroyed  the  validity  of  his  own  security  taken  from  the  principal 
debtor,  he  cannot  have  recourse  to  the  plaintiff,  because  he  has  volun- 
tarily disabled  himself  from  affording  to  the  plaintiff,  as  surety,  the 
requisite  substitution.  The  right  of  substitution  is  a  valuable  right 
belonging  to  a  suret}-,  and  the  creditor  must  do  nothing  to  impair  it. 

There  would  be  much  equity  in  the  plaintiff's  case,  if  it  should  finally 
appear  that  the  defendant  W.  had  by  his  own  act  rendered  the  adequate 
security  which  he  took  from  the  principal  debtor,  illegal  and  void.  The 
very  taking  of  that  security  by  him  may  have  excited  confidence  in  the 
surety,  and  lulled  him  to  sleep,  and  deprived  him  of  taking  other  and 
sound  security,  for  his  own  eventual  responsibilit}',  until  it  was  too 
late,  and  the  rights  of  third  persons  had  intervened.  This  considera- 
tion renders  it  an  act  of  benevolence  and  equity,  and  imposes  it  as  an 
obligation  upon  the  creditor  who  takes  security  from  the  principal 
debtor,  to  take  it  fairly  and  lawfully,  and  to  hold  it  impartially  and 
justly.     According  to  the  doctrine  of  the  civil  law,  the  surety  may,  per 

39 


610  HAYES   V.    WAKD.  [CHAP.  III. 

exceptionem  ccclendarum  action  inn,  bar  the  creditor  of  so  much  of  his 
demand  as  the  surety  might  have  received,  by  an  assignment  of  his  lien 
and  right  of  action  against  the  principal  debtor ;  provided,  the  creditor 
had,  by  his  own  unnecessary  or  improper  act,  deprived  the  surety  of 
that  resource.  The  surety,  by  his  very  character  and  relation  of  surety, 
has  an  interest  that  the  mortgage  taken  from  the  principal  debtor 
should  be  dealt  with  in  good  faith,  and  held  in  trust,  not  only  for  the 
creditor's  security,  but  for  the  surety's  indemnity.  A  mortgage  so 
taken  by  the  creditor  is  taken  and  held  in  trust,  as  well  for  the  sec- 
ondary interest  of  the  surety,  as  for  the  more  direct  and  immediate 
benefit  of  the  creditor,  and  the  latter  must  do  no  wilful  act,  either  to 
poison  it,  in  the  first  instance,  or  to  destroy  or  cancel  it,  afterwards. 
These  are  general  principles  founded  in  equity,  and  are  contained  in 
the  doctrines  laid  down  in  Pothier's  Treatise  on  Obligations,  No.  496, 
519,  520,  to  which  reference  has  been  made  in  the  former  decisions  of 
this  court.     Cheesebrough  v.  Millard  ;  x  Steevens  v.  Cooper.2 

This  doctrine  does  not  belong  merely  to  the  civil-law  system.  It  is 
equally  a  settled  principle  in  the  English  chancery,  that  a  surety  will 
be  entitled  to  every  remedy  which  the  creditor  has  against  the  principal 
debtor,  to  enforce  eveiy  security,  and  to  stand  in  the  place  of  the  cred- 
itor, and  have  his  securities  transferred  to  him,  and  to  avail  himself  of 
those  securities  against  the  debtor.  This  right  of  the  surety  stands  not 
upon  contract,  but  upon  the  same  principle  of  natural  justice,  upon 
which  one  suret}7  is  entitled  to  contribution  from  another.  2  Ves.  622  ; 
1  Wightwick,  2-6  ;  1  Desaussure,  409;  2  Madd.  Ch.  Rep.  437  ;  14  Ves. 
162;  10  Ves.  412;  11  Ves.  22.8 

But  the  application  of  these  principles  is  not,  necessarily,  the  question, 
at  present.  If  the  defendant  W.  should  be  required  to  prosecute  pre- 
viously upon  his  mortgage,  and  he  should  be  defeated  in  that  remedy, 
by  the  invalidity  of  the  mortgage,  arising  from  his  own  illegal  act,  and 
should  then  recur  back  to  the  plaintiff,  it  would  be  in  time  to  examine 
whether  this  case  fell  within  the  range  of  the  doctrine  to  which  I  have 
referred.  The  only  point  now  to  be  settled  is,  whether  the  defendant 
W.  shall  be  stayed  in  his  suit  at  law,  until  he  has  tried  his  remedy 
against  the  mortgaged  premises. 

I  am  not  aware  that  there  is  any  general  rule  in  Chancery,  that  the 
creditor  must  look  to  the  principal  debtor,  and  exhaust  his  remedy 
against  him,  before  he  can  be  permitted  to  resort  to  the  surety.  The 
general  language  in  the  books  and  the  practice  have  been  otherwise, 
and  the  surety  has  been  considered  (without  any  formal  adjudication 
upon  the  point,  and,  perhaps,  without  any  examination  of  it  upon 
principle)  as  amenable,  in  ordinary  cases,  to  the  creditor,  in  the  first 
instance,  though  the  creditor  may  have  taken  ample  security  from  the 
principal  debtor.     The  creditor  has  usually  called  on  the  surety  at  his 

i  1  Johns.  Ch.  Rep.  414. 

a  1  Johns.  Ch.  Rep.  4.30,  431. 

8  Vide  Clason  v.  Morris,  10  Johns.  Rep.  524,  s.  p. 


SECT.  IV.]  HAYES   V.    WARD.  611 

election,  and  left  him  to  resort  to  the  principal  debtor  for  his  indemnity, 
after  he  has  paid  the  debt,  and  after  he  has  been  clothed,  by  substitu-. 
tion,  with  all  the  rights  and  securities  of  the  creditor.  "The  holder  of 
the  security,  therefore,  in  general  cases,"  says  Lord  Eldon,  in  Wright 
v.  Simpson,1  "  may  lay  hold  of  the  security  :  and  till  very  lately,  even 
in  circumstances,  under  which  the  security  would  not  have  had  the  same 
benefit,  that  the  creditor  would  have  had."  But  in  late  cases,  and 
under  particular  circumstances,  Lord  Eldon  admits,  that  the  surety  has 
a  right  to  call  upon  the  creditor  to  do  the  most  he  can  for  his  benefit. 

It  is  now  considered  as  a  settled  rule  (see  the  cases  referred  to  in 
King  v.  Baldwin2)  that  a  surety  may  resort  to  chancery,  if  he  appre- 
hends danger  from  the  creditor's  delay,  and  compel  the  creditor  to  sue 
the  principal  debtor,  though,  probably,  he  must  indemnify  the  creditor 
against  the  consequences  of  risk,  delay,  and  expense.  This  is  what 
Lord  Eldon  supposes  in  the  case  already  referred  to.  As  early  as  the 
time  of  Lord  Keeper  North  (1  Vera.  190),  it  was  held,  that  equity  would 
compel  the  principal  debtor  to  pay  the  debt,  after  it  had  become  due, 
at  the  instance  of  the  suretj',  and  though  the  latter  had  not  been  sued, 
for  it  was  "  unreasonable  that  a  man  should  always  have  such  a  cloud 
hanging  over  him."  It  seems,  also,  to  be  now  considered  (2  Fonb.  802, 
n.  i ;  17  Ves.  517,  520)  as  the  right  of  a  surety  to  call  upon  a  creditor 
having  another  fund,  which  the  surety  cannot  make  available,  and  to 
require  him  to  resort  to  that  fund  in  the  first  instance  and  exhaust  it. 
And  it  is  now  settled,  that  the  suret}r  may  require  the  creditor,  upon  a 
proper  indemnity,  to  go  and  prove  his  bond  under  a  commission  of 
bankruptcy  of  the  principal  debtor,  and  the  creditor  will  be  a  trustee 
for  the  dividends  to  the  surety  pa}ing  the  whole.  Beadmore  v.  Crut- 
tenden.  The  case  of  Wright  v.  Nutt,3  which  underwent  great  dis- 
cussion, and  which  was  much  questioned,  though  not  overruled,  by  Lord 
Eldon,  in  Wright  v.  Simpson,4  may  be  cited  for  the  principle,  that  there 
are  cases  in  which  a  creditor  ma}',  in  equity  and  good  conscience,  be 
compelled  to  resort  to  a  particular  fund,  before  he  pursues  the  debtor 
personally.  One  circumstance  that  led  Lord  Thurlow,  Lord  Kenyon, 
and,  afterwards,  Lord  Rosslyn  to  that  decision,  was  that  the  creditor 
could  not  assign  the  benefit  of  the  fund  to  the  debtor.  It  is  easy  to  per- 
ceive that  such  a  principle  applies  with  much  greater  force  to  the  case 
of  a  surety,  and  to  a  fund  or  pledge,  created  at  the  time  of  the  original 
transaction  between  the  parties.  But  all  the  instances  to  which  I  have 
alluded  rmiy  be  considered  as  cases  of  a  special  nature  ;  they  do  not 
appear  to  establish  any  such  general  rule  as  that  derived  from  the  civil 
law,  requiring  the  principal  debtor  to  be  first  sued,  which  rule  prevails 
in  all  those  countries  where  the  civil  law  is  an  essential  part  of  the 
municipal  law  of  the  land. 

According  to  the  Roman  law,  in  use  before  the  time  of  Justinian,  the 

1  6  Ves.  734. 

2  2  Johns.  Ch.  Rep.  562,  and  3  Merivale,  579. 

8  1  H.  Black.  136,  3  Bro.  326.  *  6  Ves.  714. 


€12  HAYES   V.   WARD.  [CHAP.  III. 

creditor,  as  with  us,  could  apply  to  the  surety,  before  applying  to  the 
principal.  Jure  nostro  est  potestas  creditori,  relicto  reo,  eligendi 
fidejussores  (Code,  8,  41,  5);  and  the  same  law  was  declared  in  an- 
other imperial  ordinance  (Code,  8,  41,  19).  But  Justinian,  in  one 
of  his  novels  (Nov.  4,  c.  1,  entitled,  Ut  Creditores  primo  loco  con- 
veniant  principalem),  allowed  to  sureties  the  exception  of  discussion, 
or  beneficium  ordinis,  b}T  which  they  could  require,  that  before  they 
were  sued,  the  principal  debtor  should,  at  their  expense,  be  prose- 
cuted to  judgment  and  execution.  It  is  a  dilatory  exception,  and 
puts  off  the  action  of  the  creditor  against  the  surety,  until  the  remedy 
against  the  principal  debtor  has  been  sufficiently  exhausted.  This 
provision  in  the  novels  has  not  been  followed  in  the  States  and 
cities  of  Germany,  except  in  Pomerania  (Heinec.  Elem.  Jur.  Germ, 
lib.  2,  tit.  16,  s.  449,  450,  451,  465)  ;  but  it  has  been  adopted  in  those 
other  countries  in  Europe,  as  France,  Holland,  Scotland,  &c,  which 
follow  the  rules  of  the  civil  law  (Pothier's  Trait,  des  Ob.  No.  407-414; 
Code  Napoleon,  No.  2021,  2,  3;  Voet,  Com.  ad  Pand.  tit.  De  Fide- 
jussoribus,  46,  1,  14-20  ;  Hub.  Prselec.  lib.  3,  tit.  21,  s.  6  ;  Ersk.  Inst. 
504,  s.  61).  A  rule  of  such  general  adoption  shows  that  there  is 
nothing  in  it  inconsistent  with  the  relative  rights  and  duties  of  prin- 
cipal and  suret}',  and  that  it  accords  with  a  common  sense  of  justice, 
and  the  natural  equity  of  mankind. 

Without  meaning,  however,  to  lay  down  any  such  general  rule  (and 
for  which  I  have  not  seen  any  sufficient  authority  in  the  equity  juris- 
prudence of  England),  I  think  there  are  peculiar  circumstances,  in  this 
case,  to  call  for  a  continuation  of  the  injunction  upon  the  suit  at  law, 
until  the  defendant  W.  has  pursued  his  remedy  upon  the  mortgage. 
The  defendant  W.  has  shown  a  distrust  of  the  validity  of  the  mortgage 
by  his  demurrer,  and  by  omitting  to  prosecute  either  the  plaintiff,  or 
the  defendant  B.,  in  New  Jerse}',  where  the}-  all  reside,  and  where  no 
impediment  to  a  suit  appears  to  exist,  and  by  prosecuting  the  plaintiff, 
while  on  a  temporaiy  visit  to  New  York.  The  defendant  W.  ought  to 
be  obliged,  under  such  a  just  suspicion  of  his  case,  to  try  the  validity 
of  his  mortgage,  at  home,  and  not  to  compel  the  plaintiff  to  pay,  and 
then  turn  over  to  him  a  pledge,  which,  if  frail  and  insecure,  has  been 
rendered  so  by  his  own  illegal  act.  I  put  this  case  entirely  upon  the 
ground  of  the  allegation,  to  which  no  answer  has  been  given,  that  the 
mortgage  is  infected  with  usury,  and  would  be  useless  and  void,  if 
placed,  by  substitution,  in  the  hands  of  the  surety.  If  this  should  hap- 
pen to  be  the  case,  the  plaintiff,  on  paying,  might  be  deprived  of  all 
indemnity  from  his  principal,  by  reason  of  the  conduct  of  the  creditor. 

Nor  does  it  appear  to  be  necessar}-,  that  the  suit  at  law  should  pro- 
ceed to  judgment,  for  there  is  no  allegation  of  any  apprehension  of  the 
plaintiffs  insolvency,  and  the  mortgage,  if  good,  is  admitted  to  be  an 
ample  security. 

I  shall,  accordingly,  continue  the  injunction,  until  further  order,  to 
the  end  that  the  defendant  W.  ma}'  make  a  fair  experiment  with  his 


SECT.  IV.]  HOPPES   V.    HOPPES.  613 

remedy  upon  the  mortgage,  before  he  applies  for  leave  to  proceed  in  his 
suit  at  law  ;  and  the  question  of  costs,  and  all  other  questions  arising 
upon  this  case,  are  reserved  until  such  further  application.1 


HOPPES  and  Another  v.  HOPPES  and  Another. 
In  the  Supreme  Court,   Indiana,  November  Term,   1889. 

[Reported  in  123  Indiana  Reports,  397.] 

Olds,  J.2  It  is  next  objected  that  the  complaint  does  not  show  that 
the  appellees  had  any  defence  to  the  original  action.  This  objection, 
we  think,  is  not  tenable. 

As  appears  from  the  allegations  of  the  complaint,  Daniel  Hoppes 
was  the  principal  debtor,  and  his  wife,  Mariah,  was  his  surety  ;  they 
both  mortgaged  real  estate  for  the  payment  of  the  debt,  and  it  is  a 
well  settled  principle  that  when  the  principal  and  surety  both  mortgage 
property  for  the  payment  of  a  debt  of  the  principal,  the  surety  is  en- 
titled to  have  the  property  of  the  principal  first  sold  to  satisfy  the  debt 
(Brandt,  Sure,  and  Guar.,  section  204),  and  a  purchaser  of  the  property 

1  Right  of  surety  to  compel  creditor  to  apply  collateral  security  before  resorting  to  surety. 
—  This  right  has  been  asserted  extrajudicially  in  several  instances,  and  has  been  made 
the  basis  of  decision  in  a  few  cases.  Re  Babcock,  3  Story,  393  (semble) ;  Wilds  v. 
Attix,  4  Del.  Ch.  253,  258  (semble) ;  Irick  v.  Black,  17  N.  J.  Eq.  189  (statutory) ;  Phila. 
Co.  v.  Little,  41  N.  J.  Eq.  519  (statutory);  Wright  v.  Austin,  56  Hun,  13;  Sheppard  v. 
Conley,  9  N.  Y.  Sup.  777;  Polk  v.  Gallant,  2  Dev.  &  B.  Eq.  395;  Egerton  v.  Alley, 
6  Ired.  Eq.  188  (semble) ;  Hatcher  v.  Hatcher,  1  Rand.  53. 

For  authority,  contra,  see  Davis  v.  Patrick,  57  Fed.  R.  909  ;  Thorn  v.  Pinkham, 
84  Me.  101,  104;  Allen  v.  Woodard,  125  Mass.  400;  Lee  v.  Griffin,  31  Miss.  632,  638 
(semble.  By  statute  in  Mississippi,  if  execution  issue  against  principal  and  surety, 
and  principal  has  property  subject  to  execution,  the  sheriff,  if  aware  of  that  fact,  must 
levy  first  upon  the  property  of  the  principal)  ;  Aultman  Co.  v.  Smith,  52  Mo.  Ap. 
351*;  First  Bank  v.  Wood,  71  N.  Y.  405;  Third  Bank  v.  Shields,  55  Hun,  274  ;  Sterne 
v.  Talbot,  89  Hun,  368  ;  Heebner  v.  Townsend,  8  Abb.  Pr.  234  ;  Gary  v.  Cannon,  3  Ind. 
Eq.  64  (semble)  ;    Bingham  v.  Mears,  4  N.  Dak.  437  (semble). 

A  fortiori  a  surety  is  not  entitled  to  have  collateral  security  in  the  hands  of  the 
creditor  sold  before  maturity  of  the  suretyship  obligation,  even  though  the  property  is 
in  danger  of  destruction  or  depreciation.     Campbell  v.  Macomb,  4  Johns.  Ch.  534. 

Right  of  surety  to  compel  creditor  to  sue  principal.  — There  are  dicta  in  favor  of  this  right 
also.  Re  Babcock,  3  Story,  393  (semble) ;  Bingham  v.  Mears,  4  N.  Dak.  437  (semble, 
if  indemnity  is  given);  Rice  v.  Downing,  12  B.  Mon.  44,  45  (semble);  Sasscer  v. 
Young,  6  Gill  &  J.  243,  248  (semble)  ;  Whitridge  v.  Durkee,  2  Md.  Ch.  442  (semble) ; 
Bellows  v.  Lovell,  5  Pick.  307,  310  [semble,  if  indemnity  is  given) ;  Dillon  v.  Russell, 
5  Neb.  484,  489  (semble) ;  King  v.  Baldwin,  17  Johns.  384,  390,  2  Johns.  Ch.  554,  561 
(semble);  Hogabrom  v.  Herrick,  4  Yt.  131,  134  (semble);  Harris  v.  Newell,  42  Wis. 
687,  691  (semble). 

But  see  contra,  Woffington  v.  Sparks,  2  Yes.  569 ;  Hall  v.  Hall,  34  Ind.  314 ;  First 
Bank  v.  Wood,  71  N.  Y.  405,  411 ;  Mead  v.  Grigsby,  26  Grat.  612;  Penn  v.  Ingles,  82 
Va.  65.  —  Ed. 

2  Only  a  portion  of  the  opinion  of  the  Court  is  given.  —  Ed. 


614  HOPPES   V.    HOPPES.  [CHAP.  III. 

of  the  suret}'  so  mortgaged  would  have  this  same  right ;  so,  one  taking 
title  to  such  property  of  the  surety  by  inheritance  would  have  this  right. 
It  has  been  repeatedly  held  by  this  court  that  a  wife  joining  in  a  mort- 
gage with  her  husband  to  secure  his  debt  has  the  right  to  have  his  two- 
thirds  interest  in  the  land  first  sold  to  pay  the  debt.  Birke  v.  Abbott ; 1 
Figart  v.  Halderman  ;  2  Medsker  v.  Parker;3  Leary  v.  Shaffer ; 4 
Grave  v.  Bunch  ;  5  Main  v.  Ginthert ;  6  Trentinan  v.  Eldridge.7 

The  children  of  Mariah  Hoppes,  deceased,  had  the  right,  under  the 
facts  alleged  in  the  complaint,  to  have  the  husband's  lands  first  sold  to 
satisfy  the  mortgage  debt.8  Judgment  affirmed,  with  costs. 

1  103  Intl.  1.  2  75  Ind.  564.  3  70  Ind.  509. 

4  79  Ind.  567.  5  83  Ind.  4.  6  92  Ind.  180. 

7  98  Ind.  525. 

8  Medsker  v.  Parker,  70  Ind.  509  ;  Moffitt  v.  Roche,  77  Ind.  48 ;  Carley  v.  Fox,  38 
Mich.  387  ;  Wilcox  v.  Todd,  64  Mo.  388  ;  Knight  v.  Whitehead,  26  Miss.  245  (semble) ; 
Erie  Bank  v.  Roop,  80  N.  Y.  591,  597  (semble)  ;  Vartie  v.  Underwood,  18  Barb.  561, 
565  (semble);  Gore  v.  Townsend,  105  N.  Ca.  228;  Shew  v.  Call,  119  N.  Ca.  450, 
Accord. 

See  also  Aguilar  v.  Aguilar,  5  Mad.  414. 

Principal  cannot  buy  at  sale  on  execution  by  creditor  against  surety.  —  It  is  a  conse- 
quence of  the  principal's  duty  to  exonerate  the  surety  that  he  cannot  have  the  benefit 
of  a  purchase  at  a  sale  under  execution  by  the  creditor  against  the  surety.  Equity 
will  treat  the  principal  as  a  constructive  trustee  for  the  surety  as  to  the  property  pur- 
chased and  consider  the  purchase  money  as  a  payment  of  the  debt  due  from  the  prin- 
cipal to  the  creditor.  Madgett  v.  Fleenor,  90  Ind.  517  ;  Greer  v.  Wintersmith,  85  Ky. 
516;  Van  Home  v.  Everson,  13  Barb.  526 ;  Perry  v.  Yarbrough,  3  Jones,  Eq.  66. 

Surety  may  buy  at  sale  on  execution  by  creditor  against  principal.  —  It  has  been  de- 
cided in  a  few  cases  that  a  surety,  in  spite  of  his  intervention  as  a  friend  of  the  prin- 
cipal, may  purchase,  nevertheless,  and  keep  what  he  buys  at  a  sale  under  execution 
by  the  creditor  against  the  principal.  Carlos  v.  Ansley,  8  Ala.  900 ;  Horsefield  v.  Cost, 
Addis.  (Pa.)  152. 

Sm-ety's  right  to  realize  an  indemnity  security  before  paying  the  creditor.  —  If  security 
is  given  to  a  surety  purely  as  an  indemnity  it  seems  clear  that  he  has  no  right  to 
resort  to  it  until  he  has  paid  the  creditor.  Darst  v.  Bates,  51  111.  439 ;  Planters' 
Bank  v.  Douglass,  2  Head,  699.  But  see  contra,  De  Cottes  v.  Jeffers,  7  Fla.  284 ; 
Montgomery  v.  Luce,  2  La.  An.  469 ;  Tankersley  v.  Anderson,  4  Dess.  44 ;  McKnight 
v.  Bradley,  10  Rich.  Eq.  557  ;  Hellams  v.  Abercrombie,  15  S.  Ca.  110;  and  compare 
Markell  v.  Eichelberger,  12  Md.  78  ;  Kramer  v.  Trustees,  15  Oh.  254. 

But  if  the  principal  gives  his  own  note,  bond,  or  other  obligation  to  the  surety  as  an 
indemnity  against  the  hitter's  liability  to  the  creditor,  there  is  no  good  reason  why  the 
surety  may  not  collect  the  full  amount  of  such  note,  bond,  or  other  obligation  as  soon 
as  it  matures,  although  he  had  not  discharged  his  liability  as  surety.  Russell  v. 
La  Roque,  11  Ala.  352;  Moseley  v.  Ames,  5  All.  163;  Hapgood  v.  Wellington,  136 
Mass.  217  (but  see  Little  v.  Little,  13  Pick.  426) ;  Thurston  v.  Prentiss,  1  Mich.  193  ; 
Jones  v.  Child,  8  Nev.  121  ;  Churchill  v.  Hunt,  3  Den.  321  ;  Belloni  v.  Freeborn,  63 
X.  Y.  383  ;  Merchants'  Bank  v.  Cummings,  149  N.  Y.  360 ;  Wright  v.  Whiting,  40 
Barb.  235  ;  Jarvis  v.  Sewall,  40  Barb.  449. 

But  see  contra,  Hazeltine  v.  Guild,  11  N.  II.  211  ;  Osgood  v.  Osgood,  39  N.  H.  209  ; 
Child  v.  Powder  Works,  44  N.  H.  354  ;  Woodbridge  v.  Scott,  3  Brev.  193.  — Ed. 


SECT.  IV.]  BKACKETT    V.    RICH.  615 


GEORGE  A.  BRACKETT  v.  J.  D.  RICH. 
In  the  Supreme  Court,  Minnesota,  April  G,   1877. 

[Reported  in  23  Minnesota  Reports,  485.] 

Appeal  by  plaintiff  from  a  judgment  of  the  municipal  court  of  the 
cit}'  of  Minneapolis.  The  action  was  on  a  promissory  note,  made  by 
one  Gibson  to  defendant's  order,  and,  for  value  received,  transferred 
before  maturity  to  plaintiff  by  defendant,  who  wrote  and  signed  upon 
the  back  thereof  the  following :  "  I  guarantee  the  collection  of  the 
within  note."  The  action  was  tried  by  the  court  without  a  jury,  and  it 
was  found  that  the  note  had  not  been  paid ;  that  plaintiff  had  de- 
manded payment  of  the  note  at  maturity,  from  the  maker,  and  there- 
after from  defendant,  but  had  never  taken  legal  proceedings  to  collect 
from  the  maker.  It  was  also  found  that  for  some  two  years  after  the 
maturity  of  the  note  the  maker  resided  in  Hennepin  County,  during  all 
which  period  he  was  insolvent,  and  that  he  then  left  the  State.  Among 
other  conclusions  of  law  the  court  found  that  the  maker's  insolvency 
was  no  excuse  for  plaintiff's  failure  to  proceed  against  him,  and  that, 
because  of  such  failure,  the  plaintiff  could  not  recover  against  defend- 
ant as  guarantor.1 

Berry,  J.  With  regard  to  the  proper  construction  of  a  contract  of 
this  kind  the  authorities  disagree.  By  some  it  is  held  that  such  a 
guaranty  is  an  undertaking  that  the  note  is  collectible  by  due  course 
of  law,  and  that  the  guarantor  undertakes  to  pay  only  when  it  is  ascer- 
tained that  it  cannot  be  collected  by  suit  prosecuted  to  judgment  and 
execution  against  the  maker  ;  and  that  the  endeavor  to  collect  of  the 
maker,  by  this  due  course  of  law,  is  a  condition  precedent  to  the  right 
of  action  against  the  guarantor.2  This  is  the  view  taken  in  New  York. 
Moakley  v.  Riggs  ; 3  Cumpston  v.  McNair  ; 4  Craig  v.  Parkis.5  Also, 
in  Wisconsin.     Dyer  v.  Gibson  ; 6  French  v.  Marsh.7 

By  other  authorities  it  is  held  that  a  guaranty  of  collection  is  an 

1  The  statement  is  abridged  and  a  portion  of  the  opinion  is  omitted.  —Ed. 

2  Thomas  v.  Dodge,  8  Mich.  51  ;  Barman  r.  Carhartt,  10  Mich.  338;  Johnson  v. 
Shepard,  35  Mich.  115;  Bosman  v.  Akeley,  39  Mich.  710;  Schermerhorn  v.  Conner, 
41  Mich.  374;  Briggs  v.  Norris,  67  Mich.  325;  Clark  v.  Kellogg,  96  Mich.  171; 
Cumpston  v.  McNair,  1  Wend.  457 ;  White  v.  Case,  13  Wend.  543 ;  Loveland  v.  Shep- 
ard, 2  Hill,  139;  Mosher  v.  Hotchkiss,  2  Keyes,  589  ;  Craig  v.  Barkis,  40  N.  Y.  181 ; 
Northern  Co.  v.  Wright,  76  N.  Y.  445;  Meed  v.  Parker,  111  N.  Y.  259  (compare 
Ralph  v.  Eldridge,  137  N.  Y.  525)  ;  Burt  v.  Horner,  5  Barb.  501  ;  Mains  v.  Haight, 
14  Barb.  76;  Newell  v.  Fowler,  23  Barb.  628  ;  Gallagher  v.  White,  31  Barb.  92  (but 
see  Cady  v.  Sheldon,  38  Barb.  103,  semble,  contra);  Mosier  v.  Waful,  56  Barb.  80; 
Ralph  v.  Eldredge,  58  Hun,  203  ;  Reines  v.  Berkman,  27  N.  Y.  Misc.  R.  793 ;  Day  v. 
Elmore,  4  Wis.  190;  Borden  v.  Gilbert,  13  Wis.  670;  Dyer  v.  Gibson,  16  Wis.  557; 
French  v.  Marsh,  29  Wis.  649;  Cottrell  v.  New  London  Co.,  94  Wis.  176;  Getty  v. 
Bchanz,  101  Wis.  229. —Ed. 

3  19  John.  69.  4  1  Wend.  457.  5  40  N.  Y.  181. 
6  16  Wis.  557.                               7  29  Wis.  649. 


616  BRACKETT   V.   RICH.  [CHAP.  III. 

undertaking  by  the  guarantor  to  pa}-,  if  payment  cannot,  by  due  and 
reasonable  diligence,  be  obtained  of  the  maker ;  or,  as  it  is  sometimes 
expressed,  that  the  note  is  "  capable  of  being  collected."  This  is  the 
view  taken  in  Vermont.  Wheeler  v.  Lewis;1  Sylvester  v.  Downer;8 
Bull  v.  Bliss;  3  Dana  v.  Conant.4  In  Connecticut.  Perkins  v.  Catlin  ;  6 
Ranson  v.  Sherwood.6  In  Maine.  Gillighan  v.  Boardman.7  In 
Pennsylvania.  McDoal  v.  Yeomans  ; 8  McClurg  v.  Fryer.9  In  Massa- 
chusetts. Marsh  v.  Day; 10  Sanford  v.  Allen.11  In  the  Supreme  Court 
of  the  United  States.  Camden  v.  Doreinus.12  See  also  2  Parsons' 
Notes  &  Bills,  140-143  ;  and  notes  and  dissenting  opinion  of  Mason, 
J.,  in  Craik  v.  Parkis,  supra. 

This  latter  construction  appears  to  us  not  only  to  be  supported  by 
the  greater  weight  of  authority,  but  to  be  the  more  natural  and  true 
construction.  As  said  by  Gibson,  C.  J.,  in  McDoal  v.  Yeomans  :  "To 
warrant  that  a  debt  is  collectible  is  to  warrant  that  it  is  legally  de- 
mandable,  and  that  the  debtor  is  of  competent  ability  to  answer  it  — 
not  that  he  will  pay  it  when  demanded  by  execution." 

In  the  application  of  the  construction  which  we  adopt,  it  is  held  — 
and,  in  our  opinion,  correctly  held  —  by  many  of  the  authorities  last 
above  cited,  that  if  the  maker  of  the  note  is  insolvent  at  its  maturity, 
and  continues  to  be  so,  the  holder  is  not  obliged  to  institute  legal  pro- 
ceedings against  him  before  resorting  to  the  guarantor.  As  remarked 
by  Daniel,  J.,  in  Camden  v.  Doremus  (p.  533)  :  "  The  condition  to 
which  the  plaintiff  (a  guarantor)  was  pledged  was  the  practice  of  due 
—  that  is,  proper,  just,  reasonable  —  diligence  ;  not  to  the  performance 
of  acts  which  were  obviously  useless,  and  from  which  expense  and 
injury  might  arise,  but  from  which  advantage  certainly  could  not.  The 
diligent  and  honest  prosecution  of  a  suit  to  judgment,  with  a  return 
of  nulla  bona,  has  always  been  regarded  as  one  of  the  extreme  tests 
of  due  diligence.  This  phrase,  and  the  obligation  it  imports,  may  be 
satisfied,  however,  by  other  means.  The  ascertainment,  upon  correct 
and  sufficient  proofs,  of  entire  or  notorious  insolvency,  is  recognized  by 
the  law  as  answering  the  demand  of  due  diligence,  and  as  dispensing, 
under  such  circumstances,  with  the  more  dilatory  evidence  of  a  suit." 
So,  in  Bull  v.  Bliss,  the  jury  having  found  that  the  maker  of  the  note 
was  "  wholly  and  utterly  insolvent."  "This,  at  least  prima  facie" 
say  the  court  (p.  131),  "is  a  sufficient  excuse  for  an  omission  to 
attempt  to  collect  the  note  of  the  maker.  The  law  does  not  require 
the  performance  of  an  idle  act."  So  it  was  held  to  be  a  sufficient  ex- 
cuse for  a  like  omission,  in  Dana  v.  Conant  (p.  253),  that  the  makers 
of  the  note  guaranteed  had  "  failed,  and  become  insolvent,  and  desti- 
tute of  any  attachable  property,  and  have  so  remained  ever  since." 
So,  in  Sanford  v.  Allen,  the  instruction  upheld  was  that,  if  the  maker 

MlVt.  265.  2  18  Vt.  32.  3  30  Vt.  127. 

4  30  Vt.  246.  5  11  Conn.  213.  9  26  Conn.  437. 

7  29  Me.  79.  8  8  Watts,  361.  9  15  Pa.  St.  293. 

»  18  Pick.  321.  X1  1  Cush.  473.  12  3  How.  515. 


SECT.  IV.]  BKACKETT    V.    RICH.  617 

of  the  note  was  "  insolvent,  and  wholly  unable  to  pay  the  note  at  the 
date  of  the  guaranty,  and  had  continued  to  be  so,  that  if  he  had  no 
property  out  of  which  an  execution  could  have  been  satisfied,  either 
wholly  or  in  part,  and  that  a  judgment  and  execution  against  him 
would  have  been  of  no  avail,  the  plaintiff  (the  holder)  might  recover, 
without  proving  the  existence  of  such  judgment  and  execution."  In 
McDoal  v.  Yeomans  the  exception,  in  considering  which  the  court  held 
that  insolvency  of  the  maker  of  a  guaranteed  note  excused  the  omis- 
sion of  the  holder  to  proceed  against  him  at  law,  was  an  exception  to 
an  offer  to  prove  that  the  maker  "  was  so  utterly  insolvent  that  an 
action  would  have  been  fruitless ; "  and,  in  McClurg  v.  Fryer,  the 
court  say  :  "  The  law  requires  no  man,  in  the  pursuit  of  his  rights,  to 
do  a  vain  and  futile  thing,  useful  to  nobody,  and  hurtful  to  himself  by 
the  needless  expense  and  trouble  it  would  impose.  The  court  was, 
therefore,  right  in  instructing  the  jury,  that  if,  at  the  time  of  the  matu- 
rity of  the  guaranty,  Mrs.  McKinley  (the  principal  debtor)  was  so 
utterly  insolvent  as  not  to  make  it  worth  while  to  sue  her,  a  suit 
against  her  was  unnecessaiy ;  that  would  be  unnecessary  cost  and 
trouble  on  a  man  for  nothing.  Insolvency,  hopeless  or  utter  insol- 
vency, may  be  proved,  like  everything  else  depending  on  facts,  by 
parol  as  well  as  by  record,  and  we  cannot  hold  that  it  is  necessary  to 
sue  a  beggar." 

It  is  to  be  observed  that  the  insolvency  which  is  thus  required  to 
excuse  want  of  legal  proceedings  is  something  more  than  the  insolvency 
of  a  person  "  who  is  not  able  to  pay  all  his  debts  from  his  own  means, 
or  whose  propert}'  is  not  in  such  a  situation  that  all  his  debts  ma}'  be 
collected  out  of  it  by  legal  process  "  (Lamberton  v.  Windotn  x) ;  but, 
as  it  is  expressed  in  one  of  the  cases  cited,  such  an  "  utter  insolvency 
that  an  action  would  have  been  fruitless."  This  is,  we  think,  the  cor- 
rect rule.2 

1  18  Minn.  506,  515. 

2  Camden  v.  Doremus,  3  How.  515  (semble) ;  Perkins  v.  Catlin,  11  Conn.  213; 
Allen  v.  Rundle,  50  Conn.  9  ;  Lemmon  v.  Strong,  55  Conn.  443  ;  Pittman  v.  Chisholm, 
43  Ga.  442  ;  Dillman  v.  Nadelhofer,  160  111.  121  ;  Peck  v.  Frink,  10  Iowa,  193  ;  Durand 
v.  Bowen,  73  Iowa,  57.3  ;  Huntress  v.  Patten,  20  Me.  28  ;  Lewis  v.  Hoblitzell,  6  Gill  & 
J.  259;  Sanford  v.  Allen,  1  Cush.  473;  Jones  v.  Ashford,  79  N.  Ca.  172;  Stone  v. 
Rockefeller,  29  Oh.  St.  625  ;  McDoal  p.  Yeomans,  8  Watts,  361  ;  McClurg  v.  Foyer, 
15  Pa.  293  ;  Janes  v.  Scott,  59  Pa.  178  ;  Nat.  Ass'n  v.  Lichtenwalner,  100  Pa.  100 ;  Jones 
v.  Greenlaw,  6  Cold.  342  ;  Cates  v.  Kittrell,  7  Heisk.  606  ;  Texas  Co.  v.  Griswold  (Texas 
Civil  Appeals,  1900),  41  S.  W.  P.  513;  Wheeler  v.  Lewis,  11  Vt.  265  ;  Bull  v.  Bliss, 
-30  Vt.  127  ;  Dana  v.  Conant,  30  Vt.  246,  Accord. 

Uncouectibility  of  the  obligation  a  condition  precedent.  —  To  maintain  an  action  against 
a  guarantor  of  collectibility,  the  creditor  must  allege  in  his  declaration  the  facts  show- 
ing the  obligation  to  be  uncollectible,  or  an  excuse  for  the  non-performance  of  the 
condition  precedent.  Peck  v.  Frink,  10  Iowa,  193  ;  Bosnian  v.  Akeley,  39  Mich.  710; 
Moakley  v.  Riggs,  19  Johns.  69  ;  Manis  v.  Haight,  14  Barb.  76 ;  Stone  v.  Rockefeller, 
29  Oh.  St.  625  ;  Gilbert  v.  Henck,  30  Pa.  205  ;  Janes  v.  Scott,  59  Pa.  178,  182  ;  Fvans 
v.  Bell,  45  Tex.  553 ;  Texas  Co.  v.  Griswold  (Texas  Civil  Appeals,  1900),  41  S.  W.  R 
513. 

Uncollectibility  cannot  be  shown,  if  any  one  of  several  prior  parties  can  pay.  — Summer* 


618  BRACKET!    V.    RICH.  [CHAP.  IIL 

It  remains  to  consider  the  point  that  the  plaintiff  is  not  entitled  to 
recover  because  k'  he  neither  alleges  nor  proves  any  notice  to  defend- 
ant, either  of*  a  demand  of,  or  refusal  by,  the  maker  of  payment,  or 

v.  Barrett,  65  Iowa,  292;  Moakley  v.  Riggs,  19  Johns.  69;  Lovelaud  v.  Shepard, 
2  Hill,  139;  Cady  v.  Sheldon,  38  Barb.  103.  See  also  Lewis  v.  Hoblitzell,  6  Gill  &  J. 
259,  264.  Or  if  any  collateral  security  is  not  exhausted.  Barman  v.  Carhartt,  10 
Mich.  338;  Johnson  v.  Shepard,  35  Mich.  115;  Newell  v.  Fowler,  23  Barb.  628;  Bor- 
den v.  Gilbert,  13  Wis.  670;  Cottrell  v.  New  London  Co.,  94  Wis.  176  (but  see  Day 
v.  Elmore,  4  Wis.  190). 

But  if  the  principal  is  an  insolvent  corporation  the  creditor  is  not  required  to  ex- 
haust the  statutory  liability  of  the  shareholders  before  proceediug  against  the  guar- 
antor.    Nat.  Association  v.  Lichtenwaluer,  100  Pa.  100. 

Due  diligence  in  instituting  and  conducting  legal  proceedings.  —  The  creditor's  delay 
in  beginning  or  his  negligence  in  conducting  legal  proceedings  was  fatal  in  the  fol- 
lowing cases:  Getty  v.  Schantz,  100  Fed.  R.  577  (14  months)  ;  Voorhis  v.  Atlee,  29 
Iowa,  49  (10  months)  ;  Durand  v.  Bowen,  73  Iowa,  573  (beyond  first  regular  terra  of 
court)  ;  Gillighan  v.  Boardman,  29  Me.  79  (semble) ;  Moakley  v.  Riggs,  19  Johns.  69 
(17  months);  Craig  v.  Barkis,  40  N.  Y.  181  (6  months);  McMurray  v.  Noyes,  72 
N.  Y.  523  (14  months)  ;  Northern  Co.  v.  Wright,  76  N.  Y.  445  (9  months);  Burt  v. 
Horner,  5  Barb.  501  (17  months)  ;  Manis  v.  Haight,  14  Barb.  76  ;  Tiffany  v.  Willis,  30 
Hun,  266  (5£  years) ;  Beeker  v.  Saunders,  6  Ired.  380  (15  months) ;  Gilbert  v.  Henck, 
30  Fa.  205  (inadequate  execution)  ;  Hoffman  v.  Bechtel,  52  Pa.  190  (failure  to  dis- 
cover property  subject  to  levy)  ;  Dutton  v.  Pyle  (Pennsylvania,  1900),  45  Atl.  R.  429 
(3  years) ;  Cates  v.  Kittrell,  7  Heisk.  606  (3  years)  ;  Shepard  v.  Phears,  35  Tex.  763 
(4j  years)  ;  Wheeler  v.  Lewis,  11  Vt.  265  (undue  delay  in  carrying  on  an  action  begun 
seasonably)  ;  French  v.  Marsh,  29  Wis.  649 ;  Getty  v.  Schantz,  101  Wis.  229. 

Due  diligence  was  exercised  in  the  following  cases :  Thomas  v.  Woods,  4  Cow.  173  ; 
Kinyon  v.  Brock,  72  N.  Ca.  554 ;  Forest  v.  Steward,  14  Oh.  St.  246 ;  Nat.  Association  v, 
Lichtenwaluer,  100  Pa.  100;  Tissue  v.  Hanna,  158  Pa.  384  (4  months)  (delay  through- 
out war  of  rebellion) ;  Foster  v.  Barney,  3  Vt.  60  {6  days). 

Removed  of  principal  from  the  State.  —  If  the  principal  or  other  prior  party  removes 
from  his  State,  the  creditor  need  not  institute  legal  proceedings  against  him  in  the 
State  of  his  new  residence.  White  v.  Case,  13  Wend.  543  ;  Burt  v.  Horner,  5  Barb. 
501 ;  Cooke  v.  Nathan,  16  Barb.  342 ;  Mosier  v.  Waful,  56  Barb.  80;  Towns  v.  Farrar, 
2  Hawks,  163  ;  Joues  v.  Ashford,  79  N.  Ca.  172;  Benton  v.  Gibson,  1  Hill  (S.  Ca.),  56  ; 
Jones  v.  Greenlaw,  6  Cold.  342. 

But  he  should  take  proceedings  hy  publication  in  the  State  of  his  former  residence. 
White  v.  Case,  13  Wend.  543  ;  Mosier  v.  Waful,  56  Barb.  80. 

Waiver  by  promise  of  guarantor  after  default  of  creditor.  —  Any  failure  to  exercise  the 
usual  diligence  which  was  induced  by  the  couduct  of  the  guarantor  will  not  prejudice 
the  creditor.  But  if,  without  any  encouragement  by  the  guarantor,  the  creditor  has 
failed  to  perform  the  coudition  precedent  to  the  guarantor's  liability,  a  subsequent 
promise  by  the  guarantor  to  pay  nevertheless  will  not  help  the  creditor.  Van  Derveer  v. 
Wright,  6  Barb.  547.  But  see  contra,  Ashford  v.  Robinson,  8  Ired.  114,  and  compare 
Tinkum  v.  Duncan,  1  Grant  (Pa.),  228. 

Absence  of  damage  to  guarantor.  —  For  the  same  reason  a  creditor  who  has  not  per- 
formed the  condition  precedent  cannot  help  his  case  by  showing  that  its  non-perform- 
ance did  not  cause  any  damage  to  the  guarantor.  Craig  v.  Parkis,  40  N.  Y.  181  ;  Burt 
v.  Horner,  5  Barb.  501  ;  French  v.  Marsh,  29  Wis.  649. 

But  see  contra,  Gillighan  v.  Boardman,  29  Me.  79  ;  Cates  v.  Kittrell,  7  Heisk.  606. 
What  amounts  to  a  guarantee  of  collectibility.—  A  guarantee  of  collection  is  equiva- 
lent to  a  guarantee  of  collectibility.  And  such  a  guarantee  may  be  created  by  any 
words  of  similar  import,  as  iu  the  following  cases :  Phenix  Co.  v.  Louisville  Co., 
8  Fed.  R.  142  ("  if  creditor  will  endeavor  to  collect  ")  ;  Cowles  v.  Peck,  55  Conn.  251 
("good  until  paid") ;  Pittman  v.  Chisholm,  43  Ga.  442  ("to  be  liable  only  in  second 
instance");  Ely  v.  Bibb,  4  J.J.  Marsh.  71  ("guarantee  ultimate  payment");  Hun- 


SECT.  IV.]  BRACKETT   V.   RICH.  619 

that  collection  could  not  be  enforced  against  him."  The  only  notice 
which  it  is  the  duty  of  the  holder  to  give  to  the  guarantor  is  notice  of 
his  inability  to  collect  the  note  of  the  maker;  and  failure  to  give  this 
notice  furnishes  no  defence  to  the  guarantor,  unless  he  has  been  preju- 
diced thereby.1  2  Parsons'  Notes  &  Bills,  142  ;  Gillighan  v.  Board- 
man  ; 2  Bashford  v.  Shaw.3 

Judgment  reversed,  and  new  trial  directed. 

tress  v.  Patten,  20  Me.  28  ("  guaranty  of  final  payment  ")  ;  Lewis  v.  Hoblitzell,  6  Gill 
&  J.  259  ("answerable  for  final  payment");  Curtis  v.  Smallman,  14  Wend.  231  ("I 
warrant  this  note  good  ")  ;  Cooke  v.  Nathan,  16  Barb.  342  ("  I  agree  that  this  note  is 
good  ") ;  McMurray  v.  Noyes,  72  N.  Y.  522  ("  to  pay  any  deficiency  on  foreclosure") ; 
Kinyon  v.  Brock,  72  N.  Ca.  554  ("  to  be  good  and  solvent ") ;  Jones  v.  Ashford,  79  N. 
Ca.  172  ("  in  case  he  fails  to  recover,  to  pay  principal  and  costs  ")  ;  Johnston  v.  Mills, 
25  Tex'.  704  ("  ultimately  responsible  ") ;  Evans  v.  Bell,  45  Tex.  553  ("  if  bearer  fails 
to  collect,  to  be  responsible");  Hammond  v.  Chamberlin,  26  Vt.  406  ("good  until 
January  1,  1850"). 

Compare  the  following  cases  in  which  the  words  were  interpreted  as  amounting 
to  a  guaranty  of  payment.  Taylor  v.  Soper,  53  Mich.  96  ("  note  is  as  good  as  gold  ") ; 
Kock  v.  Malhorn,  25  Pa.  89  ("  just  as  good  as  if  I  would  give  you  the  money —  I  will 
insure  it  as  good  as  gold  and  silver  "). 

By  a  doctrine,  peculiar  to  Pennsylvania,  many  undertakings,  which  would  else- 
where be  regarded  as  guarantees  of  payment  are  treated  in  that  State  as  guarantees 
of  collectibility.     Supra,  239,  n. ;  Mcintosh  v.  Reed,  89  Fed.  R.  464. 

In  Connecticut,  an  aval  or  anomalous  indorser  is  a  guarantor  of  collectibility.  Per- 
kins v.  Catlin,  11  Conn.  213,  and  other  cases  cited  in  1  Ames,  Cases  on  Bills  &  Notes, 
271.  — Ed. 

1  Gillighan  v.  Bowman,  29  Me.  79  ;  Thomas  v.  Woods,  4  Cow.  173  ;  Bashford  v. 
Shaw,  4  Oh.  St.  263  ;  Gibbs  v.  Cannon,  9  S.  &  R.  198;  Brown  v.  Brooks,  25  Pa.  210; 
Janes  v.  Scott,  59  Pa.  178  ;  Benton  v.  Gibson,  1  Hill  (S.  Ca.),  56 ;  Sylvester  v.  Downey, 
18  Vt.  32,  Accord.  —  Ed. 

2  29  Me.  79.  3  4  Oh.  St.  263. 


620  MAURE   V.   HARRISON.  [CHAP.  IV. 


CHAPTER   IV. 
CREDITOR'S  RIGHTS  TO  SURETY'S   SECURITIES. 


MAURE   v.   HARRISON. 

In  Chancery,  before   Sir  James   Astry  and  Dr.  Edisbury,  Lords 
Commissioners,  Michaelmas  Term,  1692. 

[Reported  in  1  Equity  Cases,  Abridgment,  93,  placitum  5] 

A  bond  creditor  shall,  in  this  court,  have  the  benefit  of  all  counter 
bonds  or  collateral  security  given  by  the  principal  to  the  surety ;  as  if 
A  owes  B  money,  and  he  and  C  are  bound  for  it,  and  A  gives  C  a 
mortgage  or  bond  to  indemnify  him,  B  shall  have  the  benefit  of  it  to 
recover  his  debt.1 

i  Chamberlain  v.  St.  Paul  Co.,  92  U.  S.  299,  306.  (semble)  ;  Burroughs  v.  U.  S., 
2  Paine,  C.  C.  569 ;  Ex  parte  White,  2  Low.  343 ;  Mathews  v.  Abbott,  2  Hask.  289 ; 
Tompkius  v.  Catawba  Mills,  82  Fed.  R.  780  ;  Toulmin  v.  Hamilton,  7  Ala.  362  ;  Troy 
v.  Smith,  33  Ala.  469 ;  Saffold  v.  Wade,  51  Ala.  214 ;  Forrest  v.  Luddington,  68  Ala.  1 
(semble) ;  Daniel  v.  Hunt,  77  Ala.  567  (semble) ;  Van  Orden  ».  Durham,  35  Cal.  136; 
Lewis  v.  De  Forest,  20  Conn.  427 ;  Constant  v.  Matteson,  22  111.  546  (semble)  ;  Durham 
17.  Craig,  79  Ind.  117  ;  Plant  v.  Storey,  131  Ind.  46;  Rankin  v.  Wilsey,  17  Iowa,  463  ; 
Seibert  v.  Rowe,  8  Kan.  52 ;  Bronston  v.  Robinson,  4  B.  Mon.  142  ;  Moore  v.  Moberly, 
7  B.  Mon.  299  (semble)  ;  Tilford  v.  James,  7  B.  Mon.  336  (semble)  ;  Taylor  v.  Farmers' 
Bank,  87  Ky.  398, 402  (semble) ;  King  v.  Harman,  6  La.  607  (but  see  Bowman  v.  McElroy, 
15  La.  An.  646  ;  Spiller  v.  Creditors,  16  La.  An.  292) ;  In  re  Fickett,  72  Me.  266  ;  Stew- 
art v.  Welch,  84  Me.  308 ;  Kunkel  v.  Fitzhugh,  22  Md.  67  ;  Owens  v.  Miller,  29  Md. 
144;  Boyd  v.  Parker,  4.3  Md.  182;  Baltimore  Co.  v.  Trimble,  51  Md.  115  ;  Eastman  v. 
Foster,  8  Met.  19  ;  Rice  v.  Dewey,  13  Gray,  47  ;  New  Bedford  Inst.  v.  Fairhaven  Bank, 
9  All.  175;  Kelly  v.  Herrick,  131  Mass.  373;  Franklin  Bank  v.  Greenfield  Bank,  138 
Mass.  515  (explaining  Meed  v.  Nelson,  9  Gray,  55 ;  Provident  Inst.  v.  Stetson,  12  Gray, 
27)  ;  Butler  v.  Ladue,  12  Mich.  173;  Union  Bank  v.  Rich,  106  Mich.  319;  Haven  v. 
Foley,  18  Mo.  136  (semble);  St.  Louis  Co.  v.  Clark,  36  Mo.  601  (semble);  Logan 
v.  Mitchell,  67  Mo.  524  (semble) ;  Thornton  v.  Nat.  Bank,  71  Mo.  221  (semble);  Tolle  v. 
Boeckler,  12  Mo.  Ap.  54 ;  Richards  v.  Yoder,  10  Neb.  429  ;  South  Omaha  Bank  v.  Wright, 
45  Neb.  23  ;  Longfellow  v.  Barnard  (Nebraska,  1899),  79  N.  W.  R.  255  ;  Bank  v.  Her- 
rick, 62  N.  H.  174  ;  Holt  v.  Savings  Bank,  62  N.  H.  551  ;  Barton  v.  Croydon,  63  N.  H.  41 7  ; 
Demott  v.  Stockton,  32  N.  J.  Eq.  124;  Meyers  v.  Campbell,  59  N.  J.  378;  Moses  v. 
Murgatroyd,  1  Johns.  Ch.  119  ;  Phillips  v.  Thompson,  2  Johns.  Ch.  418 ;  Haggarty  v. 
Pittman,  1  Paige,  398;  Keyes  v.  Brush,  2  Paige,  311  ;  Pratt  v.  Adams,  7  Paige,  615; 
Curtis  v.  Tyler,  9  Paige,  432 ;  Ten  Eyck  v.  Holmes,  3  Sandf.  Ch.  428 ;  Vail  v.  Foster, 
4  N.  Y.  312 ;  Merchants'  Bank  v.  Comstock,  55  N.  Y.  24 ;  Crosby  v.  Crafts,  69  N.  Y. 
607  (affirming  s.  c.  5  Hun,  327)  ;  Nat.  Bank  v.  Bigler,  83  N.  Y.  51  ;  Merchants' Bank 
v.  Cumings,  149  N.  Y.  360  (affirming  s.  c.  79  Hun,  397) ;  City  of  Albany  v.  Andrews, 
29  N.  Y.  Ap.  Div.20;  Wiswell  v.  Potts,  58  N.  Ca.  719;  Bank  v.  Jenkins,  64  N.  Ca. 
719 ;  Matthews  v.  Joyce,  85  N.  Ca.  258;  Ijames  v.  Gaither,  93  N.  Ca.  358;   Sherrod 


CHAP.  IV.]  EX    PARTE    WARING   ET   ALS.  621 

WARING,   INGLIS,    CLARKE,   Ex  parte. 
In  Chancery,  .  before  Lord  Eldon,  C,  April  25,  1815. 

[Reported  in  2  Glyn  $•  Jameson,  404.] 

Bracken  &  Co.  were  manufacturers  in  Lancashire.  Brickwood  & 
Co.,  bankers  in  London,  were  the  bankers  of  Bracken  &  Co.     Bracken 

6  Co.  opened  their  account  with  Brickwood  &  Co.  upon  an  agreement 
that  Bracken  &  Co.  should  deposit  with  Brickwood  &  Co.  such  bills  of 

v.  Dixon,  120  N.  Ca.  60;  Ohio  Co.  v.  Eeeder,  18  Oh.  35;  Grant  v.  Ludlow,  8  Oh.  St. 
1;  Pendery   v.  Allen,  50  Oh.  120;  Coons  v.  Clifford,   58  Oh.  480;  Cornwell's  Ap., 

7  W.  &  S.  305  ;  Kremer's  Ap.,  37  Pa.  71 ;  Worrall's  Ap.,  41  Pa.  524  ;  Rice's  Ap.,  79 
Pa.  168;  Mifflin's  Ap.,  98  Pa.  428;  Harmony  Bank's  Ap.,  101  Pa.  428;  Aldrich  v. 
Martin,  4  R.  I.  520;  Thompson  v.  Taylor,  12  R.  I.  109;  Breedlove  v.  Stump,  3  Yerg. 
257  ;  Kirkman  v.  Bank  of  America,  2  Cold.  397  ;  Kinsey  v.  McDearmon,  5  Cold.  392  ; 
Saylors  v.  Saylors,  3  Heisk.  525;  Ray  v.  Proffett,  15  Lea,  517  ;  Walker  v.  Oglesby,  85 
Tenn.  321  ;  First  Bank  v.  Wheeler,  12  Tex.  Civ.  Ap.  489;  Magill  v.  Brown  (Texas 
Civil  Appeals,  1899),  50  S.  W.  R.  143  (sernble) ;  Paris  v.  Hulett,  26  Vt.  308  ;  Morrill  v. 
Morrill,  53  Vt.  74  ;  Hopewell  v.  Cumberland  Bank,  10  Leigh,  206;  Virginia  Bank  v. 
Boisseau,  12  Leigh,  387 ;  Schmelz  v.  Rix,  95  Va.  509  (sernble). 

In  some  jurisdictions  the  creditor's  right  to  the  surety's  securities  does  not  arise 
until  he  has  obtained  a  judgment  against  the  surety.  Importers'  Bank  v.  McGhee,  88 
Ga.  702  (statutory) ;  Ohio  Co.  v.  Reeder,  18  Oh.  35;  Grant  v.  Ludlow,  8  Oh.  St.  1. 

In  some  States  the  creditor's  right  to  a  mortgage  given  to  the  surety  by  the  prin- 
cipal is  dependent  upon  a  breach  of  the  condition  of  the  mortgage  by  the  principal's 
default.  If,  for  example,  the  condition  is  that  the  principal  shall  pay  the  debt  to  the 
creditor  when  due,  the  creditor's  right  to  the  security  is  established,  if  the  principal 
fails  to  pay  the  debt  at  maturity.  Ross  v.  Wilson,  15  Miss.  753  ;  Bibb  v.  Merton,  22 
Miss.  87  (sernble) ;  Bush  v.  Stamps,  26  Miss.  463  {sernble)  ;  Carpenter  v.  Bowen,  42  Miss. 
28.  If,  on  the  other  hand,  the  condition  is  that  the  principal  shall  reimburse  the  surety 
for  his  payment  to  the  creditor,  the  mortgage  will  never  be  accessible  to  the  creditor. 
Daniel  v.  Hunt,  77  Ala.  567,  569-570;  Osborn  v.  Noble,  46  Miss.  449;   Pool  v.  Doster, 

59  Miss.  258;  Clay  v.  Freeman,  74  Miss.  816. 

In  Connecticut  the  creditor  cannot  profit  by  the  surety's  security,  if  the  surety  is 
indebted  to  the  principal  to  an  amount  equal  to  that  of  the  suretyship  obligation. 
Homer  v.  Savings  Bank,  7  Conn.  478. 

Security  given  by  the  principal  to  the  surety  upon  an  express  trust  for  the  creditor.  —  If 
the  security  is  conveyed  to  the  surety  expressly  upon  trust  for  the  payment  of  the  debt 
to  the  creditor,  the  creditor's  rights  therein  are  like  those  of  any  other  cestui  que  trust. 
Ex  parte  Gledstanes,  3  M.  D.  &  D.  109  ;  Inman  v.  Clare,  Johns.  769  ;  Bank  of  Ireland 
t7.  Perry,  L.  R.  7  Ex.  14;  Ex  parte  Dewhurst,  8  Ch.  965  ;  Banner  v.  Johnstou,  L.  R. 
5  H.  L.  157 ;  Branch  v.  Macon  Co.,  2  Woods,  385  ;  Ohio  Co.  v.  Ledyard,  8  Ala.  866  ; 
Branch  Bank  v.  Robertson,  1-9  Ala.  798;  Pierce  v.  Robinson,  13  Cal.  116;  Hartford 
Co.  v.  First  Bank,  46  Conn.  569 ;  Constant  v.  Matteson.  22  111.  546  (sernble) ;  Nat. 
Park  Bank  v.  Halle,  30  111.  Ap.  17  ;  Loehr  v.  Colborn,  92  Ind.  24  ;  Cooper  v.  Middle- 
ton,  94  N.  Ca.  86 ;  Green  v.  Dodge,  6  Oh.  80  ;  Jack  v.  Morrison,  48  Pa.  113  ;  Wood  v. 
Moore,  1  Tenn.  Cas.  116 ;  Roberts  v.  Colvin,  3  Grat.  358  ;   Schmelz  v.  Rix,  95  Va.  509. 

Security  qiven  to  the  surety  with  power  to  sell  and  apply  the  proceeds  in  payment  of  the 
debt  due  to  the  creditor.  —  The  right  of  the  creditor  to  reach  the  security  was  recognized 
in  the  following  cases  in  which  the  surety  had  not  only  the  right  to  indemnify  himself 
after  payment  to  the  creditor,  but  also  the  power  to  apply  the  security  in  discharge  of 
his  liability  to  the  creditor.     Cullum  v.  Branch  Bank,  23  Ala.  797  ;  McMullen  v.  Neal. 

60  Ala.  555;  Daniel  v.  Hunt,  77  Ala  567;  Smithy.  Gillam,  80  Ala.  296;  Homer  v 
New  Haven  Bank,  7  Conn.  478  (sernble)  ;  Haveu  v.  Foley,  18  Mo.  136.  —  Ed. 


622  EX    PARTE    WARING   ET   ALS.  [CHAP.  IV. 

exchange  and  notes  as  the}',  Bracken  &  Co.,  should  receive  in  the 
course  of  their  dealings  ;  and  should  be  at  liberty  to  draw  upon  Brick- 
wood  &  Co.,  from  time  to  time,  as  their  occasions  might  require; 
Bracken  &  Co.  always  leaving  a  surplus  in  the  hands  of  Brickwood  & 
Co.,  and  paying  a  commission  to  Brickwood  &  Co.  on  their  accept- 
ances. Bracken  &  Co.  also  deposited  with  Brickwood  &  Co.  some  title- 
deeds  of  an  estate,  as  a  collateral  security  for  an}'  advances  made,  or 
to  be  made,  by  them.  On  the  7th  of  July,  1810,  a  commission  of  bank- 
ruptcy issued  against  Brickwood  &  Co.  At  the  time  of  this  bankruptcy 
Brickwood  &  Co.  had  acceptances  outstanding  to  the  amount  of 
£23,600;  they  were  indebted  to  Bracken  &  Co.  for  cash,  £6,776  ;  they 
held  short  bills  of  Bracken  &  Co.  to  the  amount  of  £23,800,  and  the 
title-deeds  of  an  estate  worth  £2,961  ;  so  that  the  account  between 
Bracken  &  Co.  and  Brickwood  &  Co.  was  as  follows  :  — 


Brickwood  Sf  Co.      Dr. 
Cash     .... 
Short  bills      .     . 
Title-deeds     .     . 


£      s. 

d. 

Cr 

6,776     0 

0 

Acceptance 

23,800     0 

0 

2,961     0 

0 

£        s.    d. 
23,600     0      0 


On  the  2d  of  August,  1810,  a  commission  of  bankruptcy  issued  against 
Bracken  &  Co.  Brickwood's  acceptances  were  proved  under  both  com- 
missions. The  bill-holders  presented  a  petition,  insisting  that  they 
were  entitled  to  have  the  cash,  the  short  bills,  and  the  produce  of  the 
title-deeds  applied  in  liquidation  of  their  bills. 

The  assignees  of  Bracken  &  Co.  presented  a  petition,  praying  that 
the  assignees  of  Brickwood  &  Co.  should  deliver  to  the  assignees  of 
Bracken  &  Co.  the  short  bills,  and  £2,961,  the  produce  of  the  title- 
deeds,  upon  the  assignees  of  Bracken  &  Co.  indemnifying  the  assignees 
of  Brickwood  &  Co.  against  any  dividends  which  they  might  be  liable 
to  pay  upon  the  outstanding  acceptances  to  the  amount  of  £16,824,  the 
difference  between  the  whole  amount  of  the  acceptances  and  the  cast 
balance. 

Mr.  Leach  and  Mr.  Cooke,  for  the  bill-holders. 

Sir  Samuel  Momilly  and  Mr.  Trower,  for  the  assignees  of  Brick- 
wood &  Co. 

If  the  acceptor  of  a  bill  hold  the  notes  of  the  drawer  in  trust  for  the 
holder,  the  holder  will  be  entitled  to  a  discovery  to  restrain  the  nego- 
tiation of  the  notes :  and  the  unvaried  practice  in  the  mercantile  world 
for  bankers  to  return  such  bills,  if  required  so  to  do  by  their  employers, 
is  a  breach  of  trust.  But  if  these  equities  are  to  attach  upon  bills  of 
exchange,  wiry  are  they  to  be  confined  to  bankers'  bills?  —  will  they 
not  be  applicable  to  every  species  of  bill?  for  instance,  to  a  bill  ac- 
cepted by  a  factor,  a  warehouseman,  on  account  of  his  principal,  and 
so  for  every  other  bill. 

When  a  surety  holds  security,  the  contract  between  the  creditor  and 
his  debtor  is  merely  personal ;  he  relies  upon  the  responsibility  of  the 
debtor  and  of  his  surety.  The  contract  between  the  debtor  and  his 
surety  is  not  merely  personal  ;  the  suret}'  insists  upon  security  of  prop- 


CHAP.  IV.]  EX    PARTE   WARING   ET   ALS.  623 

erty.  What  power  can  a  court  of  equity  possess  to  convert  this 
contract  between  the  creditor  and  debtor  into  a  contract  not  merely 
personal,  but  a  contract  for  security.  For  these  reasons,  as  this  note 
[of  Maure  v.  Harrison]  is  to  be  found  only  in  this  abridgment ;  as  it 
has  not  been  confirmed  by  any  decision  since  1692  ;  and  as  there  is  no 
equity  to  support  it,  we  submit  that  it  is  mistaken  law  ;  and  even  if  it 
is  not,  it  does  not  apply  to  the  case  now  before  the  court,  of  bills  of 
exchange  thus  deposited  with  a  banker.  (The  Lord  Chancellor  said, 
"  I  have  never  heard  this  case  relied  upon  as  a  governing  case  at  this 
day.")  1 

The  Lord  Chancellor,  after  stating  the  petitions,  said  :  — 
The  relief  prayed  by  the  bill-holders  is  on  this  alleged  ground,  that 
the  short  bills  and  the  mortgages  (I  leave  the  cash  out  of  the  question 
for  a  moment),  having  been  paid  into  the  hands  of  Brickwood  &  Co. 
as  a  security  against  their  acceptances,  the  holders  of  such  acceptances 
have  an  equity  to  insist  that  the  short  bills  and  the  mortgage  shall  be 
applied  specifically  to  the  purpose  of  discharging  these  acceptances, 
upon  the  supposition  that,  in  a  transaction  of  this  nature,  the  bill- 
holders  have  a  right  to  the  benefit  of  a  contract  between  the  party 
indemnifying  and  the  party  indemnified,  although  no  parties  themselves 
to  the  contract ;  or,  in  other  words,  that  the}r  who  have  contracted  out 
of  these  deposits  to  paj-  certain  debts,  are  liable  in  equity  to  the  de- 
mands of  the  persons  to  whom  payment  is  to  be  made  ;  and  there  is  a 
case  in  equity  which  goes  this  length.  It  will  be  sufficient  for  me  to 
say,  that,  supposing  a  commission  not  to  have  issued,  I  do  not  see 
anything  in  this  transaction,  between  persons  thus  dealing  with  their 
bankers,  and  making  a  deposit  of  this  sort,  which  would  entitle  the 
creditors  to  say  that  they  have  an  equity  attaching  on  these  effects  ;  that 
is  to  sa}T,  that,  the  moment  a  pledge  is  put  into  the  hands  of  the  banker, 
he  becomes  a  surety  for  them  to  whom  his  acceptances  are  delivered. 
If  there  were  such  an  equitj',  the  consequence  must  be,  that  the  banker 
and  the  person  whose  depositary  he  is  could  come  to  no  new  arrange- 
ment without  the  consent  of  the  creditors.  It  is  enough  for  me  to  say, 
that  the  petition  cannot  be  supported  upon  this  ground.  Whether  there 
is  any  other  ground  upon  which  it  ma}'  be  supported,  will  depend  upon 
the  view  which  I  have  taken  of  this  case,  and  the  opinion  which  I  have 
formed,  after  much  thought,  although  not  with  much  confidence.  My 
view  is  this  :  On  the  7th  July,  1810,  Brickwood  &  Co.  became  bank- 
rupts. Bracken  &  Co.  remained  out  of  a  state  of  bankruptcy  until  the 
2d  da}' of  August,  1810.  The  first  question  then  is,  "  What  was  the 
nature  of  the  demand  which  Bracken  &  Co.  had  on  Brickwood  &  Co. 
from  the  7th  of  Jul}'  to  the  2d  of  August.  Now  it  is  impossible  to 
deny  that,  if  Bracken  &  Co.  had  relieved  Bi'ickwood  &  Co.  from  their 
acceptances,  the  short  bills  and  the  mortgage  must  have  been  restored 
to  Bracken  &  Co.  On  the  other  hand,  I  take  it  to  be  equally  clear  that 
Bracken  &  Co.  never  could  have  any  demand  on  the  estate  of  Brick* 

1  The  argument  for  the  assignees  is  much  abridged.  —  Ed. 


624  EX    PARTE    WARING   ET   ALS.  [CHAP.  IV. 

wood  &  Co.  for  the  short  bills  and  mortgage,  without  bringing  into  tha 
estate  of  Brickwood  &  Co.  funds  equal  to  the  claim  which  Brickwood  & 
Co.  had  on  the  short  bills  and  the  deeds,  not  for  the  security  of  the 
bill-holders,  but  from  the  relative  situations  of  Bracken  &  Co.  and 
Brickwood  &  Co. 

The  next  question  is,  whether  the  nature  of  the  case  is  in  any  and 
what  respect  altered  b}T  the  bankruptcy?  I  cannot  discover  any  differ- 
ence. It  appears  to  me  that  the  assignees  of  Bracken  &  Co.  are  bound 
to  leave  the  estate  of  Brickwood  &  Co.  in  the  same  situation  as  Bracken 
&  Co.  were  themselves  bound  before  the  bankruptc}'. 

On  the  best  consideration  I  have  been  able  to  give  to  the  question, 
with  reference  to  the  rights  of  all  the  creditors  under  the  commission, 
and  with  regard  to  the  bankrupts  themselves,  it  does  appear  to  me,  that 
in  this  circuitous  wa}T  the  persons  holding  the  acceptances  must  be  paid, 
not  because  they  are  demands,  but  because  it  is  the  true  way  of  clearing 
the  estates.  I  do  not  know  that  I  am  clearly  stating  what  I  mean,  but 
I  think  the  principle  on  which  I  go  is  right ;  and  which  brings  me  back 
to  the  opinion  of  Mr.  Cook,  on  a  former  occasion  expressed  by  him, 
though,  at  that  time,  somewhat  different  from  mine.  After  this,  per- 
haps, you  will  have  no  great  difficulty  in  drawing  out  minutes  that  will 
apply  to  these  different  petitions. 

An  order  was  made,  by  which  the  payment  was  made  to  the  bill- 
holders.1 

1  Ex  parte  Parr,  Buck,  191  ;  Powles  v.  Hargreaves,  3  D.  M.  &  G.  430 ;  Ex  parte 
Carrick,  2  De  G.  &  J.  208 ;  City  Bank  v.  Luckie,  5  Ch.  773  ;  Bank  of  Ireland  v.  Perry, 
L.  R.  7  Ex.  14 ;  Ex  parte  Smart,  8  Ch.  220;  Ex  parte  Dewhurst,  8  Ch.  965  ;  Vaughan 
v.  Halliday,  9  Ch.  561  ;  Banner  v.  Johnston,  L.  R.  5  EL  L.  157 ;  M'Mahon  v.  Fether- 
stonhaugh,  Ir.  R.,  1895,  1  Ch.  182  (semble) ;  Lewis  v.  De  Forest,  20  Conn.  427,  Accord. 

In  Powles  v.  Hargreaves,  supra,  Lord  Cranworth,  referring  to  Ex  parte  Waring, 
said,  p.  448  :  "  The  question  seems  to  have  been  argued  very  fully  and  at  great  length, 
and  Lord  Eltlon  held  that  there  was  such  a  right,  —  not,  he  said,  '  in  the  nature  of  a 
direct  demand  '  by  virtue  of  any  distinct  and  independent  equity  existing  in  the  bill- 
holders  to  claim  a  lien  on  that  which  had  been  deposited  by  the  principal  debtor  with 
the  surety ;  if  that  were  so,  they  would  have  had  a  right  at  all  times  upon  the  bills  so 
deposited,  and  to  have  said,  nobody  shall  deal  with  these  bills  except  as  we  choose  to 
permit,  a  proposition  utterly  untenable." 

In  Vaughan  v.  Halliday,  supra,  James,  L.  J.,  said,  p.  567  :  "  The  principle  of  Ex 
parte  Waring  applies  where  there  are  equities  to  adjust  between  two  parties  who  be- 
come insolvent,  and  the  adjustment  of  which  equities,  by  a  piece  of  good  luck,  so 
far  as  a  third  party  is  concerned,  operates  for  the  benefit  of  such  third  party.  .  .  . 
I  desire,  with  reference  to  what  the  Lord  Justice  [Mellish]  has  just  said,  to  express 
my  entire  concurrence  in  his  observations,  that  the  right  of  proof  against  both  estates 
in  respect  of  the  same  matter  is  essential  to  the  application  of  Ex  parte  Waring." 

In  City  Bank  v.  Luckie,  supra,  Lord  Hatherley  said,  p.  776:  "As  long  as  both 
parties  were  solvent,  he  who  gave  the  security,  and  he  who  received  the  security,  might 
deal  with  the  security  just  as  they  pleased,  without  any  regard  to  who  might  be  the 
bill-holders.  But  when  there  came  to  be  a  question  whether  the  bills  were  to  be  paid 
or  not,  it  was  impossible  for  the  estate,  which  claimed  the  value  of  the  security,  subject 
to  the  charge,  to  get  back  the  security,  unless  all  the  duties  that  attached  to  it  had  been 
fulfilled.  On  the  other  hand,  the  other  estate  was  not  in  a  condition  to  make  payment 
of  the  bills,  and  thus  to  come  upon  the  security  for  indemnity.  Therefore  matters 
stood  at  a  deadlock,  and  nothing  could  be  done  on  one  side  or  the  other."  —  Ed. 


CHAP.  IV.]  ROYAL    BANK   V.    COMMERCIAL   BANK.  625 


THE    ROYAL    BANK    OF    SCOTLAND,   Appellants,    v.    THE 
COMMERCIAL  BANK  OF  SCOTLAND   and   Others, 

Respondents. 

In  the  House  of  Lords,  July  10,  1882. 

[Reported  in  Law  Reports,  7  Appeal  Cases,  366.] 

Lord  Sklborne,  L.  C.1  My  Lords,  this  is  an  appeal  in  an  action  of 
multiplepoinding,  arising  out  of  two  Scottish  bankruptcies,  the  one  of 
a  person  named  Saunders,  who  failed  in  November,  1878,  and  the  other 
of  a  person  named  Ramsay,  who  failed  in  December  of  the  same  }-ear. 
These  two  parties  had  dealings  together,  Ramsay  sending  raw  material 
(jute,  flax,  &c.)  to  Saunders'  spinning  works,  to  be  converted  into 
yarn,  under  an  agreement  in  writing,  which  provided  that  all  materials 
and  yarn  at  Saunders'  works  should  continue  to  be  the  sole  property  of 
Ramsay,  subject  to  the  lien  of  Saunders  for  whatever  might  from  time 
to  time  be  due  to  him,  and  that  Saunders  should  give  acceptances  for  a 
sum  not  exceeding  three-fourths  of  the  value  of  the  raw  material  held 
by  him  on  Ramsay's  account,  and  should  be  entitled  to  "  a  right 
of  lien  or  retention  of  goods  to  a  value  sufficient  to  cover  such 
acceptances." 

At  the  time  of  such  bankruptc}'  Saunders  was  liable  as  acceptor, 
upon  the  footing  of  this  agreement,  on  bills  drawn  by  Ramsay  to  the 
amount  of  £16,000,  and  he  held  goods  belonging  to  Ramsay  (since  sold 
for  £4,025  14s.  2c?.)  on  which  he  had  a  right  of  lien  or  retention,  to 
indemnify  him  from  that  liability.  The  appellants  are  the  holders  of 
the  £16,000  bills,  and,  as  such,  have  proved,  or  have  a  right  of  proof, 
against  both  the  insolvent  estates.  In  the  court  below  they  claimed 
to  have  the  whole  proceeds  applied,  in  the  first  place,  in  payment  of 
the  bills,  as  far  as  they  would  extend,  so  as  to  reduce  the  amount  of 
their  proof  against  the  two  estates  to  about  £12,000  instead  of  £16,000, 
relying,  for  that  purpose,  upon  the  English  case  of  Ex  parte  Waring, 
That  claim  was  rejected  by  the  Court  of  Session,  from  whose  judgment 
the  present  appeal  is  brought.2 

1  Only  the  judgment  of  Lord  Selborne,  together  with  a  portion  of  those  of  Lord 
Blackburn  and  Lord  Watson,  is  given.  —  Ed. 

2  The  Lord  President  said,  in  part :  "  The  Royal  Bank  in  the  present  case, 
ranking  for  the  full  £16,000  on  the  estate  of  Saunders,  will  receive  a  dividend  on 
that  amount  pari  passu  with  the  other  unsecured  creditors  of  Saunders.  The  estate 
of  Saunders  will  then  he  entitled  to  be  indemnified  out  of  the  price  of  the  impledged 
goods  to  the  amount  of  the  dividend  so  paid,  and  the  sum  thus  obtained  as  indemnity 
will  then  become  an  asset  of  Saunders'  estate,  out  of  which  the  Royal  Bank  and  the 
other  creditors  of  Saunders  will  receive  a  further  dividend,  and  this  process  will  be 
repeated  until  the  price  or  value  of  the  goods  has  been  exhausted.  If  the  value 
had  exceeded  the  amount  of  the  bill  debt,  the  process  would  have  been  continued 
till  the  bill  debt  was  extinguished,  and  the  acceptor's  liability  discharged  by  full  pay- 
ment, and  the  balance,  if  any,  of  the  price  or  value  of  the  impledged  goods  would  be 

40 


826  ROYAL   BANK    V.    COMMERCIAL    BANK.  [CHAP.  IV. 

The  rule  laid  down  by  Lord  Eldon  in  Ex  parte  Waring,  and  eon- 
firmed  by  subsequent  decisions  of  the  English  courts,  is  now  well 
established  in  England  ;  but  this  cannot  be  a  sufficient  reason  why 
your  Lordships  should  also  hold  it  to  be  the  law  of  Scotland,  unless  it 
can  be  shown  that  its  application  to  the  circurnstanees  of  sueh  a  case 
as  the  present,  in  the  manner  for  which  the  appellants  contend,  is  re- 
quired b\'  those  principles  of  equity  which  are  common  to  the  jurispru- 
dence of  both  parts  of  the  United  Kingdom.  The  laws  which  govern 
the  administration  in  bankruptcy  or  insolvency  are  not  in  all  respects 
the  same  in  Scotland  as  in  England.  The  rule  in  question  has  not, 
down  to  the  present  time,  been  received  or  known  in  Scotland,  though 
it  is  nearly  seventy  years  since  Ex  parte  Waring  was  decided.  The 
judges  of  the  Court  of  Sessions,  whose  opinions  are  now  under  review, 
all  think  that  if  such  a  rule  were  applied,  under  the  circumstances  of 
the  present  case,  it  would  result  in  consequences  not  only  not  required 
by  an}'  principle  of  equity,  but  practically  inequitable.  After  care- 
fully considering  the  arguments  which  have  been  addressed  to  your 
Lordships,  I  am  unable  to  differ  from  that  conclusion. 

It  is  conceded  (and  it  has  always  been  so  laid  down  by  all  the  Eng- 
lish authorities)  that  bill-holders  cannot  claim  to  have  securities,  de- 
posited with  the  acceptors  by  the  drawers  for  the  acceptors'  indemnity, 
applied  in  payment  of  the  bills  by  virtue  of  any  right  or  title  of  their 
own  to  the  benefit  of  those  securities.     They  can,  at  the  utmost,  only 

returned  to  the  estate  of  Ramsay,  the  owner  of  them.  But  whatever  may  be  the 
relative  amount  of  the  bill  debt  and  the  value  of  the  goods  impledged,  the  principle  is 
the  same  ;  the  subject  of  the  pledge  (in  strict  conformity  with  the  contract  of  pledge) 
is  applied  exclusively  to  indemnify  the  pledgee  and  his  estate  for  what  lie  and  it  have 
been  made  to  pay  in  respect  of  his  liability  as  acceptor. 

"  No  doubt  the  bill-holder  in  such  a  case  may  obtain  an  incidental  advantage  from 
the  security  that  the  acceptor  has  over  the  drawer's  goods.  For  the  bankrupt  acceptor 
and  his  estate  being  undoubtedly  entitled  to  resist  any  demand  by  the  drawer  and 
his  trustee  to  have  back  the  goods  till  the  last  farthing  of  the  debt  for  which  he  is 
liable  be  paid,  the  bill-holder,  to  the  extent  to  which  the  acceptor  is  enabled  to  pay  by 
working  out  his  right  of  indemnity,  has  indirectly  to  some  extent  the  benefit  of  the 
pledge. 

"  But  this  result  is  brought  about,  not  by  virtue  of  any  security  held  by  the  bill- 
holder,  or  of  any  active  title  in  him  to  affect  the  goods  impledged,  but  through  the 
natural  operation  of  the  contract  of  pledge,  putting  the  bankrupt  pledgee  in  a  better 
position  to  meet  his  obligation  as  acceptor  than  he  would  have  been  if  he  had  no  such 
power  to  indemnify  himself  at  the  expense  of  the  drawer  and  pledger.  The  result 
thus  brought  about  does  not  put  the  bill-holder  in  the  position  of  a  secured  creditor  of 
the  bankrupt  acceptor  or  of  the  bankrupt  drawer,  nor  has  he  any  preference  in  either 
bankruptcy.  In  ranking  on  the  drawer's  estate  he  ranks  pari  passu  with  the  drawer's 
other  unsecured  creditors,  and  in  ranking  on  the  acceptor's  estate  he  gets  no  more 
benefit  from  the  proceeds  of  the  impledged  goods  than  the  other  unsecured  creditors 
of  the  acceptor. 

"  The  result  seems  perfectly  equitable.  The  subject  of  the  pledge  is  made  avail- 
able to  the  estate  and  the  creditors  of  the  pledgee,  as  an  indemnity  to  the  extent  to 
which  it  and  they  are  made  to  pay  money  to  the  bill-holder  in  a  way  precisely  corre- 
sponding to  that  in  which  the  pledgee  would  have  been  entitled  to  work  out  his  indent 
nity  if  he  had  remained  solvent."  —  Ed. 


CHAP.  IV.]  ROYAL    BAXK   V.    COMMERCIAL    BANK.  627 

claim  to  come  in  under  a,  jus  tertii,  availing  themselves  of  the  adminis- 
tration of  the  insolvent  estates  (in  which  they  have  the  ordinary  locus 
standi  of  creditors),  to  ask  that  the  securities,  which  would  be  assets 
of  the  one  estate  but  for  the  lien  and  right  of  indemnification  belong- 
ing to  the  other,  but  which  cannot  be  realized  until  that  lien  and  right 
of  indemnification  is  discharged,  may  be  so  applied  as  to  give  effect  to 
the  contract  between  the  drawers  and  the  acceptors,  in  the  way  most 
conveniently  practicable. 

If  the  securities  were  sufficient,  or  more  than  sufficient,  to  cover  the 
whole  amount  of  the  acceptances,  the  acceptors  would  be  fully  indem- 
nified by  the  application  of  those  securities  to  the  payment  of  the  bills  ; 
and  the  drawers  (or  those  representing  their  estate)  might  in  that  case 
be  entitled  to  require  that  they  should  be  so  applied  ;  while,  on  the 
other  hand,  they  could  not  be  entitled  to  reclaim  any  part  of  those 
securities  without  (in  that  or  some  other  way)  fullv  indemnifying  the 
acceptors.  It  may  well  be  that,  under  such  a  state  of  circumstances, 
the  appropriation  of  the  securities  according  to  the  rule  in  Ex  parte 
Waring  (both  drawers  and  acceptors  being  insolvent)  might  be  the  most 
conveniently  practicable  way  of  giving  effect  to  the  contract  between 
the  drawers  and  the  acceptors. 

This  was  in  fact  the  state  of  circumstances  which  (so  far  as  an  opin- 
ion can  be  formed,  either  from  the  report  in  19  Vesey,  or  from  that  in 
2  Rose)  was  directly  in  the  contemplation  of  Lord  Eldon  when  his 
judgment  in  Ex  parte  Waring  was  pronounced  ;  and  there  is  an  im- 
portant passage  in  that  judgment  which  I  cannot  myself  reconcile  with 
the  supposition  that  the  equit}r  there  stated  could  have  the  consequences 
contended  for  by  the  appellants  in  the  present  case.  I  cite  it  from  Mr. 
Rose's,  which  seems  to  me  the  better  report.  "  It  is  impossible  to 
deny  that  if  Bracken  &  Co.  had  relieved  Brickwood  &  Co.  of  the  ac- 
ceptances for  £24,000,  the  short  bills  and  the  mortgage  must  have 
been  restored  to  Bracken  &  Co.  On  the  other  hand,  I  take  it  to  be 
equally  clear  that  Bracken  &  Co.  never  could  have  redemanded  the 
short  bills  or  the  mortgage  without  bringing  in,  under  the  estate  of 
Brickwood  &  Co.,  funds  equal  to  the  claim  that  Brickwood  &  Co.  had 
in  respect  of  the  short  bills  and  the  mortgage  ;  for  they  were  first 
applicable  to  the  discharge  of  those  acceptances,  not  for  the  security 
of  the  persons  in  whose  hands  those  acceptances  were,  but  for  that  of 
Brickwood  &  Co.,  who  had  become  liable  upon  them.  The  liability  of 
Brickwood  &  Co.  must  be  exonerated  before  any  restitution  could  be 
claimed  by  Bracken  &  Co.  That  being  the  nature  of  the  question 
from  the  7th  of  July,  1810  (the  date  of  Brick  wood's  bankruptcy),  to 
the  2d  of  August,  1810  (the  date  of  Bracken's  bankruptcy),  the  consid- 
eration arises  how  far  it  is  altered  by  the  bankruptcy  of  Bracken  &  Co. 
Now,  if  the  assignees  of  Bracken  &  Co.  are  bound  to  leave  the  estate 
of  Brickwood  &  Co.  in  the  same  condition  as  Bracken  &  Co.  were 
bound  to  have  done  before  the  bankruptcy  (and  they  certainly  would 
be  obliged  to  put  the  estate  of  Brickwood  &  Co.  in  that  condition,  in 


628  ROYAL  BANK  V.   COMMERCIAL  BANK.       [CHAR  IV. 

order  to  entitle  themselves  to  the  securities),  I  do  not  see  how  the 
bankruptcy  varies  the  question."  That  is  the  passage  in  Lord  Eldon's 
judgment. 

I  apprehend  it  to  be  clear  that  Bracken  &  Co.  would  not  have  been 
entitled,  either  before  or  after  the  bankruptcy  of  Brick  wood  &  Co.,  to 
prescribe  in  any  way  to  Brickwood  &  Co.,  or  their  assignees,  an}*  par- 
ticular mode  of  appropriating  part  of  the  securities,  whether  b}-  pay- 
ing off  some  (but  not  all)  of  the  bill-holders,  or  by  paying  a  dividend 
to  all  the  bill-holders,  leaving  Brickwood  &  Co.'s  estate  still  liable  for 
the  balance,  much  less  could  they  have  done  so  under  such  circum- 
stances as  those  of  the  present  case,  in  which  the  securities  (though  it 
was  the  intention  of  the  contract  that  they  should  be  sufficient  to  cover 
the  acceptances)  fell  far  short  of  the  required  amount.  To  confer  a 
benefit  upon  the  bill-holders,  who  are  no  parties  to  the  contract,  at  the 
expense  of  the  acceptors,  and  so  to  deprive  the  acceptors,  to  any  ex- 
tent, of  an}r  part  of  the  indemnity  for  which  they  have  contracted 
(whether  the  drawers  or  their  creditors  are  also  benefited  b}'  that  devia- 
tion from  the  contract  or  not),  must  be  (as  the  Court  of  Session  has 
considered  it)  inequitable  ;  nor  could  it  be  reconciled,  in  my  opinion, 
with  the  reasoning  of  Lord  Eldon's  judgment. 

It  is  true,  as  was  stated  by  Lord  Cranworth  in  Powles  v.  Hargreaves,1 
that  the  order  in  Ex  parte  Waring,  as  drawn  up,  "  distinctly  provided 
for  the  case  of  the  short  bills  deposited  either  being  equal  or  more  than 
sufficient,  or  being  insufficient,  and  expressly  provided  that,  if  insuf- 
ficient, the  parties  holding  the  acceptances  were  to  prove  for  the  defi- 
ciency." The  authority  of  Lord  Eldon  in  the  English  courts  of  equity 
and  bankruptcy  was  very  great ;  and  it  is,  therefore,  in  no  way  sur- 
prising that,  after  the  lapse  of  nearly  forty  years,  the  form  of  order 
drawn  up  to  carry  his  judgment  into  effect  should  have  been  regarded 
as  conclusive  in  a  similar  case,  and  should  have  been  (perhaps  too 
readily)  assumed  to  be  consistent  with  the  reasons  assigned  for  that 
judgment.  No  man  could  entertain  a  more  sincere  respect  than  I  have 
always  done  for  the  very  eminent  and  learned  judge  who  decided 
Powles  v.  Hargreaves  ; l  and  I  assume,  for  the  purpose  of  the  present 
judgment,  that  the  positive  rule  of  administration,  which  has  been 
accepted  as  law  in  England  since  the  order  in  Ex  parte  Waring 
was  made,  must  be  understood  in  accordance  with  the  determination 
in  Powles  v.  Hargreaves.2  But,  so  far  as  it  is  a  positive  rule  of  admin- 
istration, and  not  the  necessaiy  result  of  equitable  principles,  it  cannot 
be  held  to  be  of  force  in  Scotland  merely  because  it  is  so  in  England. 
Of  the  reasons  assigned  by  Lord  Cranworth  3  to  justify  the  extension 
of  the  rule  to  the  case  of  a  deficient  security,  I  cannot  but  sajr  that 
they  are  unsatisfactory  to  my  mind,  if  applied  to  such  a  contract  as 
that  between  Ramsay  and  Saunders  in  the  present  case  ;  and  indeed 
they  «ppear  to  me  to  overlook  the  fact  that,  when  the  whole  benefit  of 

1  3  D.  M.  &  G.  at  p.  453.  3  3  D.  M.  &  G.  430. 

•3D.M.&G.  at  p.  446. 


CHAP.  IV.]  ROYAL    BANK    V.   COMMERCIAL   BANK.  G29 

a  deficient  security  is  given  to  the  bill-holder,  the  estate  of  the  bank- 
rupt acceptor  may  lose  some  part  of  the  indemnity  to  whic'ii,  by  the 
contract,  he  is  entitled. 

If,  in  the  case  before  3'our  Lordships,  the  whole  fund  in  medio  were 
applied  in  the  first  instance  towards  payment  of  the  bills  held  by  the 
appellants,  and  the  appellants  were  then  admitted  to  prove  against  both 
the  insolvent  estates  for  the  difference,  viz.,  £12,000,  the  practical 
result  would  be,  to  leave  the  respondents  without  any  indemnity  at 
all  for  the  dividends  which  might  be  paid  out  of  their  estate  on  that 
£12,000.  The  result,  on  the  other  hand,  of  the  decision  of  the  Court 
of  Session  is  to  indemnify  them  to  the  full  extent  of  the  fund  (as, 
under  tlie  contract,  they  have  a  right  to  be  indemnified)  for  every  shil- 
ling which  their  estate  may  pay  on  the  bills.  Suppose  the  estate  of 
Saunders  to  pay  a  dividend  of  5s.  in  the  pound,  this  on  £16,000  would 
be  £4,000,  and  the  trustee  of  that  estate  would  have  a  right,  according  to 
the  judgment  appealed  from,  to  have  the  whole  fund  in  medio  (being, 
in  round  figures,  £4,000)  applied  for  their  reimbursement.  But  if  the 
fund  in  medio  were  first  applied  in  payment  of  the  bill- holders,  Saun- 
ders' estate  would  then  pay  on  the  remaining  £12,000  (at  5s.  in  the 
pound)  £3,000  without  any  indemnity  at  all.  Can  there  be  a  doubt 
which  of  these  results  is  the  more  equitable?  The  one  violates,  the 
other  gives  effect  to,  the  contract.  What  right  can  the  bill-holders 
have  to  ask  that  it  should  be  violated  for  their  benefit?  What  right 
could  the  trustee  of  Ramsa}',  the  debtor  primarily  liable  under  the 
contract,  have  to  ask  for  any  appropriation  of  the  securities  which 
would  take  awa}*  from  Saunders'  estate  any  part  of  the  indemnity  for 
which  he  contracted,  and  at  the  same  time  leave  that  estate  liable  on 
the  greater  part  of  the  bills  ? 

With  respect  to  the  argument  from  convenience,  in  some  possible 
circumstances  (as  when  the  part}'  secured  might  have  no  assets  of  his 
own,  so  as  to  pa}'  any  dividend,  and  yet  might  for  some  reason  fail  to 
get  his  discharge,  or  when  he  might  have  assets  falling  by  driblets,  so 
as  to  pay  repeated  dividends  at  uncertain  intervals,  without  exhausting 
the  security  fund)  it  is  enough  to  say  that  a  sufficient  practical  answer 
seems  to  me  to  be  given  to  that  argument  in  the  opinion  of  one  of  my 
noble  and  learned  friends,  which  I  have  had  the  advantage  of  seeing 
in  print.  It  is  impossible  that  mere  inconvenience  or  delay  in  working 
out  the  security  can  make  it  necessary  or  just  to  infringe  the  contract 
in  favor  of  persons  who  are  strangers  to  it. 

I  therefore  move  your  Lordships  to  dismiss  this  appeal  with  costs. 

Lord  Blackburn.  An  argument  was  submitted  b}'  Mr.  Benjamin 
that  on  the  true  construction  of  this  agreement  the  holders  of  the  out- 
standing  bills  had  a  specific  hold  on  this  propert}'.  I  think,  agreeing 
therein  with  all  the  judges  below,  that  this  agreement  gave  the  holders 
no  security  whatever  over  the  goods  either  in  the  hands  of  Saunders 
whilst  sui  juris,  or  in  the  hands  of  his  trustees.  It  did  give  Saunders 
whilst  sui  juris  a  right  to  retain  the  goods  until  he  was  indemnified 


630  ROYAL   BANK   V.   COMMERCIAL    BANK.  [_CHAP.  IY< 

against  any  claim  made  on  him  by  the  holders  of  the  bills,  and  it  left 
to  Ramsay  a  right  to  remove  those  goods  and  deal  with  them  in  any 
wa}"  he  pleased,  so  soon  as  he  had  in  any  way  satisfied  all  claims  that 
were  made  or  could  be  made  upon  Saunders,  for  which  he  had  by 
agreement  a  right  to  retain  the  goods,  but  not,  except  by  Saunders' 
consent,  till  then.  No  doubt  this  considerably  increased  the  proba- 
bility that  the  bills  would  be  taken  up,  and  so  indirectly  gave  the  bill- 
holders  a  better  seeurit}',  but  it  was  only  indirectly  ;  if  Ramsa}T  and 
Saunders,  whilst  sui  juris,  had  chosen  to  abrogate  the  agreement  of 
the  22d  of  April,  1870,  and  appropriate  the  goods  to  any  other  purpose 
they  pleased,  the  holders  of  the  bills  could  not  have  prevented  them. 

If  we  view  the  matter  as  it  would  be  when  the  whole  value  of  the 
assets  forming  the  estate  of  the  firm  holding  the  security,  and  also  the 
whole  amount  of  the  unsecured  creditors,  exclusive  of  the  bill-holders, 
are  ascertained,  the  justice  of  the  case  seems  plain  enough.  The  cred- 
itors of  that  estate  (in  this  case  that  of  Saunders),  exclusive  of  the  bill- 
holders,  can  never  have  a  claim  to  a  greater  dividend  than  they  would 
receive  if  the  bills  were  paid  off.  If  the  amount  of  that  dividend  on 
the  bills  would  not  exceed  the  proceeds  of  the  security,  the  unsecured 
creditors  and  the  bill-holders  should  take  that  dividend,  and  so  much 
of  those  proceeds  of  the  security  as  will  indemnify  the  estate  against 
the  dividend  thus  paid  to  bill-holders  should  be  applied  for  the  benefit 
of  the  estate,  the  surplus  over  that  amount  being  applied  for  the  benefit 
of  the  creditors  of  the  other  estate.  If  the  proceeds  of  the  security 
are  not  sufficient  to  pay  so  much  they  should  be  applied  as  far  as  they 
will  go  for  the  benefit  of  that  estate,  and  the  dividend  be  reduced  to 
that  amount  which  the  estate  could  pay  after  that.  In  that  case  there 
would  be  no  surplus  to  apply  for  the  benefit  of  the  other  estate. 

It  seems  to  me  that  this  would  be  perfect  equity,  remembering  that 
the  right  of  the  creditors  on  the  estate  against  the  proceeds  of  the 
security  is  to  an  indemnity  only,  and  that  the}*  have  no  right  to  make  a 
profit. 

Lord  Watson.  It  was  argued  for  the  appellants  that  it  is  desirable 
to  have  a  uniform  rule  in  all  cases  like  the  present,  and  that  the  prin- 
ciple adopted  by  the  Court  of  Session  would,  in  very  many  instances, 
lead  to  inextricable  confusion,  and  would,  in  others,  occasion  grave 
inconvenience.  It  was  urged,  in  the  first  place,  that  the  system  of 
recouping  dividends  paid  to  the  bill-holders  would  lead  to  an  inter- 
minable declaration  of  dividends,  each  sum  recovered  by  way  of  in- 
demnity becoming  a  new  fund  for  division  among  the  creditors  ;  and, 
in  the  second  place,  that,  if  the  indemnity  fund  were  not  at  once 
exhausted,  the  reversionaiy  interest  of  the  creditors  of  the  drawer 
would  lead  to  his  sequestration  being  indefinitely  suspended,  in  the 
event  of  the  acceptor  being  unable  to  procure  his  discharge.  I  agree 
with  the  appellants'  argument,  that  one  and  the  same  principle  ought 
to  regulate  all  cases  like  the  present ;  but  it  appears  to  me  that  the 
difficulties   which  have   been   suggested,    in   regard   to   the   principle 


CHAP.  IV.]  ROYAL    BANK   V.    COMMERCIAL   BANK.  631 

upon  which  the  Lord  Ordinary's  interlocutor  proceeds,  are  not  very 
formidable. 

The  subject  of  the  acceptor's  lien,  when  converted  into  money  by 
consent  of  parties,  or  by  warrant  of  the  court,  becomes  a  fund  to  which 
he  may  legitimately  resort,  in  order  to  avoid  the  necessity  of  making 
payment  out  of  his  own  pocket,  and  the  trustees  for  his  creditors  are 
entitled  to  use  it  for  payment  of  dividends  upon  the  debt  for  which  it 
is  retained,  in  order  to  protect  his  estate  from  the  claim  of  the  creditor 
in  that  debt.  When  the  amount  of  the  assets  available  for  dividend 
has  been  ascertained,  nothing  can  be  more  simple  than  to  calculate 
once  for  all  what  sum  must  be  taken  from  the  fund  in  order  to  obtain 
indemnity,  without  resorting  to  the  totles  quoties  method,  which  the 
appellants  seemed  to  consider  indispensable.  In  the  present  case  the 
respondents  have  merely  to  ascertain  the  dividend  which  Saunders' 
estate  will  yield  to  creditors  other  than  the  appellants,  and  then  pa}'  to 
the  appellants,  out  of  the  indemnity  fund,  a  corresponding  dividend 
upon  their  claim.  If  the  fund  prove  insufficient  for  that  purpose,  they 
will  add  it  to  the  dividend  fund  and  divide  the  total  between  the 
creditors  of  Saunders  including  the  appellants.  By  one  or  other  of 
these  processes  the  respondents  will,  uno  Jlatu,  obtain  the  full  measure 
of  relief  to  which  the}'  are  entitled  under  the  agreement,  and  no  more. 

The  other  difficulty  suggested  by  the  appellants  is  equally  devoid  of 
substance.  Should  the  acceptor  be  unable  to  procure  his  discharge  his 
creditors  would,  no  doubt,  by  the  judgment  under  appeal  be  entitled  to 
retain  their  hold  upon  the  fund,  in  case  of  future  dividends  becoming 
payable  from  estate  subsequently  accruing  to  the  bankrupt ;  and  it 
might  be  productive  of  very  great  hardship  and  inconvenience  if  that 
state  of  matters  necessarily  prevented  the  creditors  of  the  drawer  from 
bringing  his  sequestration  to  a  close.  I  cannot,  however,  conceive 
why  the  circumstance  that  an  interest  such  as  Ramsay's  creditors  have 
in  the  fund  in  medio  forms  one  of  the  assets  of  the  bankrupt  estate 
should  necessarily  delay  the  winding-up  of  the  sequestration.  The 
trustee,  with  the  concurrence  of  the  commissioners,  may  either  enter 
into  a  compromise  with  the  party  entitled  to  retain,  or  he  may  sell  the 
interest  for  ready  money.  It  frequently  happens  that  a  bankrupt 
estate  consists  in  part  of  reversionary,  and,  it  may  be,  contingent 
rights;  and,  when  that  is  the  case,  it  is  for  the  trustee  and  the  com- 
missioners to  consider  and  determine  whether  it  is  for  the  interest  of 
the  general  body  of  creditors  to  realize  at  once  or  to  prolong  the 
sequestration.  Appeal  dismissed.1 

1  The  difference  between  the  Scotch  and  English  rules  appears  from  the  following 
comparison  taken  from  the  statement  of  facts.  —  Ed. 

State  I. 

1.  Saunders'  Estate.  —  Liabilities. 

(1 )  Creditors  other  than  the  Royal  Bank,  say    .    £24,000    0    0 

(2)  The  Royal  Bank 16,000    °    °  £40,000    O    O 


632  ROYAL   BANK   V.   COMMERCIAL    BANK.  [CHAP.  IV. 

Assets. 

General  assets  (in  which  value  of  security  subjects  is   not  in- 
cluded), say £9,000    0    0 

(=  4s.  6f/.  per  pound  on  liabilities.) 

2.  Security  subjects,  realized  value,  say £4,000    0    0 

3.  Saunders'  trustees  propose,  out  of  the  general  assets  (as  above)  in  their  hands,  to 

pay  a  first  dividend  of  4s.  6c/.  in  the  pound  on  all  claims,  including  that  of  the 
Royal  Bank. 
The  first  dividend  payable  to  the  Royal  Bank  at  4s.  6d.  per  pound 

on  £16,000  will  be £3,600    0    O 

4.  After  paying  to  the  Royal  Bank  this  first  dividend  of  £3,600,  Saunders'  trustees 
claim  to  have  the  estate  under  their  administration  reimbursed  to  that  amount  out  of 
the  security  subjects  held  for  their  relief.  If  this  claim  is  sustained  the  sum  of 
£3,600  will  be  restored  to  the  estate,  and  will  be  available  with  any  other  accruing 
funds  for  a  second  distribution. 

5.  Assume  that  there  are  no  other  funds  available  for  a  second  dividend  than  this 
£3,600.     The  estate  will  then  pay  a  second  dividend  of  about  Is.  9c/.  per  pound. 

6.  A  second  dividend  at  Is.  9d.  on  the  Royal  Bank's  claim  will  be     £1,400     0     0 

7.  Having  paid  the  Royal  Bank  a  second  dividend  of  £1,400,  Saunders'  trustees 
claim  to  have  the  estate  under  their  administration  reimbursed  to  that  extent,  out  of 
the  security  subjects  held  for  their  relief. 

The  security  subjects  being  now  reduced  to  £4,000  —  £3,600  =  £400,  Saunders' 
estate  will"  only  recover  therefrom  £400  of  this  second  dividend  of  £1,400.  But  that 
sum  of  £400  will  become  available  for  a  third  dividend. 

8.  Assume  that  there  are  no  other  funds  available  for  a  third  dividend  than  this 
£400,  the  estate  will  pay  a  third  dividend  of  about  2\  per  pound  on  the  claims. 

9.  The  Royal  Bank  will  receive  a  third  dividend  at  2|  per  pound,  or      £160     0    0 

10.  As  the  security  subjects  are  already  more  than  exhausted,  Saunders'  estate  will 
not  recover  any  part  of  this  third  dividend  from  the  security  subjects.  The  estate 
itself  will  also  be  exhausted,  and  no  further  dividends  be  paid. 

1 1 .  The  result  will  be  that  the  Royal  Bank  will  receive  in  dividends  — 

£3,600     0    0 

1,400     0     0 

160     0     0 
£5,160    0    <? 

Of  this  sum  the  trustees  on  Saunders'  estate  will  have  recovered  £4,000  out  of  the 
security  subjects,  and  will  have  failed  to  recover  the  remaining  .     .     .     £1,160     0     0 

This  sum  will  therefore  be  taken  out  of  Saunders'  own  estate  to  the  reduction  of 
the  dividends  drawn  by  the  general  creditors  other  than  the  Royal  Bank. 

12.  If  the  rule  of  Ex  parte  Waring  is  applied,  the  Royal  Bank  will  recover  the 
amount  of  the  security  subjects £4,000    0     0 

And  will  rank  on  Saunders'  estate  for  £16,000—  £4,000  =  £12,000 
only.  But  as  the  liabilities  of  Saunders'  estate  will  thus  be 
reduced  by  £4,000  to  £36,000  the  dividends  which  the  estate 
can  pay  will  be  increased  proportionally  to  5s.  per  pound,  and  the 
dividend  which  the  Royal  Bank  will  receive  will  be £3,000     0    0 

£7,000     0     0 

13.  On  the  assumption  that  Ramsay's  estate  can  pay  the  same  dividends  in  either 
view  as  Saunders'  estate,  the  Royal  Bank  will  receive  from  Ramsay's  estate  — 

(1.)  If  the  rule  of  Ex  parte  Waring  is  not  applied £3,600     0    0 

(2.)  If  the  rule  of  Ex  parte  Waring  is  applied 3,000    0    0 

14.  The  effect  therefore  will  be  — 

(1.)  If  the  rule  of  Ex  parte  Waring  is  not  applied  the  Royal 

Bank  will  receive  in  dividends  from  Saunders' estate    .     .     £5,160    0    0 
Do.  from  Ramsay's  estate 3,600    0    0 

£8,760     0    O 


€HAP.  IV.]  IN   RE   WALKER.  633 


In  re  WALKER.     SHEFFIELD  COMPANY   v.    CLAYTON. 

In  Chancery,  before  Stirling,  J.,  January  14,  1892. 

[Reported  in  Law  Reports,  1892,  1  Chancery,  021.] 

Further  consideration.  This  was  an  action  to  administer  the  estate 
of  Hugh  Walker,  deceased. 

On  the  7th  of  May,  1885,  the  testator  guaranteed  the  current 
account  of  Messrs.  Spencer  Brothers,  of  Sheffield,  with  the  Sheffield 
and  Rotherhain  Banking  Company,  Limited,  to  the  extent  of  £1,000. 

By  an  indenture,  dated  the  1st  of  August,  1885,  Arthur  Spencer,  a 
member  of  the  firm  of  Spencer  Brothers,  in  consideration  of  the  above- 
mentioned  guarantee,  assigned  to  the  testator  by  way  of  mortgage,  but 
subject  to  a  previous  mortgage,  certain  hereditaments  at  Sheffield,  and 
covenanted  to  indemnify  the  testator  in  respect  of  his  guarantee.  On 
the  5th  of  July,  1886,  the  testator  gave  to  the  London  and  Yorkshire 
Bank,  Limited,  to  whom  the  banking  account  of  Spencer  Brothers  was 
then  transferred,  a  guarantee  to  secure  the  payment  of  all  moneys  then 
or  thereafter  payable  to  the  said  bank  b\-  the  firm  of  Spencer  Brothers, 
not  exceeding  £1,000.  On  the  same  date  Agnes  Spencer,  the  wife  of 
Arthur  Spencer,  as  a  securit}'  against  this  guarantee,  executed  to  the 
testator  a  memorandum  of  deposit  of  title  deeds,  relating  to  certain 
property  belonging  to  her,  and  by  a  further  memorandum,  dated  the 
18th  of  August,  1886,  in  which  her  husband  also  joined,  Mrs.  Agnes 
Spencer  agreed  to  execute  a  legal  mortgage  to  the  testator  of  the  prop- 
erty comprised  in  the  equitable  mortgage  to  secure  the  said  sum  of 
£1,000  and  interest.  On  the  9th  of  September,  1887,  the  banking  ac- 
count of  Spencer  Brothers  was,  with  the  approbation  of  Agnes  Spencer, 
transferred  to  the  plaintiffs,  the  Sheffield  Banking  Compan}',  Limited, 
and  on  the  same  date  the  testator,  with  the  full  knowledge  and  appro- 
bation of  Mrs.  Spencer,  gave  the  following  guarantee  to  the  plain- 
tiffs:  "  In  consideration  that  you  will  make  advances  and  grant  other 
accommodation  at  your  discretion  to  the  firm  of  Spencer  Brothers,  of 
Sheffield  Moor,  Sheffield,  wholesale  grocers,  I  hereby  guarantee  the 
pa}*ment  of  all  such  mone3*s  as  the  said  Spencer  Brothers  are,  or  may 
become,  liable  to  pay  to  you  on  current  account  or  on  an}r  other  ac- 
count or  in  any  manner  whatsoever,  but  so  that  the  total  amount  re- 

(2)  If  the  rule  of  Ex  parte  Waring  is  applied  the  Royal  Bank  will 

receive  the  value  of  the  security  subjects £4,000  0  0 

In  dividends  on  Saunders'  estate 3,000  0  0 

In  dividends  on  Ramsay's  estate 3,000  0  0 

£10,000  0  0 
Difference  in  favor  of  Royal  Bank  by  the  application  of  Ex 

parte.  Waring £1,240  0  0 

Do.  in  favor  of  Ramsay's  estate  —  £3,600  — £3,000  =  600  0  0 

And  Saunders'  estate  will  have  to  bear  the  increased  burden 
of  £3,000— £1,160= £1,840    0    0 


634  IN    HE    WALKER.  [CHAP.  IV. 

coverable  under  this  guarantee  shall  not  exceed  two  thousand  pounds. 
.  .  .  And  this  guarantee  shall,  in  the  event  of  my  death,  bind  and 
charge  my  estate  in  respect  of  transactions  and  dealings  subsequent  as 
well  as  prior  thereto,  and  continue  until  notice  shall  be  given  to  you 
bv  me,  my  executors  or  administrators  determining  the  same." 

The  testator  died  on  the  4th  of  November,  1888,  and  his  will,  dated 
the  12th  of  July,  1888,  was  proved  by  the  defendants,  the  executors, 
on  the  24th  of  January,  1889. 

On  the  2d  of  August,  1889,  the  firm  of  Spencer  Brothers  became 
bankrupt,  and  there  was  then  due  from  them  to  the  plaintiffs  the  sum 
of  £4,457  14s.  9d.  The  plaintiffs  received  certain  dividends  under  the 
bankruptcy  of  the  firm  and  from  the  separate  estate  of  Arthur  Spencer, 
in  respect  of  collateral  securities  held  by  them,  amounting  in  all  to 
£1,777  17s.  6cl,  leaving  the  sum  of  £2,679  lis.  3d.  due  to  them  from 
the  firm. 

On  the  25th  of  April,  1890,  upon  an  originating  summons  taken  out 
by  the  plaintiffs,  an  order  was  made  for  the  administration  of  the  testa- 
tor's estate.  On  the  6th  of  June,  1890,  the  defendants  received  from 
the  first  mortgagees  of  the  property  comprised  in  the  mortgage  of  the 
1st  of  August,  1885,  given  by  Arthur  Spencer  to  the  testator,  the  sum 
of  £45  0s.  Gd.,  being  the  balance  of  the  proceeds  of  sale  of  the  said 
property  after  deducting  what  was  due  to  the  first  mortgagees  on  their 
security  ;  and  on  the  6th  of  December,  1890,  the  defendants  received 
a  dividend  amounting  to  £169  10s.  3d.,  out  of  the  separate  estate  of 
Arthur  Spencer,  in  respect  of  his  covenant  to  indemnify  the  testator. 

By  an  agreement  of  compromise  dated  the  14th  of  April,  1891,  and 
made  between  Agnes  Spencer  and  the  defendants,  provision  was  made, 
subject  to  the  sanction  of  the  Court,  for  the  sale  of  the  property  com- 
prised in  the  equitable  mortgage  of  the  5th  of  July,  1886,  and  for  the 
application  of  the  mone}T  arising  from  such  sale  in  or  towards  the  pay- 
ment of  the  principal  and  interest  due  under  the  said  mortgage. 

By  an  order  dated  the  30th  of  April,  1891,  this  agreement  was 
directed  to  be  carried  into  effect. 

The  sale  was  duly  effected,  and  realized  the  sum  of  £250,  which  was 
received  b}*  the  defendants. 

The  plaintiffs  claimed  to  be  exclusively  entitled  to  the  above- 
mentioned  sums  of  £45  0s.  6d.  and  £169  10s.  3d,  on  the  ground  that 
they  were  received  by  the  defendants  in  respect  of  the  counter-security 
given  by  Arthur  Spencer  to  the  testator  against  his  liability  under  the 
guarantee ;  and  they  also  claimed,  on  similar  grounds,  to  be  exclu- 
sively entitled  to  the  £250  realized  by  the  sale  of  the  property  com- 
prised in  the  equitable  mortgage  ;  and,  further,  that  they  were  entitled 
to  prove  against  the  testator's  estate  for  the  balance  of  their  debt. 

Hastings,  Q.  C. ,  and  Curtis  Price,  for  the  plaintiffs. 

We  are  entitled  to  the  benefit  of  the  counter-securities  given  by  Mr. 
and  Mrs.  Spencer  to  the  testator. 

The  right  is,  of  course,  confined  to  the  case  of  the  surety  being  in- 


CHAP.  IV.]  IN    KE   WALKER.  635 

solvent.  As  the  surety,  if  he  pays  the  debt,  is  entitled  to  the  benefit 
of  till  securities  held  by  the  creditor,  so  the  creditor,  if  the  surety  does 
not  pay,  is  entitled  to  the  benefit  of  all  counter-securities  held  by  the 
surety. 

Buckle)/,  Q.  C,  and  Ingle  Joyce,  for  the  executors. 

The  supposed  rule  has  never  been  followed  or  acted  upon  since  1815. 
We  submit  that  it  is  contrary  to  principle. 

The  principal  creditor,  no  doubt,  is  entitled  to  prove  against  the 
surety's  estate,  but  his  utmost  right  is  to  fill  his  pocket  as  the  surety 
fills  his,  —  that  is  to  sa}-,  he  can  prove  against  the  estate  of  the  surety, 
and  if  the  surety's  estate  is  subsequently  increased  by  the  proceeds  of 
the  counter-security,  he  can  come  in  and  prove  again. 

[Stirling,  J.  Do  you  say  that  the  general  estate  of  the  surety 
ought  to  have  the  benefit  of  the  indemnity  ?] 

Yes. 

[Stirling,  J.  Then  his  estate  might  actually  recover  more  than 
he  pays?] 

No ;  it  is  only  an  indemnity.  When  the  security  is  realized  it  is 
assets  of  the  surety's  estate,  and  as  against  that  the  principal  creditor 
is  entitled  to  prove.  He  has  no  right  to  the  proceeds  of  the  security. 
The  surety  cannot,  of  course,  recover  more  than  he  has  had  to  pay. 
As  to  the  security  given  by  Mrs.  Spencer,  she  is  a  third  part}',  and 
there  is  no  trace  of  any  right  in  the  principal  creditor. 

_R.  J.  Parker,  for  the  beneficiaries  under  the  will  of  the  testator.1 

Stirling,  J.  (stated  the  facts,  and  continued)  :  — 

The  plaintiff's  contention  was  founded  upon  two  cases :  the  first  is 
an  old  case  of  Mawer  v.  Harrison.  It  is  reported  very  shortly  as  fol- 
lows :  "  A  bond  ci'editor  shall  in  the  Court  of  Chancery  have  the  bene- 
fit of  all  counter-bonds  or  collateral  security  given  by  the  principal  to 
the  surety  ;  as  if  A  owes  B  money,  and  he  and  C  are  bound  for  it, 
and  A  gives  C  a  mortgage  or  bond  to  indemnify  him,  B  shall  have 
the  benefit  of  it  to  recover  his  debt."  That  case  was  decided  in 
Michaelmas,  1692.  The  plaintiffs  also  relied  upon  a  dictum  of  Sir 
William  Grant,  in  Wright  v.  Morley,2  which  runs  thus:  "I  conceive, 
that,  as  the  creditor  is  entitled  to  the  benefit  of  all  the  securities  the 
principal  debtor  has  given  to  his  suret\-,  the  surety  has  full  as  good  an 
equity  to  the  benefit  of  all  the  securities  the  principal  gives  to  the 
creditor."  As  to  the  latter  portion  of  the  sentence,  there  is  no  ques- 
tion at  all.  It  is  well  established  at  this  date  that  the  surety  on 
paying  the  debt  is  entitled  to  stand  in  the  place  of  the  principal  cred- 
itor, and  to  have  the  benefit  of  all  the  securities  which  the  principal 
creditor  had.  Now,  these  two  cases  were  veiy  much  discussed  in  the 
well-known  case  of  Ex  parte  Waring,  before  Lord  Eldon.  That  case 
is  most  fully  reported  perhaps  in  Glyn  &  Jameson's  Reports.  It 
appears  from  that  report  that  in  the  course  of  the  argument  Lord 
Eldon  spoke  somewhat  disparagingly  of  the  case  -of  Mawer  v.  Harri' 

1  The  arguments  of  counsel  are  abridged.  —  Ed.  8  11  Ves.  22. 


636  IN   RE    WALKER.  [CHAP.  IV. 

son.     He  said  this:   "I  have  never  heard  this  case  relied  upon  as  a 
governing  case  at  this  day."     In  the  judgment  as  reported  he  puts  it 
thus  : 1  "  The  prayer  of  the  first  of  these  petitions  has  been  supported 
upon  this  ground,  that  the  short  bills  and  the  mortgage  .   .  .   having 
been  placed  with  Brick  wood  &  Co.  as  a  security  against  their  accept- 
ances, the  holders  of  these  bills  have  an  equity  to  have  that  security 
applied   specifically  to  the  discharge  of  those  acceptances,  upon  the 
general  ground,  that  upon  a  transaction  of  this  kind,  a  person  holding 
the  bills,  which  are  the  subject  of  indemnity,  has  a  right  to  the  benefit 
of  the  contract  between  the  principal  debtor  and  the  party  indemnified  ; 
and,  though  not  himself  a  party  to  that  contract,  to  sa}',  that  he,  who 
has  contracted  for  the  payment  of  certain  debts  out  of  those  pledges, 
is  liable  in  equity  to  the  demand  upon  the  part  of  those,  whose  de- 
mands are  to  be  so  paid,  for  that  application  ;  and  a  case  was  cited 
(Mawer  v.  Harrison)   which  goes   that  length.     With  regard  to  that 
case,  or  cases  in  general,  I  desire  it  to  be  understood  that  I  forbear 
to  give  my  opinion  upon  that  point."     Then  he  goes  on  to  sa}-  that  he 
decides,  not  on  that  principle  but  on  another  ground.     The  result  of 
these  two  cases  —  namely,  the  dictum  of  Sir  William  Grant,  in  Wright 
v.  Morle}-,2  and  the  judgment  and  observations  of  Lord  Eldon  in  Ex 
parte  Waring  —  seems  to  me  to  be  that  Sir  William  Grant  and  Lord 
Eldon  were  not  of  the  same  mind  on  the  point.     Under  these  circum- 
stances, I  was  very  anxious  to  discover  what  was  realty  done  in  the 
case  of  Mawer  v.  Harrison,  which  is  so  shortly  reported  in  1  Equity 
Cases,  Abridged.     The  registrar  has  been  kind  enough  to  make  search 
for  that  case.     No  decree  was  drawn  up,  but  the  entry  of  the  case  has 
been  found  in  the  registrar's  book,  and  the  pleadings  have  been  dis- 
covered, and  I  am  indebted  to  the  learned  senior  reporter  of  this  court, 
Mr.  Knox,  for  having  made  a  summary  of  them  for  my  use,  the  plead- 
ings themselves  being  somewhat  length}' ;  and  from  them  and  the  notes 
in  the  registrar's  book  it  is  tolerably  easy  to  discover  what  the  case 
was.     The  plaintiff  was  Thomas  Mawer,  the  defendants  were  William 
Harrison  and  William  Morley,  and  Mary,  his  wife.     Thomas  Mawer 
was  the  father  of  the  first  wife  of  William  Harrison,  the  father  of  Wil- 
liam Harrison,  the  defendant.     By  that  first  marriage,  William  Harri- 
son, the  father,  had  three  children,  —  namely,  William,  the  defendant, 
Thomas,  and  Margaret.      The  first  wife  having  died,  William  Harri- 
son, the  father,  married  his  second  wife,  Mary,  the  defendant,  after- 
wards the  wife  of  William  Morley,  and  subsequently  he  died  intestate, 
leaving  this  widow  and  the  three  children  by  the  first  wife,  the  persons 
entitled  to  his  personal  estate  under  the  Statute  of  Distribution.     Ad- 
ministration was  taken  out  by  his  widow,  and  the  share  of  the  three 
children  in  the  intestate's  property  amounted  to  £120.     It  appears  that 
the  plaintiff,  Thomas  Mawer,  the  grandfather  of  William  Harrison,  the 
defendant,   was  ver}7  anxious    that  William    Harrison,   his  grandson, 
should  continue  the  business  of  a  farmer,  which  had  been  carried  on 

1  19  Ves.  348.  2  11  Ves.  22. 


CHAP,  iv.j  IN    RE    WALKER.  637 

by  William  Harrison,  the  father  ;  but  for  that  purpose  it  was  necessary 
that  the  sum  of  £120,  which  formed  the  portion  of  the  intestate's  estate 
belonging  to  the  three  children,  should  be  paid  over  to  William  Harri- 
son, the  son  ;  and  that  was  accordingly  done.  The  two  other  children 
being  infants,  Thomas  Mawer,  the  plaintiff  in  the  action,  gave  a  bond 
to  the  defendant,  Mary  Morley,  the  legal  personal  representative  of  the 
intestate,  to  indemnify  her  against  all  claims  by  those  children.  It 
appears  that  at  this  time  William  Harrison,  the  defendant,  was  an  in- 
fant, but  the  money  was  paid  to  him.  He  attained  twenty-one,  and 
carried  on  the  farm.  Some  time  after  attaining  twenty -one  he  re- 
pudiated the  transaction,  and  began  to  press  William  Morley,  and 
Mary,  his  wife,  for  payment  of  his  share  of  his  father's  estate,  which 
he  had  already  received  in  point  of  fact,  though  apparently  an  infant. 
Thereupon  William  Morley  gave  him  a  bond  for  payment  of  his  share, 
and  William  Morley  and  Mary,  his  wife,  began  to  sue  the  plaintiff, 
Thomas  Mawer,  in  the  Court  of  Exchequer  for  payment  under  the 
bond  which  had  been  given  b}T  him.  Thereupon  the  plaintiff  instituted 
this  suit  in  equity  to  restrain  the  action,  and  to  obtain  delivery  up  of 
the  bond  which  had  been  given  by  him.  Now,  of  the  other  children 
who  were  interested  in  the  intestate's  estate,  Thomas  had  died  an  in- 
fant and  intestate,  and  Margaret  was  still  an  infant,  and  was  not  a 
party  to  the  suit.  The  argument  is  stated  in  the  registrar's  book.  It 
is  to  be  observed  that  the  bill  is  by  the  person  who  gave  the  bond,  to 
be  relieved  of  it,  and  the  result  is  thus  stated  in  the  registrar's  book : 
"The  Court  doth  declare  that  the  defendant,  William,  is  well  paid, 
and  he  must  deliver  up  the  bond  to  the  other  defendant  and  give  a 
release  and  decree  the  same  accordingly."  The  bond  there  mentioned 
is,  as  I  read  it,  that  which  had  been  given  by  William  Morley  to  the 
defendant,  William  Harrison,  for  payment  of  his  share.  Whether  that 
relief,  being  relief  between  co-defendants,  ought  to  have  been  given  by 
the  decree  may  be  a  question.  Then  it  goes  on  :  "  Sta}'  all  proceed- 
ings at  law  on  the  plaintiff's  £100  bond  "  —  that  is  a  mistake  for  £120, 
as  clearly  appears  from  the  previous  passage  in  the  registrar's  note, 
where  it  is  corrected  in  the  margin,  but  the  correction  is  omitted  here 
—  so  that  all  proceedings  on  the  plaintiff's  bond  were  stayed  —  "till 
Margaret  doth  release,  and  when  the  plaintiff  hath  procured  Margaret, 
who  is  not  a  part}'  to  the  action,  to  release  that  bond,  then  that  bond 
to  be  delivered  up"  —  and  so  forth  —  "but  then  the  plaintiff's  bond 
to  be  at  suit  for  the  recovery  of  Margaret's  moiety  of  £120."  So  that 
all  that  was  decided  in  that  action  was  this  :  that  the  plaintiff,  who 
had  given  his  bond  of  indemnity,  was  not  entitled  to  have  it  delivered 
up  to  be  cancelled  till  all  claims  had  been  settled.  Under  those  cir- 
cumstances, it  appears  that  the  point  for  which  it  was  cited  in  1  Equity 
Cases,  Abridged,  could  not  have  been  decided  in  that  case;  and  that 
at  most  the  reported  statement  amounts  to  a  dictum  in  the  course  of 
the  argument.  It  is  now  nearly  two  hundred  }-ears  since  this  case  was 
decided,  and  the  sole  authorities  on  a  point  which  must  have  been  of 


638  EX   PARTE    MORRIS.      IN    RE    FOYE.  [CHAP.  IV. 

frequent  occurrence  are  these :  a  dictum  in  1692,  a  dictum  early  in  the 
century  by  Sir  William  Grant  in  the  year  1805,  and  what  appears  to 
me  to  be  the  contrary  opinion  of  Lord  Eldon  a  little  later. 

Under  these  circumstances,  it  seems  to  me  that  there  is  no  real 
authority  for  the  proposition  in  question  ;  and  upon  principle,  I  cannot 
see  why  a  surety  who  takes  from  the  principal  debtor  a  bond  or  in- 
demnity at  once  becomes  a  trustee  of  that  for  the  principal  creditor. 
That  is  really  the  contention  of  the  plaintiffs.  Of  course,  the  other 
doctrine  is  well  established  —  viz.,  that  the  surety  who  pays  the  debt 
is  entitled  to  stand  in  the  place  of  the  principal  creditor ;  but  the  doc- 
trine contended  for  by  the  plaintiffs  rests  entirely  on  those  dicta  which 
I  have  mentioned. 

It  seems  to  me,  under  these  circumstances,  that  I  cannot  give  effect 
to  the  contention  of  the  plaintiffs,  and  that  they  must  simply  be  left 
to  prove  against  the  estate  of  the  testator  for  what  is  due  to  them, 
without  having  the  exclusive  benefit  of  these  securities  in  respect  of 
which  payments  have  been  made  to  the  estate. 


Ex  parte  MORRIS.     In  re  FOYE. 
In  the  United  States  District  Court,  Massachusetts. 

[Reported  in  2  Lowell,  424.] 

In  June,  1874,  George  F.  Foye  mortgaged  his  stock  and  fixtures 
to  his  brother,  John  W.  Foye,  to  secure  him  for  all  liabilities  he  has 
assumed  or  might  assume  for  the  mortgagor.  Within  a  few  months 
both  parties  became  bankrupt,  and  the  petitioner  was  chosen  assignee 
of  both  estates.  He  realized  about  $9,000  from  the  sale  of  the  mort- 
gaged property,  and  nothing  of  importance  from  any  other  assets 
in  either  case.  Upon  his  petition,  asking  directions  for  the  distribu- 
tion of  the  assets,  the  register  notified  all  creditors,  and  from  his 
report  and  from  the  papers  on  file  it  appeared  that  John  W.  Foye 
had  indorsed  for  his  brother  for  more  than  $15,000,  all  of  which 
debt  was  outstanding,  and  formed  the  bulk  of  the  indebtedness  of 
both  estates;  that  the  creditors,  holding  the  notes,  had  proved  against 
both  estates,  and  most  of  them  had  voted  for  the  assignee ;  that  none 
of  them  had  appeared  before  him  at  the  hearing  of  this  petition;  that 
one  general  creditor  of  George  F.  Foye  had  appeared  and  filed  a 
brief,  which  was  sent  to  the  court. 

The  register  reported  that  the  money  received  for  the  stock  and 
fixtures  should  be  divided  among  the  creditors  of  George  F.  Foye 
without  distinction,  because  the  holders  of  the  notes  had  waived  any 
equity  they  might  have  had,  by  proving  in  full,  and  voting  under  both 
bankruptcies;  and  because  the  assets  of  John  W.  Foye  being  insuffi- 
cient to  pay  any  dividend,  his  creditors  had  suffered  and  could  suffer 


CHAP.  IV.]        EX  PARTE  MORRIS.   IN  HE  FOYE.  639 

do  injury  from  the  indorsements,  and  therefore  the  mortgage  had  be* 
come  inoperative. 

Lowell,  J.  It  is  well  settled  that  if  a  mortgage,  pledge,  or  lien 
is  given  by  a  principal  debtor  to  secure  his  indorsee  or  other  surety, 
and  both  become  insolvent,  the  holders  of  the  notes  or  other  debts  for 
which  the  surety  is  bound  have  an  equity  to  require  the  property  to 
be  applied  to  the  discharge  of  their  debts  specifically.  Many  of  the 
American  cases  upon  this  subject  are  reviewed  by  the  late  Judge  Hall 
in  Jaycox's  Case,1  and  by  the  learned  American  editors  in  1  Lead. 
Cas.  Eq.  (ed.  1859)  p.  16o.  The  English  decisions  I  have  not  seen 
fully  collected,  but  have  had  occasion  to  examine  them  more  than 
once.  Some  of  the  more  important  of  them  are  Ex  parte  Waring; 
Powles  v.  Hargreaves ; 2  Ex  parte  Carrick ; s  Ex  parte  Copeland ; 4 
Ex  parte  Prescott; 5  Inman  v.  Clare ; 6  Bank  of  Ireland  v.  Perry ; 7  City 
Bank  v.  Luckie;8  Ex  parte  Dewhurst.9 

Under  all  these  decisions,  in  both  countries,  the  holders  of  the 
notes  would  prima  facie  have  the  equity  which  I  have  referred  to. 
But  this  equity  is  obtained  by  subrogation,  and  depends  upon  the 
equities  between  the  parties  to  the  mortgage.  Thus  it  has  been  held 
that  if  the  surety  has  been  discharged  by  the  negligence  of  the  cred- 
itors, or  if  the  state  of  the  accounts  between  the  parties  is  such  that 
the  surety  has  lost  his  lien,  the  creditors  have  no  equity.  Hopewell 
v.  Bank  of  Cumberland;10  Bibb  v.  Martin;11  Vaughan  v.  Halliday;12 
Ex  parte  Parr.18 

It  is  further  settled  that  the  creditors  must  work  out  their  equity, 
and  apply  their  security  so  as  to  prove  against  either  estate  for  the 
deficiency  only.14    New  Bedford  Inst.  v.  Fairhaven  Bank;15  Jaycox's 

1  8  N.  B.  R.  241 .  2  3  De  Gex,  M.  &  G.  430. 

3  2  De  Gex  &  J.  208.  4  3  Dea.  &  Ch.  199. 

5  3  Dea.  &  Ch.  218.  6  Johns.  Eq.  769. 

*  L.  R.  7  Exch.  14.  8LR.5  Ch.  773. 

9  L.  R.  8  Ch.  965.  10  10  Leigh,  206. 

n  14  Smedes  &  M.  87.  12  L.  R.  9  Ch.  561. 

13  Buck,  191. 

14  The  reason  for  this  rule  in  England  is  explained  by  Sir  George  Jessel,  M.  R.,  iis 
Ex  parte  Joint-Stock  Co.,  19  Eq.  1,  9, 13  :  "  It  is  plain  that  Lord  Eldon  not  only  reduced 
the  proofs,  but  he  made  them  pay  back  the  dividends.  In  other  words,  the  equity  he 
administered  was  this:  he  treated  it  as  if  the  securities  had  been  realized  at  the 
moment  of  bankruptcy,  disregarding  the  fact  that  by  the  nature  of  the  case  they  were 
not  realized  until  some  time  afterwards.  That  seems  to  be  the  view  he  took.  ...  In 
that  way  it  does  appear  to  me  that  the  order  of  Lord  Eldon  is  perfectly  reconcilable 
with  the  judgment  of  Lord  Cranworth  [in  Powles  v.  Hargreaves,  3  D.  M.  &  G.  430],  and 
can  only  be  made  intelligible  on  that  srround  ;  because,  if  it  were  not  so,  on  what  ground 
do  you  make  a  creditor  reduce  a  proof  and  hand  hack  dividends  ?  It  is  not  a  security 
to  him  ;  if  it  had  been  a  security  to  him,  he  must  in  bankruptcy  have  deducted  it  from 
the  proof  in  the  first  instance.  Then  it  is  not  a  payment  after  proof  ;  for  there  can  be 
nothing  better  settled  in  bankruptcy,  and  no  rule  less  open  to  dispute,  than  that  pay- 
ment by  a  third  party  after  proof  does  not  reduce  the  proof  —  still  less  can  it  make  the 
creditor  pay  back  the  dividend."  See  also  the  remarks  of  James,  L.  J.,  in  the  same 
case  on  appeal,  10  Ch.  198,  200.  —  Ed. 

I6  9  Allen,  175. 


640  EX   PARTE   MORRIS.      IN    HE    FOYE.  [CHAP.  IV. 

Case;1  Powles  v.  Hargreaves ; 2  Banner  v.  Johnston ;  3  Ex  parte  Joint- 
Stock  Disc.  Co.4  There  are  many  other  cases,  but  none  opposed  to 
these.  The  reason  is,  that  the  equity  is  primarily  that  of  the  two 
estates,  and  the  general  creditors  of  each  have  a  right  to  say  that 
the  security  shall  be  applied  before  the  debt  is  proved.  Indeed,  the 
decision  of  Ex  parte  Waring  was  put  wholly  upon  the  equities  of  the 
two  estates,  and  several  judges  since  have  said  that  the  secured  or 
quasi  secured  creditors  have  no  equity  of  their  own;  but  this  dis- 
tinction has  not  been  found  useful,  as  the  courts  are  bound  to  apply 
the  equity,  whoever  may  ask  for  the  application,  and  they  have  found 
themselves  obliged  to  apply  it,  in  many  of  the  cases,  upon  the  peti- 
tion of  the  secured  creditors. 

It  results  from  this  rule,  that  if  the  holders  of  the  notes,  or  other 
privileged  debts,  prove  in  full,  they  waive  their  security.  New  Bed- 
ford Inst.  v.  Fairhaven  Bank;5  Jaycox's  Case.6  I  desire,  however, 
to  make  one  or  two  remarks  on  those  cases.  In  Jaycox's  Case, 
Judge  Hall  said,  very  justly,  that  if  the  holders  of  the  secured  notes 
proved  in  full  against  the  estate  of  the  bankrupt  principal,  without 
the  consent  of  the  solvent  surety,  they  would  thereby  release  the  surety 
to  the  extent  of  the  value  of  the  security,  and  at  the  same  time 
abandon  the  security  for  the  benefit  of  the  estate  of  the  principal. 
He  had  also  said  that  the  assent  of  the  surety,  or  the  fact  that  he 
was  bankrupt,  would  probably  make  no  difference,  as  it  clearly  would 
not,  because  the  general  creditors  of  the  principal  have  a  right  to 
insist  that  full  proof  shall  not  be  made  against  the  principal's  estate, 
except  upon  waiver  of  the  security  for  their  benefit.  He,  however, 
permitted  the  proofs  in  full  against  that  estate  to  stand,  apparently 
upon  the  ground  that  the  resulting  rights  of  the  parties  might  be  set- 
tled in  another  action,  which  is  technically  sound ;  but  the  bankrupt 
court  has  undoubted  power,  and  it  would  sometimes  be  its  duty  to 
see  that  the  property  was  actually  surrendered,  at  least  before  divi- 
dends are  paid  upon  the  proofs.  A  court  of  law,  in  an  action  arising 
out  of  the  very  case  before  Judge  Hall,  refused  to  give  the  surety 
the  benefit  of  such  a  supposed  release.    Merchants'  Bank  v.  Comstock.7 

In  the  case  in  9  Allen,  it  was  held,  and  very  justly,  that  proof 
against  both  estates  waived  the  security.  The  consequent  equities 
were  not  considered,  and  no  one  appears  to  have  asked  for  their  deter- 
mination. They  would  be  that  the  surety's  estate  must  surrender  the 
security,  and  that  the  proofs  against  that  estate  must  be  reduced  to 
the  extent  of  the  full  value  of  the  security.8 

1  8  N.  B.  R.  241,  per  Hall,  J.  2  3  Mont.,  T).  &  De  G.  576. 

3  L.  R.  5  H.  L.  137.  *  L.  R.  19  Eq.  1,  and  L.  R.  10  Ch.  198. 

5  9  Allen,  175.  6  8  N.  B.  R.  241,  per  Hall,  J. 

T  55  N.  Y.  24. 

8  Re  Jaycox,  8  N.  B.  R.  241  (semble),  Accord. 

But  in  Curry  v.  McConley,  11  Fed.  II.  365,  and  Merchants'  Bank  v.  Comstock, 
55  N.  Y.  24, 11  N.  B.  R.  235,  s.  C,  it  was  decided  that  proof  for  the  full  amount  against 
the  principal  debtor  did  not  reduce  the  proof  against  the  surety.  —  Ed. 


CHAP.  IV.]  JONES    V.   QUINNIPIACK    BANK.  641 

In  the  present  case,  the  proof  having  been  made  against  both 
estates,  the  rule  above  indicated  would  be  followed,  but  for  the  fact 
that  there  will  be  no  dividend  in  the  estate  of  John  W.  Foye,  and 
therefore  it  is  not  worth  while  to  go  to  the  expense  of  reforming  the 
proofs. 

I  am  somewhat  inclined  to  think  the  other  reason  given  by  the 
register  for  regarding  the  mortgage  as  valueless  may  be  sound.  The 
mortgage  being  for  the  indemnity  of  the  surety,  and  the  holders  of 
the  notes  having  no  equity  excepting  through  him,  although  it  is 
perfectly  clear  that  this  equity  does  not  depend  on  the  surety's  being 
personally  damnified,  or  upon  his  having  been  damnified  before  his 
bankruptcy,  yet  I  think  it  may  be  doubted  whether  the  assignee  of 
the  principal  has  not  a  right  to  the  security,  when  it  is  clear  that  no 
damage  can  possibly  happen  to  the  estate  of  the  bankrupt  surety. 
A  doubt  arises,  on  the  other  hand,  from  this  consideration.  Suppose 
the  surety  should  not  obtain  his  discharge,  would  he  not  have  a  right 
to  say  that  the  property  ought  to  have  been  applied  exclusively  to  his 
exoneration,  and  not  to  the  general  debts  of  his  principal?  This 
might  be  met,  perhaps,  by  those  creditors  tendering  him  personally 
an  indemnity,  or,  as  they  have  a  largely  controlling  voice  in  both 
bankruptcies,  by  procuring  his  discharge.  It  must  be  admitted,  too, 
that  the  American  decisions  seem  to  regard  the  equity  as  a  positive 
one,  subject  only  to  the  rights  of  the  surety. 

I  place  my  decision,  therefore,  upon  the  ground  that  the  creditors 

have  proved  in  full,  and  acted  as  general  creditors  of  the  estate  of 

George  F.  Foye,  the  principal,  and  thereby  have  waived  the  security.1 

The  assignee  is  to  divide  the  proceeds  of  sale,  pro  rata,  among  all 

the  creditors  of  George  F.  Foye. 


S.  P.  JONES  and  Another  v.  THE  QUINNIPIACK  BANK 

and  Others. 

In  the  Supreme  Court  of  Errors,  Connecticut,  February  Term» 

1860. 

[Reported  in  29  Connecticut  Reports,  25.] 

Bill  in  equity  to  compel  a  conveyance  of  certain  real  estate  and  for 
a  foreclosure.     The  petitioners  were  Seth  B.  Jones  and  the  New  Haven 

1  Re  Jaycox,  8  N.  B.  R.  241;  Re  Holbrook,  2  Low.  259;  Curry  v.  McConley, 
IT  Fed.  R.  365;  New  Bedford  Inst.  v.  Fairhaven  Bank,  9  All.  175  ;  Franklin  Bank  v. 
First  Bank,  138  Mass.  515,  Accord. 

In  Re  Holbrook,  2  Low.  259,  it  was  ruled  that  the  security  must  be  surrendered  or 
applied  before  the  creditor  could  prove  against  the  principal.  But  see  Franklin  Bank 
«.  First  Bank,  138  Mass.  515,  520.  —  Ed. 

41 


642  JONES   V.    QUINNIPIACK   BANK.  [CHAP.  IV. 

County  Bank.     The  facts,  as  found  by  a  committee,  were  substantially 
as  follows :  — 

The  Jerome  Manufacturing  Company,  on  the  7th  of  November,  1855, 
conveyed  the  premises,  by  a  mortgage  deed,  to  Phineas  T.  Barnum  ; 
the  condition  of  the  mortgage  being  as  follows:  "The  condition  of 
this  deed  is  such,  that  whereas  the  said  Barnum  has  this  day  become 
the  indorser  and  acceptor  on  the  bills  and  notes  of  the  said  grantor,  or 
upon  bills  and  notes  for  the  benefit  of  said  grantor,  to  the  amount  of 
fifty  thousand  dollars,  and  may  also  continue  to  be  acceptor  or  indorser 
upon  like  bills  or  notes  to  that  amount,  either  in  renewal  thereof  or 
anew  ;  now,  therefore,  if  the  said  grantor  shall  pay  at  maturity  all  such 
acceptances,  or  notes  and  bills,  and  save  harmless  the  said  Barnum  by 
reason  of  his  said  indorsements  or  acceptances,  at  any  time  outstanding 
to  that  amount,  then  this  deed  shall  be  null  and  void,  but  otherwise  of 
full  force  and  effect  in  the  law."  On  the  same  dajr,  and  on  the  9th  of 
November,  Barnum,  upon  the  security  of  the  mortgage,  accepted  bills 
drawn  on  him  by  the  company,  to  the  amount  of  over  $50,000  ;  most 
of  which  were  held,  at  the  time  of  suit  brought,  by  the  petitioners. 

On  the  15th  of  November,  1855,  the  Jerome  Company  and  Barnum 
proposed  to  the  Quinnipiack  Bank  (the  principal  respondent)  to  make 
a  loan  of  $30,000  to  the  company,  by  discounting  the  drafts  of  the 
company,  accepted  b}T  Barnum,  to  that  amount ;  and  it  was  finally 
agreed  that  the  bank  should  advance  Virginia  bonds  to  that  amount, 
that  twelve  drafts  of  the  Jerome  Company  on  Barnum  for  $2,500  each 
should  be  accepted  by  him  and  delivered  to  the  bank,  and  that  Barnum 
should  assign  to  the  bank  the  mortgage  of  the  Jerome  Company  above 
described.  The  bills  were  at  once  drawn  and  accepted  by  Barnum  and 
delivered  to  the  bank,  and  Barnum  executed  a  quitclaim  mortgage-deed 
of  the  premises  to  the  bank,  the  conveyance  to  be  void  if  Barnum  honored 
the  said  twelve  drafts.  The  mortgage  was  at  once  put  upon  record. 
Immediately  on  receiving  it  the  Quinnipiack  Bank  delivered  the  $30,000 
of  Virginia  bonds  to  the  Jerome  Company. 

The  Jerome  Compaii}'  and  Barnum  were  solvent  and  in  good  credit 
at  the  time,  and  the  mortgage  was  taken  by  the  bank  in  good  faith,  in 
the  belief  that  Barnum  had  the  right  to  mortgage  the  premises  as  ex- 
clusive securit}'  for  the  twelve  acceptances  mentioned,  and  without  any 
knowledge  of  the  existence  of  the  other  acceptances,  except  so  far  as  the 
condition  of  the  original  mortgage  would  be  regarded  in  law  as  notice 
to  them. 

The  Quinnipiack  Bank,  Barnum,  and  the  trustees  of  the  insolvent 
estate  of  Barnum  were  made  respondents.  The  bill  prayed  that  the 
respondents  be  foreclosed  of  all  right  to  redeem  the  premises,  unless 
they  paid  the  amount  of  the  acceptances  held  by  the  petitioners,  and 
embraced  in  the  mortgage  of  November  7,  1855  ;  and  that  upon  failure 
to  pay,  the  Quinnipiack  Bank  be  required  to  convey  the  premises  to  the 
petitioners,  or  that  the  court  would  decree  that  the  title  to  the  same 
should  become  vested  in  the  petitioners. 


CHAP.  IV.]  JONES    V.    QUINNIPIACK    BANK.  643 

The  Superior  Court  dismissed  the  bill.1 

Ellsworth,  J.  We  do  not  discover  an}-  error  in  this  record  which 
calls  for  a  reversal  of  the  judgment  below. 

The  first  and  fundamental  position  of  the  petitioners'  counsel,  that 
the  deed  of  the  Jerome  Manufacturing  Company  to  PhineasT.  Barnum, 
dated  the  7th  day  of  November,  1855,  is,  in  itself,  a  deed  of  trust  in 
behalf  of  creditors,  who  should  afterwards  hold  the  paper  indorsed  or 
accepted  by  him,  constituting  Barnum  their  trustee,  and  obliging  him 
thereafter  so  to  continue  in  spite  of  whatever  he  and  the  Jerome  Manu- 
facturing Company  might  do,  although  the  parties  were  solvent,  and  no 
equities  had  arisen  in  behalf  of  the  holders  of  the  paper,  cannot,  we 
think,  be  maintained  as  good  law.  It  is  claimed  that  this  principle  is 
but  the  legitimate  consequence  of  the  doctrine  of  equity,  that  when 
collateral  security  is  taken  for  the  protection  of  a  debt,  it  shall  be  made 
effectual  therefor,  not  only  to  the  person  who  first  takes  the  security,  but 
to  any  other  person  who  may  afterwards  become  entitled  to  the  debt,  or 
be  compelled  to  pay  it  as  an  indorser  or  surety. 

That  there  is  such  a  general  doctrine  of  equity  we  do  not  deny.  The 
authorities  are  too  numerous  to  allow  of  any  question  with  regard  to  it, 
and  their  good  sense  and  proprietj*  are  most  obvious ;  but  when  the 
doctrine  is  attempted  to  be  applied  to  a  case  like  the  one  before  us,  it  is 
clear  that  an  important  distinction  is  overlooked. 

We  consider  the  deed  to  Mr.  Barnum  to  have  been  given  for  the 
exclusive  purpose  of  saving  him  harmless  from  the  acceptances  and 
indorsements  he  might  give  for  the  Jerome  Manufacturing  Compan}7. 
This  is  the  very  language  of  the  deed,  and  it  was  clearly  its  only  object. 
Not  a  word  is  said  about  a  trust  or  fund  for  third  persons  ;  nor,  we  are 
sure,  was  anything  of  the  kind  in  the  minds  of  the  parties.  It  may  be 
true  that,  under  certain  circumstances,  a  future  equity  might  spring  up 
in  favor  of  creditors,  which  a  court  of  equity  would  enforce  ;  yet  here 
no  such  equity  has  arisen  ;  and  we  remark,  as  it  was  so  strongly  urged 
upon  us  in  the  argument,  that  there  is  nothing  in  the  phraseology  of 
the  condition  of  the  deed  —  "  that  the  mortgagor  is  to  pay  the  accept- 
ances and  indorsements"  —  which  distinguishes  it  from  an  ordinary 
mortgage.  The  language  points  out  the  mode  in  which  the  Jerome 
Manufacturing  Company  agree  to  save  Mr.  Barnum  harmless  from  his 
liabilities.     The  mortgage  is  both  in  effect  and  form  for  indemnity. 

If,  then,  the  language  of  the  deed  does  not  create  a  trust,  and  we 
are  to  seek  further  for  it,  wherein  is  it  to  be  found?  How  is  it  super- 
induced upon  the  deed,  or  on  Mr.  Barnum,  the  mortgagee?  At  that 
time  the  Jerome  Manufacturing  Company  and  Barnum  were  solvent  and 
in  good  credit.  Whatever  paper  had  their  names  upon  it  was  regarded 
as  perfectly  good,  and  no  one  thought  of  calling  it  in  question.  Why, 
then,  might  not  the  indorser  give  up  or  waive  his  security?  Why 
might  he  not  let  the  Jerome  Manufacturing  Company  take  it  back,  and 

x  The  statement  of  the  case  is  abridged,  and  only  a  portion  of  the  opinion  of  the 
Court  is  given.  —  Ed. 


644  JONES   V.    QUINNIPIACK    BANK.  [CHAP.  IV. 

appropriate  it  to  secure  the  Quinnipiack  Bank,  or  any  third  party  who 
would  on  that  security  loan  money  to  the  company?  We  think  nobody 
but  Barnum  could  object  to  this.  Certainly  Baniuna  was  not  obliged  to 
take  security  in  the  first  instance,  nor,  having  taken  it,  is  he  of  course 
obliged  to  hold  it.  Being  solvent  and  no  new  equities  having  as  yet 
arisen,  the  parties  were  entirely  free  to  act  their  pleasure.  This 
appears  to  us  to  be  the  only  just  conclusion ;  and  the  idea  that  the 
original  transaction  between  the  parties  to  the  deed  stamped  it  with  a 
trust,  placing  tlie  property  beyond  their  control,  locking  it  up  inper- 
peticum,  or  until  consent  should  be  obtained  from  every  person  who 
might  possibly  hold  a  piece  of  the  indorsed  paper,  is  one  that  cannot 
be  entertained  for  a  moment.  Especially  is  this  so  where  the  party 
secured  is,  as  here,  an  indorser,  who  does  not  stand  on  the  same 
ground  as  a  creditor,  since  an  indorser  seeks  merely,  by  taking  a 
mortgage,  to  secure  himself  from  a  possible  loss,  while  the  creditor  who 
takes  security,  originally  had  his  eye  on  the  security  itself,  as  a  fund  for 
payment  in  case  of  bankruptcy. 

It  is  claimed  that,  whatever  may  have  been  the  intention  of  the 
parties,  and  whatever  was  their  situation  at  the  time  of  the  execution 
of  the  deed,  an  equity  arises  at  once,  and  continues  to  adhere  to  the 
propert}',  in  favor  of  all  and  each  of  the  subsequent  holders  of  the 
paper  in  its  circulation,  until  it  is  fully  paid.  Not  that  this  is  expressed 
or  implied  b}'  the  language  of  the  deed,  nor  that  the  title  to  the  security 
is  itself  negotiable  or  transferable  without  a  proper  deed  of  conveyance, 
but  that  it  is  just  and  equitable  to  hold  the  indorser  to  be  a  trustee  for 
creditors,  and  having  become  so  by  force  of  the  deed,  he  must  continue 
to  be  a  trustee,  although  he  has  honestly  and  in  good  faith  surrendered 
the  property  to  the  true  owner.  This  course  of  argument  assumes  the 
very  point  in  controvers}',  that  the  legal  effect  of  the  deed  is  such  as  to 
create  a  trust  by  its  own  operation,  a  doctrine  to  which  we  cannot  give 
our  assent. 

There  is  no  error  in  the  judgment  complained  of,  and  it  must  be 
affirmed. 

» 

In  this  opinion  the  other  judges  concurred,  except  Sanford,  J.,  who, 
being  disqualified  by  interest,  did  not  sit.  Judgment  affirmed} 

1  Thrall  v.  Spencer,  16  Conn.  139  (semble)  ;  Hartford  Co.  v.  First  Bank,  46  Conn. 
569  (semble);  Rittenhouse  v.  Kemp,  37  Ind.  258;  Rankin  v.  Wilsey,  17  Iowa,  463; 
Tilford  v.  James,  7  B.  Mon.  336  (at  any  time  before  surety's  liability  is  fixed.  But  see 
Taylor  v.  Farmers'  Bank,  87  Ky.  398,  402)  ;  St.  Louis  Co.  v.  Clark,  36  Mo.  601  (semble) ; 
Logan  v.  Mitchell,  67  Mo.  524  (semble) ;  Tolle  u.  Boeckler,  22  Mo.  Ap.  498  ;  Price  v. 
Trusdell,  28  N.  J.  Eq.  200,  205  (semble);  Bank  v.  Jenkins,  64  N.  Ca.  719  (but  see 
Ijames  v.  Gaither,  93  N.  Ca.  358)  ;  Worrall's  App.,  41  Pa.  524,  527  (semble) ;  Harmony 
Bank's  App.,  101  Pa.  428  (semble) ;   Walker  v.  Oglesby,  85  Tenn.  321,  Accord. 

Durham  v.  Craig,  79  Ind.  117  ;  Kunkel  v.  Fitzhugh,  22  Md.  67  ;  Boyd  v.  Parker, 
43  Md.  182;  Eastman  v.  Foster,  8  Met.  19  (semble);  Rice  v.  Dewey,  13  Gray,  47, 
Coritra. 

Iu  Bank  v.  Jenkins,  supra,  Pearson,  C.  J.,  said,  p.  731 :  "A,  in  order  to  induce  B 
to  become  his  surety  on  a  debt  to  C,  puts  a  horse  in  the  hands  of  B,  for  his  indemnity  ; 
there  is  no  contract  between  B  and  C  in  respect  to  the  horse,  and  so  far  as  C  is  con> 


CHAP.  IV.J  SUMNER   V.    BACIIELDER.  645 


AUSTIN  SUMNER  and  Another  v.  JAMES  R.  BACHELDER. 
In  the  Supreme  Judicial  Court,  Maine,  1849. 

[Reported  in  30  Maine  Reports,  35. J 

Shepley,  C.  J.1  The  plaintiffs  are  creditors  of  Hall  &  Turner. 
The  defendant  is  the  sheriff  of  this  county.  The  action  is  trover 
brought  to  recover  the  value  of  certain  goods  attached  and  sold  by  a 
deputy  of  the  defendant  as  the  property  of  William  G.  Hall.  It  is 
admitted  that  he  was  formerly  the  owner  of  the  goods.  The  plaintiffs 
claim  to  have  derived  their  title  to  them  from  him.  It  was  stated  in 
argument  that  the  defendant  had  exhibited  no  title. 

They  exhibit  a  conveyance  of  the  goods  in  mortgage  made  on 
December  29,  1847,  and  recorded  in  the  town  records  on  the  following 
day  by  William  G.  Hall  to  Hall  &  Turner,  upon  condition  to  be  void 
upon  payment  by  William  G.  Hall  of  the  sum  of  $1,343,  being  the 
amount  of  two  notes  described,  given  by  William  G.  Hall  to  Hall 
&  Turner  ;  and  an  assignment  of  that  mortgage  to  themselves,  made 
on  February  7,  1848,  and  recorded  in  the  town  records  the  same  day. 
The  notes  described  in  the  condition  were  not  produced.  To  prove 
that  the  mortgage  was  made  for  a  valuable  consideration,  the  plaintiffs 
introduced  Charles  O.  Turner,  of  the  firm  of  Turner  &  Hall,  who  testi- 
fied, in  substance,  that  the  mortgage  was  made  to  secure  Hall  &  Turner 
for  signing  two  promissory  notes  produced,  as  sureties  for  William  G. 
Hall ;  that  Hall  &  Turner  had  no  other  notes  against  William  G.  Hall, 
that  he  recollected ;  that  the  schedule  annexed  to  the  mortgage  was 
made  the  day  before  the  goods  were  attached  ;  that  Hall  &  Turner  had 
no  other  security  than  the  mortgage  for  signing  those  two  notes  for 
William  G.  Hall. 

The  notes  produced  were  signed  by  William  G.  Hall  and  by  Hall  & 
Turner.  One  of  them  bearing  date  on  November  12,  1847,  was  made 
payable  to  Sumner,  Brewer,  &  Co.,  in  four  months  with  interest  after, 
for  the  sum  of  $916.41.  The  other  bearing  date  on  December  28,  1847, 
was  made  payable  to  Little,  Spear,  &  Co.  in  two  months  from  date,  for 
$426.11. 

Admitting  that  the  parol  testimony  excluded  should  have  been 
received,  the  whole  proof  as  now  presented  under  the  motion  shows 

cerned,  it  is  difficult  to  see  why  B  may  not  sell  the  horse,  or,  if  he  choose  to  surrender 
the  indemnity,  aud  give  the  horse  back  to  A  ;  that  is,  provided  B  is  solvent  and  fully 
able  to  pay  the  debt ;  for  if  B  is  insolvent  and  is  about  to  make  way  with  the  fund,  it 
is  a  fraud  on  C  which  the  Court  will  prevent,  by  converting  B  into  a  trustee  of  the 
fund  for  the  benefit  of  C.  In  the  latter  case  the  equity  is  clear,  but  in  the  former  I 
confess  my  inability  to  see  any  ground  on  which  an  equity  can  rest.  If  the  surety  be 
not  insolvent,  how  does  it  concern  the  creditor  what  he  does  with  the  indemnity 
fund?"  — Ed. 

1  Only  a  portion  of  the  opinion  of  the  Court  is  given.  —  En 


646  SUMNER   V.   BACHELDER.  [CHAP.  IV. 

that  the  mortgage  was  made,  or  that  it  was  intended  to  have  been  made, 
to  indemnify  Hall  &  Turner  for  becoming  sureties  for  William  G.  Hall 
on  the  two  notes  first  named.  The  question  is  therefore  still  presented, 
whether  at  the  time  of  the  trial  the  plaintiffs  had  such  a  title  to  the 
goods  that  they  could  maintain  their  action. 

They  had  before  that  time,  on  October  7,  1848,  by  an  instrument 
under  their  hands  and  seals,  released  Hall  &  Turner  "  from  any  and 
all  liability,"  "  by  reason  of  their  having  assumed,  as  surety  or  other- 
wise, any  responsibility  to  our  said  firm  for  or  on  account  of  William  G. 
Hall." 

It  is  therefore  obvious  that  they  could  maintain  no  action  against 
Hall  &  Turner  founded  upon  those  two  notes.  The  liability  of  Hah 
&  Turner  to  pay  those  notes  had  been  by  their  release  extinguished. 
Nothing  had  been  paid  upon  them.  Hall  &  Turner  acquired  by  the 
mortgage  from  William  G.  Hall  a  conditional  title  to  the  goods,  liable 
to  be  defeated  by  the  termination  or  extinguishment  of  their  lia- 
bility to  pay  those  notes.  That  title  and  no  other  could  they  convey 
to  the  plaintiffs.  They  did  not  attempt  to  convey  any  other.  They 
only  assigned  the  mortgage  and  the  title  to  the  goods,  which  they  had 
acquired  by  it. 

No  absolute  title  to  the  goods  was  at  any  time  conveyed  or  attempted 
to  be  conve3Ted  by  William  G.  Hall  to  Hall  &  Turner,  or  by  them  to 
the  plaintiffs. 

There  may  be  a  difference  of  opinion,  whether  the  title  to  real  estate 
conveyed  in  mortgage,  upon  payment  or  discharge  of  the  debt  or  lia- 
bility secured  b}7  the  mortgage  after  condition  broken,  would  revest 
in  the  mortgagor  without  a  reconveyance  or  release  or  cancellation 
of  the  mortgage.  But  although  the  title  to  personal  property  conveyed 
in  mortgage  becomes  absolute  in  the  mortgagee  upon  failure  to  per- 
form the  condition  within  the  time  limited  and  extended,  b}-  the  statute 
of  this  State,  c.  125,  §  30  ;  yet  if  the  mortgagee  or  his  assignee  after- 
ward accept  payment  of  the  debt,  or  discharge  the  liability  secured  by 
the  mortgage,  the  title  revests  in  the  mortgagor  without  a  redelivery 
or  resale  and  without  a  cancellation  of  the  mortgage.  Butler  v.  Tufts  ; 1 
Flanders  v.  Barstow  ; 2  Paid  v .  Hay  ford  ; 3  Greene  v.  Dingley  ;  4  Leigh- 
ton  v.  Shaple}' ; 5  Parks  v.  Hall ; 6  Barry  v.  Bennett ; 7  Patchin  v.  Pierce  ; 8 
Harrison  v.  Hicks.9 

It  is  true,  that  the  introduction  of  a  mortgage  made  to  indemnify  a 
suret}',  after  proof  of  its  execution,  has  been  held  to  be  prima  facie 
evidence  of  title.  The  same  case  also  decides  that  such  title  will  be 
avoided  by  proof  introduced  in  defence,  that  the  debt  has  been  paid, 
or  the  liability  of  the  surety  discharged.     Davis  v.  Mills.10 

1  13  Maine,  302.  2  18  Maine,  357. 

3  22  Maine,  234.  i  24  Maine,  131. 

*  8  N.  H.  359.  6  2  Pick.  206. 

»  7  Mete.  354.  8  12  Wend.  61. 

9  1  Port.  423.  10  18  Pick.  394. 


CHAP.   IV.]  HAMPTON    V.    PHIPPS.  647 

In  this  case,  the  proof,  that  the  sureties  had  been  discharged  from 
their  liability,  was  introduced  by  the  plaintiffs,  and  their  title  to  the 
goods  was  thereby  avoided.     A  new  trial  could  not  avail  them. 

Nonsuit  confirmed.1 


HAMPTON,    Administrator,    and   Others   v.    PHIPPS. 

In  the  Supreme  Court,  United  States,  October  Term,   1882. 

[Reported  in  108  United  States  Reports,  260.] 

Bill  in  equity  by  a  creditor  to  obtain  the  benefit  of  securities  held 
by  sureties  of  the  principal  debtor. 

The  appellee,  who  was  complainant  below,  was  the  holder,  and 
filed  his  bill  in  equity,  on  behalf  of  himself  and  the  other  holders  of 
bonds,  executed  and  delivered  by  Theodore  D.  Wagner  and  William 
L.  Trenholm,  to  the  amount  of  $710,000,  and  paid  to  creditors  in 
settlement  of  the  liabilities  of  two  insolvent  firms,  in  which  they 
were  two  of  the  copartners.  These  bonds  were  dated  January  1, 
1868.  The  payment  of  the  principal  and  interest  of  each  of  these 
bonds  was  guaranteed,  by  writing  indorsed  thereon,  by  George  A. 
Trenholm  and  James  T.  Welsman,  who  were  sureties  merely.  These 
sureties  entered  into  a  written  agreement  each  with  the  other,  dated 

1  Valentine  v.  Wheeler,  122  Mass.  566;  Higgins  v.  Wright,  43  Barb.  461,  Accord. 

Carlisle  v.  Wilkins,  51  Ala.  371  ;  Phillips  v.  Thompson,  2  Johns.  Ch.  418;  Streeter 
v.  Seigman  (New  Jersey  Equity,  1900),  45  At.  R.  908,  Contra. 

In  Hayden  v.  Smith,  12  Met.  511,  the  Court,  while  admitting  that  a  release  under  seal 
given  to  the  surety  by  the  creditor  would  deprive  the  latter  of  all  rights  in  the  security 
assigned  to  him  by  the  surety,  decided  that  a  parol  agreement  never  to  sue  the  surety 
would  not  have  the  same  effect. 

Consistently  with  the  principal  case  the  discharge  of  the  surety  in  any  mode  must 
deprive  the  creditor  of  all  claim  to  any  security  given  to  the  surety  for  his  indemnity 
by  the  principal  debtor ;  e.  g. :  — 

Variation  of  the  surety's  risk  by  act  of  the  creditor.  —  City  of  Albany  v.  Andrews, 
29  N.  Y.  Ap.  Div.  20;  Schmelz  v.  Rix,  95  Va.  509. 

Failure  of  holder  to  exercise  due  diligence  in  charging  indorser.  —  Tilford  v.  James, 
7  B.  Mon.  336  ;  Hopewell  v.  Cumberland  Bank,  10  Leigh,  206  ;  Va.  Bank  v.  Boisseau, 
12  Leigh,  387. 

Discharge  in  bankruptcy.  —  Bush  v.  Stamps,  26  Miss.  463.  But  see  contra,  Forrest 
v.  Luddington,  68  Ala.  1,  12  (semble). 

Discharge  by  Statute  of  Limitations.  —  Ex  parte  Morris,  supra,  639;  Russell  v.  La 
Roque,  13  La.  An.  149;  Phillips  v.  Thompson,  2  Johns.  Ch.  418  {semble).  But  see 
contra,  Forrest  v.  Luddington,  68  Ala.  1,12  (semble) ;  Plant  v.  Storey,  131  Ind.  46,  49 
(semble) ;  Eastman  v.  Foster,  8  Met.  19 ;  Holt  v.  Savings  Bank,  62  N.  H.  551 ;  Ijames 
v.  Gaither,  93  N.  Ca.  358 ;  Long  v.  Miller,  93  N.  Ca.  227 ;  Sherrod  v.  Dixon,  120  N.  Ca. 
60  (semble). 

Discharge  by  death  of  surety  in  a  joint  obligation.  — But  see  contra,  Crosby  v.  Crafts, 
5  Hun,  327,  affirmed  in  69  N.  Y.  607. 

Satisfaction  of  surety's  liability.  —  If  a  surety  for  a  part  of  the  principal's  debt  pays 
that  part,  the  creditor  has  no  claim  to  security  held  by  the  surety  for  his  indemnity. 
Van  Orden  v.  Durham,  35  Cal.  136;  Sherrod  v.  Dixon,  120  N.  Ca.  60.  — Ed. 


648  HAMPTON   V.    PHIPPS.  [CHAP.  IV. 

May  3,  1869,  in  which  it  was  recited  that,  in  becoming  parties  to  said 
guaranty,  they  had  agreed  between  themselves  that  the  said  George 
A.  Trenholm  should  be  liable  for  the  sum  of  $400,000,  and  the  said 
James  T.  Welsrnan  for  the  sum  of  $310,000,  of  the  aggregate  amount 
of  the  bonds,  and  no  more,  and  that  each  would  be  respectively 
liable  to  the  other  for  the  full  discharge  of  the  said  sum  and  propor- 
tion by  them  respectively  undertaken,  and  that  each  would  save  and 
keep  harmless  and  indemnify  the  other  from  all  claim,  by  reason  of 
the  said  guaranty,  beyond  the  amount  or  proportion  respectively 
assumed,  as  stated;  and  it  was  thereby  further  agreed  that,  at  any 
time  when  either  of  them  should  so  require,  each  should,  by  mort- 
gage of  real  estate,  secure  to  the  other  more  perfect  indemnity,  be- 
cause of  the  said  guaranty.  Thereupon,  and  on  the  same  date,  each 
executed  to  the  other  a  mortgage  upon  real  estate  of  which  they 
were  respectively  the  owners,  the  condition  of  which  was  that  the 
mortgagor  should  perform  on  his  part  the  said  agreement  of  that  date. 
The  guarantors,  as  well  as  the  principal  obligors,  had  become  insol- 
vent before  the  bill  was  filed. 

It  also  appeared  that,  of  the  sum  of  $573,300  due  on  account  of 
outstanding  bonds,  George  A.  Trenholm,  one  of  the  guarantors,  had 
paid  $108,454,  leaving  still  due  from  his  estate  to  make  good  the  pro- 
portion assumed  by  him,  $214,532;  and  that  the  proportion  for  which 
the  estate  of  James  T.  Welsrnan,  the  other  guarantor,  was  liable, 
was  $250,314,  of  which  nothing  had  been  paid.  The  appellees 
claimed  that  the  mortgages  interchanged  between  the  guarantors 
inured  to  their  benefit  as  securities  for  the  payment  of  the  principal 
debt,  and  prayed  for  a  foreclosure  and  sale  for  that  purpose. 

This  was  resisted  by  the  appellants,  one  of  whom,  Hampton's 
administrator,  as  a  judgment  creditor  of  George  A.  Trenholm  and 
James  T.  Welsrnan,  claimed  a  lien  on  the  mortgaged  premises;  the 
others,  executrixes  of  James  Welsrnan,  deceased,  being  subsequent 
mortgagees  of  the  same  property. 

A  decree  passed  in  favor  of  the  complainants,  according  to  the 
prayer  of  the  bill,  from  which  appeal  was  taken. 

Mr.  Theodore  G.  Barker  and  Mr.  W.  G.  De  Saussure  for  appellants. 

Mr.  James  Lowndes  for  appellee. 

Mr.  Justice  Matthews  delivered  the  opinion  of  the  Court.  After 
reciting  the  facts  in  the  above  language,  he  continued:  — 

The  ground  on  which  the  Court  below  proceeded  seems  to  have 
been  that  the  mortgages  given  by  the  co-sureties,  each  to  the  other, 
were  in  equity  securities  for  the  payment  of  the  principal  debt, 
which  inured  to  the  benefit  of  the  creditors  upon  the  principle  of 
subrogation. 

The  application  of  the  principle  of  subrogation  in  favor  of  cred- 
itors and  of  sureties  has  undoubtedly  been  frequent  in  the  courts  of 
equity  in  England  and  the  United  States,  and  is  an  ancient  and 
familiar  head  of  their  jurisdiction. 


CHAP.  IV.]  HAMPTON   V.    PHIPPS.  649 

It  was  distinctly  stated,  as  to  creditors,  in  the  early  case  of  Maure 
v.  Harrison,  where  the  whole  report  is  as  follows:  — 

"A  bond  creditor  shall,  in  this  court,  have  the  benefit  of  all 
counter-bonds  or  collateral  security  given  by  the  principal  to  the 
surety ;  as  if  A  owes  B  money,  and  he  and  C  are  bound  for  it,  A  gives 
C  a  mortgage  or  bond  to  indemnify  him,  B  shall  have  the  benefit  of  it 
to  recover  his  debt." 

And  the  converse  of  the  rule  was  stated  by  Sir  William  Grant,  in 
Wright  v.  Morley,1  where  he  said:  — 

"I  conceive  that  as  the  creditor  is  entitled  to  the  benefit  of  all  the 
securities  the  principal  debtor  has  given  to  his  surety,  the  surety 
has  full  as  good  an  equity  to  the  benefit  of  all  the  securities  the  prin- 
cipal gives  to  the  creditor." 

And  it  applies  equally  between  sureties,  so  that  securities  placed 
by  the  principal  in  the  hands  of  one,  to  operate  as  an  indemnity  by 
payment  of  the  debt,  shall  inure  to  the  benefit  of  all. 

Many  sufficient  maxims  of  the  law  conspire  to  justify  the  rule.  To 
avoid  circuity  and  multiplicity  of  actions ;  to  prevent  the  exercise  of 
one's  right  from  interfering  with  the  rights  of  others;  to  treat  that 
as  done  which  ought  to  be  done;  to  require  that  the  burden  shall  be 
borne  by  him  for  whose  advantage  it  has  been  assumed ;  and  to  secure 
equality  among  those  equally  obliged  and  benefited,  are  perhaps  not 
all  the  familiar  adages  which  may  legitimately  be  assigned  in  support 
of  it.  It  is,  in  fact,  a  natural  and  necessary  equity  which  flows  from 
the  relation  of  the  parties,  and  though  not  the  result  of  contract,  is 
nevertheless  the  execution  of  their  intentions.  For,  when  a  debtor, 
who  has  given  personal  guaranties  for  the  performance  of  his  obliga- 
tion has  further  secured  it  by  a  pledge  in  the  hands  of  his  creditor, 
or  an  indemnity  in  those  of  his  surety,  it  is  conformable  to  the  pre- 
sumed intent  of  all  the  parties  to  the  arrangement,  that  the  fund  so 
appropriated  shall  be  administered  as  a  trust  for  all  the  purposes, 
which  a  payment  of  the  debt  will  accomplish;  and  a  court  of  equity 
accordingly  will  give  to  it  this  effect.  All  this,  it  is  to  be  observed, 
as  the  rule  verbally  requires,  presupposes  that  the  fund  specifically 
pledged  and  sought  to  be  primarily  applied,  is  the  property  of  the 
debtor,  primarily  liable  for  the  payment  of  the  debt;  and  it  is  because 
it  is  so,  that  equity  impresses  upon  it  the  trust,  which  requires  that 
it  shall  be  appropriated  to  the  satisfaction  of  the  creditor,  the  exon- 
eration of  the  surety,  and  the  discharge  of  the  debtor.  The  implica- 
tion is,  that  a  pledge  made  expressly  to  one  is  in  trust  for  another, 
because  the  relation  between  the  parties  is  such  that  that  construc- 
tion of  the  transaction  best  effectuates  the  express  purpose  for  which 
it  was  made. 

It  follows  that  the  present  case  cannot  be  brought  within  either  the 
terms  or  the  reason  of  the  rule;  for,  as  the  property,  in  respect  to 
which  the  creditors  assert  a  lien,  was  not  the  property  of  the  princi- 

i  11  Ves.  12. 


650  HAMPTON   V.    PHIPPS.  [CHAP.  IV, 

pal  debtor,  and  has  never  been  expressly  pledged  to  payment  of  the 
debt,  so  no  equitable  construction  can  convert  it  by  implication  into 
a  security  for  the  creditor. 

It  is  urged  that  the  logic  of  the  rule  would  extend  it  so  as  to  cover 
the  case  of  all  securities  held  by  sureties  for  purposes  of  indemnity 
of  whatsoever  character  and  by  whomsoever  given.  But  this  sugges- 
tion is  founded  on  a  misconception  of  the  scope  of  the  rule  and  the 
rational  grounds  on  which  it  is  established.  Of  course,  if  an  ex- 
press trust  is  created,  no  matter  by  whom,  nor  of  what,  for  the 
payment  of  the  debt,  equity  will  enforce  it,  according  to  its  terms, 
for  the  benefit  of  the  creditor,  as  a  cestui  que  trust ;  but  the  question 
concerns  the  creation  of  a  trust,  by  operation  of  law,  in  favor  of  a 
creditor,  in  a  case  where  there  was  no  duty  owing  to  him,  and  no 
intention  of  bounty.  A  stranger  might  well  choose  to  bestow  upon  a 
surety  a  benefit  and  a  preference,  from  considerations  purely  per- 
sonal, in  order  to  make  good  to  him  exclusively  any  loss  to  which 
he  might  be  subjected  in  consequence  of  his  suretyship  for  another. 
In  such  a  case  neither  co-surety  nor  creditor  could,  upon  any 
ground  of  privity  in  interest,  claim  to  share  in  the  benefit  of  such 
a  benevolence.1 

There  may  be,  indeed,  cases  in  which  it  would  not  be  inequitable 
for  the  debtor  himself  to  make  specific  pledges  of  his  own  property, 
limited  to  the  personal  indemnity  of  a  single  surety,  without  benefit 
of  participation  or  subrogation;  as,  when  the  liability  of  the  surety 
was  contingent  upon  conditions  not  common  to  his  co-sureties,  and 
which  may  never  become  absolute.     Hopewell  v.  Cumberland  Bank.  2 

We  are  referred  by  counsel  to  the  case  of  Curtis  v.  Tyler,3  as  an 
instance  in  which  the  rule  has  been  extended  to  securities  in  the 
hands  of  a  surety  not  derived  from  the  principal  debtor.  But  the 
fact  in  that  case  is  otherwise.  The  question  was  as  to  the  right  of 
an  assignee  of  a  mortgage  to  the  benefit  of  the  guaranty  of  one  Allen 
to  make  good  any  deficiency  in  the  mortgaged  property  to  pay  the 
mortgage  debt.  This  bond  had  been  given  to  one  Murray,  a  prior 
holder  of  the  mortgage,  who  had  assigned  it  to  the  complainant. 
The  Court  say,  in  the  opinion,  p.  436:  — 

"In  the  case  under  consideration  Murray  had  assigned  the  bond 
and  mortgage  given  to  him,  and  had  guaranteed  the  payment  thereof 
to  the  assignee.  He,  therefore,  stood  in  the  situation  of  a  surety  for 
the  mortgagor,  when  the  latter  procured  the  bond  of  Allen  as  a  col- 
lateral security,  or  as  a  guaranty  of  the  payment  of  his  original  bond 
and  mortgage.  The  present  holders  are,  therefore,  in  equity  entitled 
to  the  benefit  of  this  collateral  bond,  in  the  same  manner  and  to  the 

1  Mechlin  v.  Northern  Bank,  83  Ky.  314;  Taylor  v.  Farmers'  Bank,  87  Ky.  398- 
Black  v.  Kaiser,  91  Ky.  422  ;  Union  Bank  v.  Rich,  106  Mich.  319,  329  (semble),  in  which 
cases  a  creditor  claimed  the  benefit  of  securities  given  to  the  surety  by  a  stranger, 
Accord.  —  Ed. 

2  10  Leigh,  206.  s  9  Paige,  432. 


CHAP.  IV.]  HAMPTON    0.    PHIPPS.  651 

same  extent  as  if  it  had  been  given  to  Murray  before  be  assigned  his 
bond  and  mortgage,  and  had  been  expressly  assigned  by  him  to  Beers, 
and  by  Beers  to  the  complainants." 

It  thus  distinctly  appears  that  the  bond  of  Allen,  which  was  the 
collateral  security  in  controversy,  was  procured  by  and  derived  from 
the  original  mortgagor,  the  principal  debtor.  We  have  been  referred 
to  no  case  which  forms  an  exception  to  the  rule  as  we  have  stated  it. 

But  the  claim  of  the  complainants  fail3  for  another  reason.  The 
right  of  subrogation,  on  which  they  rest  it,  is  merely  a  right  to  be 
substituted  in  place  of  each  of  the  co-sureties  in  respect  to  the  other, 
in  order  to  enforce  the  mortgages  given  by  them  respectively  accord- 
ing to  their  terms.  But  the  conditions  of  those  mortgages  have  not 
been  broken,  and  the  very  fact,  which  is  supposed  to  confer  the  right 
upon  the  creditor  to  interpose  —  the  insolvency  of  the  sureties  —  has 
rendered  it  impossible  for  either  to  fasten  upon  the  other  a  breach 
of  the  condition  of  his  mortgage.  As  neither  can  pay  his  own  pro- 
portion of  the  liability  they  agreed  to  divide,  neither  can  claim  in- 
demnity against  the  other  for  an  over-payment.  It  is  entirely  clear, 
therefore,  that  neither  of  the  sureties  could  be,  under  the  circum- 
stances as  they  appear,  entitled,  as  mortgagee,  to  foreclose  the  mort- 
gage against  the  other.  The  condition  of  each  mortgage  was,  that 
the  mortgagor  would  perform  his  part  of  the  agreement  and  indem- 
nify the  mortgagee  against  the  consequences  of  a  failure  to  do  so. 
Unless  one  of  them  had  been  compelled  to  pay,  and  had  in  fact  paid, 
an  excess  beyond  his  agreed  share  of  the  debt,  there  could  have  been 
no  breach  of  the  conditions  of  the  mortgage,  and  consequently  no 
right  to  a  foreclosure  and  sale  of  the  mortgaged  premises.  And  the 
amount  which  the  mortgagor  could  be  required  to  pay,  as  a  condition 
of  redeeming  the  mortgaged  premises,  in  case  of  foreclosure,  would 
be,  not  the  amount  which  the  mortgagee,  as  between  himself  and 
the  common  creditor,  was  bound  to  pay  on  account  of  the  debt,  but 
the  amount  which,  as  between  himself  and  his  co-surety,  the  mort- 
gagor, he  had  paid  beyond  the  proportion  which,  by  the  terms  of  the 
agreement  between  them,  was  the  limit  of  his  liability.  The  mort- 
gages were  not  created  for  the  security  of  the  principal  debt,  but  as 
security  for  a  debt  possibly  to  arise  from  one  surety  to  the  other.  As 
to  which  of  them  has  there  been  as  yet  any  default?  Plainly  none 
as  to  either.  And  yet  the  complainants  assert  the  right  to  foreclose 
them  both  —  a  claim  that  is  self-contradictory,  for,  by  the  very  nature 
of  the  arrangement,  it  is  impossible  that  there  should  be  a  default  as 
to  both.  The  fact  that  one  mortgagor  had  failed  to  perform  his  part 
of  the  agreement  could  only  be  on  the  supposition  that  the  other  had 
not  only  fully  performed  it  on  his  part,  but  had  paid  that  excess 
against  which  his  co-surety  had  agreed  to  indemnify  him.  There  is, 
therefore,  no  right  to  the  subrogation  insisted  on,  because  there  i,° 
nothing  to  which  it  can  apply. 

It  results,  therefore,  that  the   complainants  were   not  entitled  to 


652  HAMPTON  V.   PHIPPS.  [CHAP.  IV. 

participate  in  the  benefit  of  the  mortgages  in  question,  nor  to  share 
in  the  proceeds  of  the  sale  of  the  mortgaged  premises;  but  that  the 
same  should  have  been  applied  to  the  payment  of  the  other  judgment 
and  mortgage  liens  upon  the  premises,  in  the  order  of  their  priority. 
The  decree  of  May  29,  1879,  therefore,  being  the  one  from  which  the 
appeal  was  taken,  is  reversed,  and  the  cause  remanded  with  direc- 
tions to  take  such  further  proceedings  therein,  not  inconsistent  with 
this  opinion,  as  justice  and  equity  require.  Decree  reversed.1 

1  Siward  v.  Huntington,  94  N.  Y.  104,  26  Hun,  217,  Accord.—  Ed. 


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